NRS: CHAPTER 370A - MANUFACTURERS OF TOBACCO PRODUCTS

[Rev. 11/4/2011 9:57:19 AM]

CHAPTER 370A - MANUFACTURERS OF TOBACCO PRODUCTS

NRS 370A.010 Definitions.

NRS 370A.020 “Adjusted for inflation” defined.

NRS 370A.030 “Affiliate” defined.

NRS 370A.040 “Allocable share” defined.

NRS 370A.050 “Cigarette” defined.

NRS 370A.060 “Manufacturer of tobacco products” defined.

NRS 370A.070 “Master Settlement Agreement” defined.

NRS 370A.080 “Participating manufacturer” defined.

NRS 370A.090 “Qualified escrow fund” defined.

NRS 370A.100 “Released claims” defined.

NRS 370A.110 “Releasing parties” defined.

NRS 370A.120 “Units sold” defined.

NRS 370A.130 Adoption of regulations to ascertain amount of excise tax collected from each manufacturer.

NRS 370A.140 Participation in Master Settlement Agreement or deposits into qualified escrow fund required.

NRS 370A.160 Compliance by manufacturer: Annual certification; enforcement; penalties for violations.

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NRS 370A.010 Definitions. As used in this chapter, the words and terms defined in NRS 370A.020 to 370A.120, inclusive, have the meanings ascribed to them in those sections.

(Added to NRS by 1999, 1106)

NRS 370A.020 “Adjusted for inflation” defined. “Adjusted for inflation” means increased in accordance with the formula for inflation adjustment set forth in Exhibit C to the Master Settlement Agreement.

(Added to NRS by 1999, 1106)

NRS 370A.030 “Affiliate” defined. “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 the 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.

(Added to NRS by 1999, 1106)

NRS 370A.040 “Allocable share” defined. “Allocable share” has the meaning ascribed to it in section II(f) of the Master Settlement Agreement.

(Added to NRS by 1999, 1106)

NRS 370A.050 “Cigarette” defined. “Cigarette” means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains:

1. Any roll of tobacco wrapped in paper or in any other substance not containing tobacco;

2. 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; or

3. 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 subsection 1.

Ê The term includes “roll-your-own” tobacco, that is, any tobacco which 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 the purposes of this section, 0.09 ounces of “roll-your-own” tobacco constitutes one individual cigarette.

(Added to NRS by 1999, 1106)

NRS 370A.060 “Manufacturer of tobacco products” defined. “Manufacturer of tobacco products” means an entity that, after May 24, 1999, directly, and not exclusively through an affiliate:

1. Manufactures cigarettes anywhere that such manufacturer intends to be sold in the United States, including cigarettes intended to be sold in the United States through an importer (except where such importer is an original participating manufacturer, as that term is defined in the Master Settlement Agreement, that 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 that 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 such cigarettes in the United States);

2. Is the first purchaser anywhere for resale in the United States of cigarettes manufactured anywhere that the manufacturer does not intend to be sold in the United States; or

3. Becomes a successor of an entity described in subsection 1 or 2.

Ê The term does not include an affiliate of a manufacturer of tobacco products unless the affiliate itself is an entity described in subsection 1, 2 or 3.

(Added to NRS by 1999, 1107)

NRS 370A.070 “Master Settlement Agreement” defined. “Master Settlement Agreement” means the settlement agreement, and related documents, entered into on November 23, 1998, by this state and leading United States manufacturers of tobacco products.

(Added to NRS by 1999, 1107)

NRS 370A.080 “Participating manufacturer” defined. “Participating manufacturer” has the meaning ascribed to it in section II(jj) of the Master Settlement Agreement.

(Added to NRS by 1999, 1107)

NRS 370A.090 “Qualified escrow fund” defined. “Qualified escrow fund” means an escrow arrangement with a federally or state-chartered financial institution, that has no affiliation with any manufacturer of tobacco products and has assets of at least $1 billion where the arrangement requires the financial institution to hold the principal of the amount deposited in escrow for the benefit of releasing parties and prohibits the manufacturer of tobacco products which deposits the money from using, having access to or directing the use of the principal of the amount deposited except as permitted under NRS 370A.150.

(Added to NRS by 1999, 1107)

NRS 370A.100 “Released claims” defined. “Released claims” has the meaning ascribed to it in section II(nn) of the Master Settlement Agreement.

(Added to NRS by 1999, 1107)

NRS 370A.110 “Releasing parties” defined. “Releasing parties” has the meaning ascribed to it in section II(pp) of the Master Settlement Agreement.

(Added to NRS by 1999, 1107)

NRS 370A.120 “Units sold” defined. “Units sold” means, with respect to a particular manufacturer of tobacco products for a particular year, the number of individual cigarettes sold in this state by the manufacturer directly or through a distributor, retailer or similar intermediary or intermediaries during that year, as measured by excise taxes collected by the State on packs, or containers of “roll-your-own” tobacco, bearing the excise stamp of this state.

(Added to NRS by 1999, 1107)

NRS 370A.130 Adoption of regulations to ascertain amount of excise tax collected from each manufacturer. The Department of Taxation shall adopt such regulations as are necessary to ascertain the amount of excise tax collected by the State on the cigarettes of each manufacturer of tobacco products for each year.

(Added to NRS by 1999, 1107)

NRS 370A.140 Participation in Master Settlement Agreement or deposits into qualified escrow fund required. A manufacturer of tobacco products that sells cigarettes to consumers in this state, directly or through a distributor, retailer or similar intermediary or intermediaries, after May 24, 1999, shall do one of the following:

1. Become a participating manufacturer and generally perform its financial obligations under the Master Settlement Agreement; or

2. Deposit into a qualified escrow fund, on or before April 15 of the year following the year in question, the following amounts as such amounts are adjusted for inflation:

(a) For the year 1999, $0.0094241 for each unit sold after May 24, 1999;

(b) For the year 2000, $0.0104712 for each unit sold;

(d) For each of the years 2003 through 2006, $0.0167539 for each unit sold; and

(e) For each of the year 2007 and each year thereafter, $0.0188482 for each unit sold.

(Added to NRS by 1999, 1108)

NRS 370A.150 Deposits into escrow: Disposition of interest; release of principal. [Effective until the date a court of competent jurisdiction enters a judgment determining that subsection 2 of this section is unconstitutional.] A manufacturer of tobacco products that deposits money into escrow pursuant to subsection 2 of NRS 370A.140 shall receive the interest or other appreciation on the deposit as earned. The principal of the deposit may be released from escrow only under the following circumstances:

1. To pay a judgment or settlement on a released claim brought against that manufacturer by this State or by a releasing party located or residing in this State. Money may be released from escrow under this subsection only in the order in which it was deposited 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 the manufacturer establishes that the amount it was required to deposit 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 such manufacturer would have been required to make on account of such units sold if the manufacturer had been a participating manufacturer, the excess must be released from escrow and revert to the manufacturer.

3. To the extent not released from escrow under subsection 1 or 2, deposits must be released from escrow and revert to the manufacturer 25 years after the date on which they were deposited.

(Added to NRS by 1999, 1108; A 2005, 379)

NRS 370A.150 Deposits into escrow: Disposition of interest; release of principal. [Effective from the date a court of competent jurisdiction enters a judgment determining that former subsection 2 of this section is unconstitutional until the date such a court enters a judgment determining that the repeal of former subsection 2 of this section is unconstitutional.] A manufacturer of tobacco products that deposits money into escrow pursuant to subsection 2 of NRS 370A.140 shall receive the interest or other appreciation on the deposit as earned. The principal of the deposit may be released from escrow only under the following circumstances:

2. To the extent not released from escrow under subsection 1, deposits must be released from escrow and revert to the manufacturer 25 years after the date on which they were deposited.

(Added to NRS by 1999, 1108; A 2005, 379, 380, effective from the date a court of competent jurisdiction enters a judgment determining that former subsection 2 of this section is unconstitutional until the date such a court enters a judgment determining that the repeal of former subsection 2 of this section is unconstitutional)

NRS 370A.150 Deposits into escrow: Disposition of interest; release of principal. [Effective on the date a court of competent jurisdiction enters a judgment determining that the repeal of former subsection 2 of this section is unconstitutional.] A manufacturer of tobacco products that deposits money into escrow pursuant to subsection 2 of NRS 370A.140 shall receive the interest or other appreciation on the deposit as earned. The principal of the deposit may be released from escrow only under the following circumstances:

2. To the extent that the manufacturer establishes that the amount it was required to deposit into escrow in a particular year was greater than this State’s allocable share of the total payments that the manufacturer would have been required to make in that year under the Master Settlement Agreement if the manufacturer had been a participating manufacturer, as such payments are determined pursuant to section IX(i)(2) of that Agreement and before any of the adjustments or offsets described in section IX(i)(3) of that Agreement other than the inflation adjustment, the excess must be released from escrow and revert to the manufacturer.

3. To the extent not released from escrow under subsection 1 or 2, deposits must be released from escrow and revert to the manufacturer 25 years after the date on which they were deposited.

(Added to NRS by 1999, 1108; A 2005, 379, 380, effective on the date a court of competent jurisdiction enters a judgment determining that the repeal of former subsection 2 of this section is unconstitutional)

NRS 370A.160 Compliance by manufacturer: Annual certification; enforcement; penalties for violations.

1. A manufacturer of tobacco products that elects to deposit money into escrow pursuant to subsection 2 of NRS 370A.140 shall annually certify to the Attorney General that it is in compliance with that subsection and with NRS 370A.150. If the Attorney General does not receive the annual certification, he or she shall mail a notice to the manufacturer. The Attorney General may maintain a civil action on behalf of this state against any manufacturer of tobacco products which fails to deposit into escrow the amount required by NRS 370A.140.

2. A manufacturer of tobacco products that fails in any year to place into escrow the money required under NRS 370A.140 shall:

(a) Be required within 15 days to place such money into escrow as shall bring it into compliance with NRS 370A.140. The court, upon a finding of a violation of subsection 2 of NRS 370A.140 or NRS 370A.150, may impose a civil penalty to be paid to the State General Fund in an amount not to exceed 5 percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed 100 percent of the original amount improperly withheld from escrow.

(b) In the case of a knowing violation, be required within 15 days to place such money into escrow as shall bring it into compliance with this section. The court, upon a finding of a knowing violation of subsection 2 of NRS 370A.140 or NRS 370A.150, may impose a civil penalty to be paid to the State General Fund in an amount not to exceed 15 percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed 300 percent of the original amount improperly withheld from escrow.

(c) In the case of a second knowing violation, shall be prohibited from selling cigarettes to consumers in this state, directly or through a distributor, retailer or similar intermediary, for a period to be fixed by the court not to exceed 2 years.

3. Each failure to make an annual deposit required by NRS 370A.140 constitutes a separate violation.

(Added to NRS by 1999, 1108)