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H0046......................................................by STATE AFFAIRS
MASTER SETTLEMENT AGREEMENT - Amends existing law to provide that for an
unstamped "roll-your-own" tobacco container, each nine one-hundredths ounce
of "roll-your-own" tobacco shall equal one unit sold for purposes of the
Idaho Tobacco Master Settlement Agreement.
01/25 House intro - 1st rdg - to printing
01/26 Rpt prt - to St Aff
02/03 Rpt out - rec d/p - to 2nd rdg
02/04 2nd rdg - to 3rd rdg
02/07 3rd rdg - PASSED - 64-2-4
AYES -- Anderson, Andrus, Barraclough, Bastian, Bayer, Bell, Bilbao,
Black, Block, Boe, Cannon, Chadderdon, Clark, Collins, Crow, Deal,
Denney, Edmunson, Ellsworth, Eskridge, Field(18), Field(23), Garrett,
Hart, Harwood, Henbest, Henderson, Jaquet, Jones, Kemp, Lake,
LeFavour, Loertscher, Martinez, Mathews, McGeachin, Miller, Mitchell,
Nielsen, Nonini, Pasley-Stuart, Pence, Raybould, Ring, Ringo,
Roberts, Rusche, Rydalch, Sali, Sayler, Schaefer, Shepherd(2),
Shepherd(8), Shirley, Skippen, Smith(30), Smith(24), Smylie,
Snodgrass, Stevenson, Trail, Wills, Wood, Mr. Speaker
NAYS -- Barrett, McKague
Absent and excused -- Bedke, Bolz, Bradford, Moyle
Floor Sponsor - Ring
Title apvd - to Senate
02/08 Senate intro - 1st rdg - to St Aff
02/23 Rpt out - rec d/p - to 2nd rdg
02/24 2nd rdg - to 3rd rdg
03/01 3rd rdg - PASSED - 31-0-4
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett,
Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough, Langhorst,
Little, Lodge, Malepeai, Marley, McGee, McKenzie, Noble, Schroeder,
Stegner, Werk, Williams
NAYS -- None
Absent and excused -- Pearce, Richardson, Stennett, Sweet
Floor Sponsor - Darrington
Title apvd - to House
03/02 To enrol
03/03 Rpt enrol - Sp signed
03/04 Pres signed
03/07 To Governor
03/11 Governor signed
Session Law Chapter 39
Effective: 07/01/05
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature First Regular Session - 2005
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 46
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO THE IDAHO TOBACCO MASTER SETTLEMENT AGREEMENT ACT; AMENDING SEC-
3 TION 39-7802, IDAHO CODE, TO FURTHER DEFINE THE TERM "UNITS SOLD" AND TO
4 MAKE A TECHNICAL CORRECTION.
5 Be It Enacted by the Legislature of the State of Idaho:
6 SECTION 1. That Section 39-7802, Idaho Code, be, and the same is hereby
7 amended to read as follows:
8 39-7802. DEFINITIONS. (a) "Adjusted for inflation" means increased in
9 accordance with the formula for inflation adjustment set forth in Exhibit C to
10 the Master Settlement Agreement.
11 (b) "Affiliate" means a person who directly or indirectly owns or con-
12 trols, is owned or controlled by, or is under common ownership or control
13 with, another person. Solely for purposes of this definition, the terms
14 "owns," "is owned" and "ownership" mean ownership of an equity interest, or
15 the equivalent thereof, of ten percent (10%) or more, and the term "person"
16 means an individual, partnership, committee, association, corporation or any
17 other organization or group of persons.
18 (c) "Allocable share" means allocable share as that term is defined in
19 the Master Settlement Agreement.
20 (d) "Cigarette" means any product that contains nicotine, is intended to
21 be burned or heated under ordinary conditions of use, and consists of or con-
22 tains: (1) any roll of tobacco wrapped in paper or in any substance not con-
23 taining tobacco; or (2) tobacco, in any form, that is functional in the prod-
24 uct, which, because of its appearance, the type of tobacco used in the filler,
25 or its packaging and labeling, is likely to be offered to, or purchased by,
26 consumers as a cigarette; or (3) any roll of tobacco wrapped in any substance
27 containing tobacco which, because of its appearance, the type of tobacco used
28 in the filler, or its packaging and labeling, is likely to be offered to, or
29 purchased by, consumers as a cigarette described in clause (1) of this defini-
30 tion. The term "cigarette" includes "roll-your-own" (i.e., any tobacco which,
31 because of its appearance, type, packaging, or labeling is suitable for use
32 and likely to be offered to, or purchased by, consumers as tobacco for making
33 cigarettes). For purposes of this definition of "cigarette," nine one-hun-
34 dredths (0.09) ounces of "roll-your-own" tobacco shall constitute one (1)
35 individual "cigarette."
36 (e) "Master Settlement Agreement" means the settlement agreement (and
37 related documents) entered into on November 23, 1998, by the state and leading
38 United States tobacco product manufacturers.
39 (f) "Qualified escrow fund" means an escrow arrangement with a federally
40 or state-chartered financial institution having no affiliation with any
41 tobacco product manufacturer and having assets of at least one billion dollars
42 ($1,000,000,000) where such arrangement requires that such financial institu-
43 tion hold the escrowed funds' principal for the benefit of releasing parties
2
1 and prohibits the tobacco product manufacturer placing the funds into escrow
2 from using, accessing or directing the use of the funds' principal except as
3 consistent with section 39-7803, Idaho Code.
4 (g) "Released claims" means released claims as that term is defined in
5 the Master Settlement Agreement.
6 (h) "Releasing parties" means releasing parties as that term is defined
7 in the Master Settlement Agreement.
8 (i) "Tobacco product manufacturer" means an entity that after the date of
9 enactment of this act directly (and not exclusively through any affiliate):
10 (1) Manufactures cigarettes anywhere that such manufacturer intends to be
11 sold in the United States, including cigarettes intended to be sold in the
12 United States through an importer (except where such importer is an origi-
13 nal participating manufacturer (as that term is defined in the Master Set-
14 tlement Agreement) that will be responsible for the payments under the
15 Master Settlement Agreement with respect to such cigarettes as a result of
16 the provisions of subsections II(mm) of the Master Settlement Agreement
17 and that pays the taxes specified in subsection II(z) of the Master Set-
18 tlement Agreement, and provided that the manufacturer of such cigarettes
19 does not market or advertise such cigarettes in the United States);
20 (2) Is the first purchaser anywhere for resale in the United States of
21 cigarettes manufactured anywhere that the manufacturer does not intend to
22 be sold in the United States; or
23 (3) Becomes a successor of an entity described in paragraph (1) or (2) of
24 this subsection.
25 The term "tobacco product manufacturer" shall not include an affiliate of a
26 tobacco product manufacturer unless such affiliate itself falls within any of
27 paragraphs (1) through (3) of this subsection.
28 (j) "Units sold" means the number of individual cigarettes sold in the
29 state by the applicable tobacco product manufacturer (whether directly or
30 through a distributor, retailer or similar intermediary or intermediaries)
31 during the year in question, as measured by excise taxes collected by the
32 state on packs (or "roll-your-own" tobacco containers) bearing the excise tax
33 stamp of the state or on unstamped "roll-your-own" tobacco containers, with
34 each nine one-hundredths (0.09) ounces of "roll-your-own" tobacco equaling one
35 (1) unit sold. The state tax commission shall promulgate such rules as are
36 necessary to ascertain the amount of state excise tax paid on the cigarettes
37 of such tobacco product manufacturer for each year.
STATEMENT OF PURPOSE
RS 14537
This proposed legislation clarifies that .09 ounces of "roll-your-
own" tobacco ("RYO") is a "unit sold" under Idaho's Tobacco Master
Settlement Agreement Act ("the Act"). The Act requires tobacco
product manufacturers that have not joined what is called the
Master Settlement Agreement ("MSA") to establish an escrow account
and make deposits into escrow based upon their "units sold" in
Idaho. (The MSA being referred to is the settlement that was
entered into on November 23, 1998 between the State and leading
United States tobacco product manufacturers). The Act defines
"units sold," in part, as the number of cigarettes sold in Idaho
"as measured by excise taxes collected by the state on packs (or
'roll-your-own' tobacco containers) bearing the excise tax stamp of
the state." Idaho Code 39-7802(j) (emphasis added).
A number of tobacco product manufacturers that have not joined the
MSA argue that no escrow needs to be deposited for RYO sold in
Idaho because it is not a "unit sold." They contend that because
Idaho taxes RYO differently from cigarettes and does not require an
excise tax stamp to be affixed to RYO containers, it is not a "unit
sold." The result is that some manufacturers that have not joined
the MSA are not depositing into escrow based upon sales of RYO in
Idaho. This directly undercuts the purposes for which the Act was
passed in 1999 and puts tobacco product manufacturers that have
joined the MSA at an unfair disadvantage, because they are paying
the State based upon sales of RYO sold in Idaho.
FISCAL NOTE
There is no fiscal impact to the general fund.
Contact
Name: Brett DeLange, Office of the Attorney General
Phone: 208-334-4114
Name: William von Tagen, Office of the Attorney General
Phone: 208-334-4140
STATEMENT OF PURPOSE/FISCAL NOTE H 46