51-25 Tobacco Product Manufacturer Sales
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adjustment set forth in exhibit C to the master settlement agreement.2."Affiliate" means a person who directly or indirectly owns or controls, is owned or
controlled by, or is under common ownership or control with, another person. Solely
for purposes of this definition, the terms "owns", "is owned", and "ownership" mean
ownership of an equity interest, or the equivalent thereof, of ten percent or more,
and the term "person" means an individual, partnership, committee, association,
corporation, or any other organization or group of persons.3."Allocable share" means allocable share as that term is defined in the master
settlement agreement.4."Cigarette" means any product that contains nicotine, is intended to be burned or
heated under ordinary conditions of use, and consists of or contains:a.Any roll of tobacco wrapped in paper or in any substance not containing
tobacco;b.Tobacco, in any form, that is functional in the product, which, because of its
appearance, the type of tobacco used in the filler, or its packaging and labeling,
is likely to be offered to, or purchased by, consumers as a cigarette; orc.Any roll of tobacco wrapped in any substance containing tobacco which,
because of its appearance, the type of tobacco used in the filler, or its
packaging and labeling, is likely to be offered to, or purchased by, consumers
as a cigarette described in subdivision a.The term "cigarette" includes "roll-your-own", which means any tobacco that,
because of its appearance, type, packaging, or labeling is suitable for use and likely
to be offered to, or purchased by, consumers as tobacco for making cigarettes. For
purposesofthisdefinitionof"cigarette",0.09ounces[2.556 grams]of"roll-your-own" tobacco constitutes one individual "cigarette".5."Master settlement agreement" means the settlement agreement and related
documents entered on November 23, 1998, by the state and leading United States
tobacco product manufacturers.6."Qualified escrow fund" means an escrow arrangement with a federally or state
chartered financial institution having no affiliation with any tobacco product
manufacturer and having assets of at least one billion dollars if the arrangement
requires that the financial institution hold the escrowed funds' principal for the benefit
of releasing parties and prohibits the tobacco product manufacturer placing the
funds into escrow from using, accessing, or directing the use of the funds' principal
except as consistent with subdivision b of subsection 2 of section 51-25-02.7."Released claims" means released claims as that term is defined in the master
settlement agreement.8."Releasing parties" means releasing parties as that term is defined in the master
settlement agreement.Page No. 19."Tobacco product manufacturer" means an entity that after April 8, 1999, directly,
and not exclusively through any affiliate:a.Manufactures cigarettes anywhere that the manufacturer intends to be sold in
the United States, including cigarettes intended to be sold in the United States
through an importer (except when the importer is an original participating
manufacturer, as that term is defined in the master settlement agreement,
which will be responsible for the payments under the master settlement
agreement with respect to such cigarettes as a result of the provisions of
subsection II(mm) of the master settlement agreement and which pays the
taxes specified in subsection II(z) of the master settlement agreement, and
provided that the manufacturer of such cigarettes does not market or advertise
the cigarettes in the United States);b.Is the first purchaser anywhere for resale in the United States of cigarettes
manufactured anywhere which the manufacturer does not intend to be sold in
the United States; orc.Becomes a successor of an entity described in subdivision a or b.The term "tobacco product manufacturer" does not include an affiliate of a tobacco
product manufacturer unless the affiliate itself falls within subdivision a, b, or c.10."Units sold" means the number of individual cigarettes sold in the state by the
applicable tobacco product manufacturer, whether directly or through a distributor,
retailer, or similar intermediary or intermediaries, during the year in question, as
measured by excise taxes collected by the state on packs or "roll-your-own" tobacco
containers.The state tax commissioner shall adopt rules as are necessary toascertain the amount of state excise tax paid on the cigarettes of the tobacco
product manufacturer for each year.51-25-02.Requirements.A tobacco product manufacturer selling cigarettes toconsumers within the state, whether directly or through a distributor, retailer, or similar
intermediary or intermediaries, after April 8, 1999, must do one of the following:1.Become a participating manufacturer, as that term is defined in section II(jj) of the
master settlement agreement, and generally perform its financial obligations under
the master settlement agreement; or2.a.Place into a qualified escrow fund by April fifteenth of the year following the
year in question, the following amounts, as such amounts are adjusted for
inflation:(1)1999: $.0094241 per unit sold after April 8, 1999;(2)2000: $.0104712 per unit sold;(3)For each of 2001 and 2002: $.0136125 per unit sold;(4)For each of 2003 through 2006: $.0167539 per unit sold; and(5)For each of 2007 and each year thereafter: $.0188482 per unit sold.b.A tobacco product manufacturer that places funds into escrow pursuant to
subdivision a shall receive the interest or other appreciation on the funds as
earned.The funds may be released from escrow only under the followingcircumstances:Page No. 2(1)To pay a judgment or settlement on any released claim brought against
the tobacco product manufacturer by the state or any releasing party
located or residing in the state. Funds must be released from escrow
under this paragraph in the order in which they were placed into escrow
and only to the extent and at the time necessary to make payments
required under the judgment or settlement;(2)To the extent that a tobacco product manufacturer establishes that the
amount it was required to place into escrow on account of units sold in
the state in a particular year was greater than the master settlement
agreement payments, as determined pursuant to section IX(i) of that
agreement, including after final determination of all adjustments, that the
manufacturer would have been required to make on account of such
units sold had it been a participating manufacturer, the excess must be
released from escrow and revert back to such tobacco product
manufacturer; or(3)To the extent not released from escrow under paragraph 1 or 2, funds
must be released from escrow and revert back to the tobacco product
manufacturer twenty-five years after the date on which they were placed
into escrow.c.Each tobacco product manufacturer that elects to place funds into escrow
pursuant to this subsection shall annually certify to the state tax commissioner
that it is in compliance with this subsection. The state tax commissioner shall
refer every instance of noncompliance to the attorney general. The attorney
general may bring a civil action on behalf of the state against any tobacco
product manufacturer that fails to place into escrow the funds required under
this section. Any tobacco product manufacturer that fails in any year to place
into escrow the funds required under this section must:(1)Be required within fifteen days to place the funds into escrow as will bring
it into compliance with this section.The court, upon a finding of aviolation of this subdivision, may impose a civil penalty to be paid to the
general fund of the state in an amount not to exceed five percent of the
amount improperly withheld from escrow per day of the violation and in a
total amount not to exceed one hundred percent of the original amount
improperly withheld from escrow;(2)In the case of a knowing violation, be required within fifteen days to place
the funds into escrow as will bring it into compliance with this section.
The court, upon a finding of a knowing violation of this subdivision, may
impose a civil penalty to be paid to the general fund of the state in an
amount not to exceed fifteen percent of the amount improperly withheld
from escrow per day of the violation and in a total amount not to exceed
three hundred percent of the original amount improperly withheld from
escrow; and(3)In the case of a second knowing violation, be prohibited from selling
cigarettes to consumers within the state, whether directly or through a
distributor, retailer, or similar intermediary, for a period not to exceed two
years.Each failure to make an annual deposit required under this section constitutes a separate
violation.Page No. 3Document Outlinechapter 51-25 tobacco product manufacturer sales