An Act Regarding Distribution of Tobacco Products
Maine Legislature, Session 121, LD 1587
Committee: Taxation
Sponsors: LEMOINE, STANLEY
Amends: 36 MRSA §4362-A, 36 MRSA §4383, 36 MRSA §4402

Legislative Document 
No. 1587 
H.P.1160 
House of Representatives, April 28, 2003 
An Act Regarding Distribution of Tobacco Products 
Submitted by the Department of the Attorney General pursuant to Joint Rule 204. 
Reference to the Committee on Taxation suggested and ordered printed. 
7J1~ 
1?1·7114£~ 
MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative LEMOINE of Old Orchard Beach. 
Cosponsored by Senator STANLEY of Penobscot. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 22 MRSA c. 263, sub-c. 4 is enacted to read: 
SUBCHAPTER 4 
TQBACCO PRODUCT MANUFACTURERS 
§1580-L. 
Tobacco product manufacturer 
1. 
Definitions. 
As used in this section, unless the 
context 
otherwise 
indicates, 
the 
following 
terms 
have 
the 
following meanings. 
A. 
"Brand family" means all styles of cigarettes sold under 
the same trademark and differentiated from one another by 
means of additional modifiers, including, but not limited 
to, 
menthol, 
lights, 
kings 
and 
100s. 
"Brand 
family" 
includes any brand name alone or in conjunction with any 
other word, trademark, logo, symbol, motto, selling message, 
recognizable pattern of colors or any other indicia of 
product 
identification 
identical 
or 
similar 
to 
or 
identifiable with a previously known brand of cigarettes. 
B. 
"Cigarette" has the same meaning as in section 1580-H, 
subsection 4. 
C. 
"Distributor" means a person that is authorized to affix 
tax stamps to packages or other containers of cigarettes 
under 
Title 
36, 
section 
4366-14. 
or 
any 
person that is 
reguired to pay the excise tax imposed on cigarettes, 
including 
roll-your-own 
tobacco, 
pursuant 
to 
Title 
36, 
chapter 703 or chapter 704. 
D. 
"Nonparticipating manufacturer" 
means 
any 
tobacco 
product 
manufacturer 
that 
is 
not 
a 
participating 
manufacturer. 
E. 
"Participating manufacturer" means a 
manufacturer as 
defined 
in 
the 
Master 
Settlement 
Agreement. 
as 
that 
agreement is defined in section 1580-H, subsection 5. 
F. 
"Qualified escrow fund" has the same meaning as in 
section 1580-H, subsection 6. 
G. 
"Tobacco product manufacturer" has the same meaning as 
in 
section 
1580-H, 
subsection 
9. 
"Tobacco 
product 
manufacturer" also means a participating manufacturer or a 
nonparticipating manufacturer. 
H. 
"Units sold" has the same meaning as in section 1580-H, 
subsection 10. 
2. 
Certification: 
participating 
manufacturer. 
Every 
participating manufacturer whose cigarettes are sold in this 
State, whether directly or through a distributor, retailer or 
similar intermediary, shall execute and deliver in the manner 
prescribed 
by 
the 
Attorney 
General 
a 
certification to 
the 
Attorney General no earlier than April 15th of each year and no 
later than April 30th of each year under penalty of perjury that 
as of the date of certification the tobacco product manufacturer 
is a participating manufacturer. 
A. 
A participating manufacturer 
shall 
include 
in its 
certification 
a 
list 
of 
its 
brand 
families. 
The 
participating manufacturer shall provide an updated list 30 
calendar days prior to any addition to or modification of 
its brand families and deliver a supplemental certification 
to the Attorney General. 
3. 
Certification: nonparticipating manufacturer. 
Every 
nonparticipating manufacturer whose cigarettes are sold in this 
State, whether directly or through a distributor, retailer or 
similar intermediary, shall execute and deliver in the manner 
prescribed by the Attorney General 
a 
certification to the 
Attorney General no earlier than April 15th of each year and no 
later than April 30th of each year under penalty of perjury that 
as of the date of certification the tobacco product manufacturer 
is in full compliance with subchapter 3. 
A. 
A nonparticipating manufacturer shall include in its 
certification a complete list of all of its brand families 
that: 
(1) 
Separately lists for each brand family the number 
of 
units 
sold 
in 
the 
State 
during 
the 
preceding 
calendar year; 
(2) 
Indicates 
all 
of 
the 
nonparticipating 
manufacturer I s brand families that have been sold in 
the State at any time during the current calendar year; 
(3) 
Indicates by an asterisk any brand family sold in 
the State during the preceding calendar year that is no 
longer being sold in the State as of the date of 
certification; and 
(4) 
Identifies 
by 
name 
and 
address 
any 
other 
manufacturer of the brand families in the preceding or 
current calendar year. 
The nonparticipating manufacturer shall provide an updated 
list to the Attorney General 30 days prior to any addition 
to or modification of its brand families and deliver a 
supplemental certification to the Attorney General. 
B. 
In 
addition 
to 
submitting 
the 
lists 
reguired 
in 
paragraph A, 
a nonparticipating manufacturer shall also 
state in its certification that: 
(1) 
The nonparticipating manufacturer is registered to 
do business in the State or has appointed a resident 
agent for service of process and provided notice of the 
registration as reguired under subsection 8: 
(2) 
The nonparticipating manufacturer has: 
(a) 
Established and continues to maintain a 
gualified escrow fund pursuant to section 1580-1; 
and 
(b) 
Executed an escrow agreement, reviewed and 
approved by the Attorney General, that governs the 
gualified escrow fund; 
( 3) 
The nonparticipating manufacturer is in full 
compliance with subchapter 
and any rules adopted 
pursuant to this section and subchapter 3; 
(4) 
The name, address and telephone number of the 
financial 
institution 
where 
the 
nonparticipating 
manufacturer has established the gualified escrow fund 
reguired under section 1580-1; 
(5) 
The account number of the gualified escrow fund 
and the subaccount number for the State; 
(6) 
The 
amount the nonparticipating manufacturer 
placed in the gualified escrow fund for cigarettes sold 
in the State during the preceding calendar year, the 
date 
and 
amount 
of 
each 
deposit 
and 
evidence 
or 
verification as may be determined necessary by the 
Attorney General to confirm the amount; and 
(7) 
The amount and date of any withdrawal or transfer 
of funds the nonparticipating manufacturer made at any 
time from the gualified escrow fund or from any other 
gualified escrow fund into which the nonparticipating 
manufacturer has made escrow payments. 
4. 
Tobacco 
product manufacturer: brand family. 
A tobacco 
product manufacturer 
may 
not include 
a 
brand family in its 
certification unless: 
A. 
In the case of a participating manufacturer, the 
participating manufacturer affirms that the brand family is 
deemed to be the participating manufacturer's cigarettes for 
purposes 
of 
calculating its 
payments 
under 
the 
Master 
Settlement Agreement for the relevant year, in the volume 
and 
shares 
determined pursuant to the Master Settlement 
Agreement: and 
B. 
In the case of a nonparticipating manufacturer, the 
nonparticipating manufacturer affirms that the brand family 
is 
deemed 
to 
be 
the 
nonparticipating 
manufacturer's 
cigarettes for purposes of subchapter 3. 
Nothing in this subsection may be construed as limiting or 
otherwise affecting the State's right to maintain that a 
brand family constitutes cigarettes of a different tobacco 
product manufacturer for purposes of calculating payments 
under the Master Settlement Agreement or for purposes of 
subchapter 3. 
5. 
Maintain invoices. 
A tobacco product manufacturer of 
any cigarettes sold in this State shall maintain all invoices and 
documentation of sales and other information relied upon for 
certification for a period of 5 years unless otherwise required 
by law to maintain those invoices and documentation of sales and 
other information for a greater period of time. 
6. 
Directory of cigarettes. 
The Attorney General shall 
develop and make available for public inspection a directory 
listing all tobacco product manufacturers that have provided 
accurate certifications conforming to the requirements of this 
section 
and 
all 
brand 
families 
that 
are 
listed 
in 
the 
certifications. 
A. 
The Attorney General may not include or retain in the 
directory the name or brand families of any nonparticipating 
manufacturer 
that 
fails 
to 
provide 
the 
required 
certification or whose certification the Attorney General 
determines 
is 
not 
in 
compliance 
with 
subsection 
3, 
paragraphs 
A 
and 
B, 
unless 
the 
Attorney 
General 
has 
determined that the nonparticipating manufacturer is no 
longer in violation of subsection 3, paragraphs A and B. 
B. 
Neither a tobacco product manufacturer nor brand family 
may be included or retained in the directory if the Attorney 
General concludes that: 
(1) 
In the case of a nonparticipating manufacturer, 
all escrow payments required pursuant to subchapter 3 
for any period for any brand family, whether or not 
listed by the nonparticipating manufacturer, have not 
been fully deposited into 
a 
qualified escrow 
fund 
governed by an escrow agreement that has been approved 
by the Attorney General; or 
(2) 
All 
outstanding 
final 
judgments, 
including 
interest on the judgment, for violations of subchapter 
have not been fully satisfied for the brand family or 
the tobacco product manufacturer. 
C. 
The Attorney General shall update the directory as 
necessary in order to correct mistakes and to add or remove 
a tobacco product manufacturer or brand family to keep the 
directory 
in 
conformity 
with 
the 
requirements 
of 
this 
section. 
A determination by the Attorney General not to 
list or to remove 
from the directory a brand family or 
tobacco product manufacturer is a final agency action as 
defined in Title 5, section 8002. 
1. 
Prohibition against stamping or sale of cigarettes. 
It 
is unlawful for any person to affix a tax stamp to a package or 
other container of cigarettes of a tobacco product manufacturer 
or brand family not included in the directory or to distribute, 
sell or offer or possess for sale in this State cigarettes of a 
tobacco product manufacturer or brand family not included in the 
directory. 
A person who violates this subsection engages in an unfair and 
deceptive act in violation of the Maine Unfair Trade Practices 
Act. 
8. 
Agent for service of process. 
Any nonresident or 
foreign nonparticipating manufacturer that has not registered to 
do business in the State as a foreign corporation or business 
entity shall, as a condition precedent to having its brand 
families 
listed or 
retained 
in 
the 
directory, 
appoint 
and 
continually engage without interruption the services of an agent 
in this State for the service of process concerning or arising 
out of the enforcement of this section and subchapter 3. 
Such 
service constitutes legal and valid service of process on the 
nonparticipating manufacturer. The nonparticipating manufacturer 
shall provide the name, address, phone number and proof of the 
appointment and availability of the agent to the Attorney General. 
The nonparticipating manufacturer shall provide notice to the 
Attorney General 30 days prior to termination of the authority of 
an agent and shall further provide proof to the satisfaction of 
the Attorney General of the appointment of a new agent no less 
than 5 days prior to the termination of an existing agent 
appointment. 
In the event an agent terminates that agent IS 
appointment 
by 
the 
nonparticipating 
manufacturer, 
the 
nonparticipating manufacturer shall notify the Attorney General 
of the termination within 5 days and shall include proof to the 
satisfaction of the Attorney General of the appointment of a new 
agent. 
9. 
Reporting by distributors. 
No later than 20 days after 
the end of each calendar quarter and more 
frequently if so 
directed by the Attorney General, each distributor shall submit 
information 
as 
the 
Attorney 
General 
requires 
to 
facilitate 
compliance with this section, including, but not limited to, a 
list by brand family of the total number of cigarettes upon which 
the distributor affixed tax stamps during the previous calendar 
quarter or, in the case of roll-your-own tobacco, the equivalent 
stick count for which the distributor paid the tax due. 
The 
distributor shall maintain all invoices 
and documentation of 
sales of all nonparticipating manufacturer cigarettes and any 
other 
information relied 
upon 
in reporting to 
the 
Attorney 
General for a period of 5 years. 
10. 
Disclosure of information. 
Notwithstanding any other 
provision of law, the Department of Administrative and Financial 
Services, Bureau of Revenue Services is authorized to disclose to 
the Attorney General any tax information received by the Bureau 
of Revenue Services and requested by the Attorney General for 
purposes 
of 
determining 
compliance 
with 
and 
enforcing 
the 
provisions of this section. The Attorney General may share any 
information received under this section, other than information 
received from the Bureau of Revenue Services, with other federal, 
State or local agencies but only for purposes of enforcement of 
this section, subchapter 3 or corresponding laws of other states. 
11. 
Verification of qualified escrow fund. 
The Attorney 
General 
may 
require 
at 
any 
time 
that 
the 
nonparticipating 
manufacturer provide from the financial institution in which the 
nonparticipating manufacturer has established a qualified escrow 
fund for the purpose of compliance with subchapter 3 proof of the 
amount of money in the qualified escrow fund being held on behalf 
of the State, the dates of deposits and a listing of the amounts 
of all withdrawals from the fund and the dates of the withdrawals. 
12. 
Requests for additional information. 
The Attorney 
General may require a distributor or tobacco product manufacturer 
to submit any additional information, including, but not limited 
to, samples of the packaging or labeling of each brand family 
necessary to enable the Attorney General to determine whether a 
tobacco product manufacturer is in compliance with this section. 
13. 
Escrow 
installments. 
To promote compliance with the 
provisions of this section, the Attorney General may adopt rules 
requiring 
a 
tobacco 
product 
manufacturer 
subject 
to 
the 
requirements of subsection 3, paragraph A to make the required 
deposits in the qualified escrow fund in installments during the 
year in which the sales covered by the deposits are made. 
The 
Attorney General may require sufficient information to enable the 
Attorney General to determine the adequacy of the amount of the 
installment deposit. 
14. 
Rules. 
The Attorney General may adopt rules necessary 
to carry out the purposes of this section. 
Rules adopted 
pursuant to this section are routine technical rules as defined 
in Title 5, chapter 375, subchapter 2-A. 
15. 
Unlawful acts. 
It is unlawful for a person to: 
A. 
Sell or distribute cigarettes in violation of subsection 
7: or 
B. 
Acquire, hold, own, possess, transport, import or cause 
to be imported cigarettes that the person knows or should 
have known are intended for distribution or sale in the 
State in violation of subsection 7. 
16. 
Criminal penalty. 
A violation of this section is a 
Class E crime except that violation of this section is a Class D 
crime when the person has one or more prior convictions for 
violation of this section. 
For purposes of this subsection, the 
date of the prior conviction must precede the commission of the 
offense being enhanced by no more than 10 years. 
The date of 
conviction is deemed the date that sentence is imposed. 
Each stamp affixed and each offer to sell cigarettes in violation 
of subsection 7 constitutes a separate violation. 
17. 
Contraband: seizure. 
Cigarettes that have been sold, 
offered for sale or possessed for sale in this State in violation 
of subsection 7 are deemed contraband under Title 36, section 
4372-A and the cigarettes are subject to seizure and forfeiture 
as provided in section 4372-A. 
All cigarettes so seized and 
forfeited must be destroyed and may not be resold. 
18. 
Injunction. 
The 
Attorney 
General 
may 
seek 
an 
injunction to 
restrain 
a 
threatened or 
actual violation of 
subsection 7. 
or 12 
and to compel compliance with these 
subsections. 
• 
19. 
Recovery of costs. 
In any action brought by the State 
to enforce this section, the State is entitled to recover the 
costs of investigation, expert witness fees, costs of the action 
and reasonable attorney's fees. 
20. 
Profits. 
If a court determines that a person has 
violated this section, the court shall order any profits, gain, 
gross receipts or other benefit from the violation to be paid to 
the 
Fund 
for 
a 
Healthy Maine. 
Unless 
otherwise expressly 
provided, the remedies or penalties provided by this section are 
cumulative 
to 
each other 
and 
to 
the 
remedies 
or penalties 
available under all other laws of this State. 
21. 
Construction; severability. 
If a court of competent 
jurisdiction finds that the provisions of this section and of 
subchapter 
conflict, then the provisions of subchapter 
control. 
If any portion of this section causes subchapter 3 to 
no longer constitute a qualifying or model statute, as those 
terms are defined in the Master Settlement Agreement, then that 
portion of this section is not valid. 
Sec. 2. 
MRSA §4362-A, sub-§3, as amended by PL 2001, c. 
526, §3, is further amended to read: 
3. 
Expiration and reissuance. 
A distributor's license 
expires one year from the 30th day of June next succeeding the 
date of issuance unless sooner revoked by the assessor pursuant 
to subsection 5 or unless the business with respect to which the 
license was issued is sold, in either of which cases the holder 
of the license shall immediately surrender it to the assessor. 
A person may not be issued a distributor's license or granted a 
renewal of a license unless the person certifies in writing to 
the Attorney General that the person is in compliance with Title 
22, section l580-L. 
Sec. 3. 36 MRSA §4383, as enacted by PL 2001, c. 322, §l, is 
repealed. 
Sec. 4. 36 MRSA §4402, as amended by PL 2001, c. 526, §4, is 
further amended by adding at the end a new paragraph to read: 
A person may not be issued a license or granted a renewal of 
a license unless the person certifies in writing to the Attorney 
General that the person is in compliance with Title 22, section 
l580-L. 
Sec. 5. 
Initial certification due. 
Notwithstanding the Maine 
Revised Statutes, Title 22, section l580-L, subsections 2 and 3, 
the initial certification required by those sections must be 
filed by 
a 
tobacco 
product manufacturer 
days 
after the 
effective date of this Act. 
Sec. 6. Availability of directory. No later than 90 days after 
the effective date of this Act the Attorney General shall make 
available for public inspection the directory required by the 
Maine Revised Statutes, Title 22, section l580-L, subsection 6. 
SUMMARY 
This bill repeals the existing law governing cigarette 
distributor's responsibilities and enacts in its stead a 
new 
subchapter of law that creates a certification process for 
tobacco 
product 
manufacturers, 
a 
reporting 
requirement 
for 
tobacco product distributors and wholesalers and a directory of 
compliant tobacco product manufacturers. 
)