MISSISSIPPI LEGISLATURE

2000 Regular Session

To: Judiciary

By: Senator(s) Minor

AN ACT TO PROHIBIT THE SALE OR DISTRIBUTION IN THIS STATE, OR THE ACQUISITION, OWNING, POSSESSING OR TRANSPORTING FOR SALE OR DISTRIBUTION IN THIS STATE, ANY CIGARETTES IN A PACKAGE THAT INDICATES THEY WERE NOT MANUFACTURED TO BE SOLD IN THE UNITED STATES, DOES NOT COMPLY WITH REQUIREMENTS IMPOSED BY FEDERAL LAW ON THE PACKAGING OF CIGARETTES FOR SALE IN THE UNITED STATES OR DOES NOT COMPLY WITH FEDERAL TRADEMARK AND COPYRIGHT LAW; TO PROHIBIT THE SALE OF CIGARETTES IMPORTED INTO THE UNITED STATES IN VIOLATION OF FEDERAL LAW; TO PROHIBIT THE SALE OF ANY CIGARETTES THAT A PERSON KNOWS OR HAS REASON TO KNOW THE MANUFACTURER DID NOT INTEND TO BE SOLD, DISTRIBUTED OR USED IN THE UNITED STATES OR FOR WHICH THERE HAS NOT BEEN SUBMITTED TO THE U.S. DEPARTMENT OF HEALTH THE LIST OF INGREDIENTS ADDED TO THE TOBACCO IN THE MANUFACTURING PROCESS; TO PROHIBIT CERTAIN ALTERATION OF CIGARETTE PACKAGES; TO PROVIDE CRIMINAL AND CIVIL PENALTIES FOR VIOLATIONS OF THIS ACT; TO PROVIDE THAT ANY CIGARETTES IMPORTED INTO THE UNITED STATES FOR SALE OR DISTRIBUTION UNDER ANY TRADE NAME, TRADE DRESS OR TRADEMARK THAT IS THE SAME AS OR CONFUSINGLY SIMILAR TO ANY TRADE NAME, TRADE DRESS OR TRADEMARK USED FOR CIGARETTES MANUFACTURED IN THE UNITED STATES FOR SALE OR DISTRIBUTION IN THE UNITED STATES SHALL BE PRESUMED TO HAVE BEEN PURCHASED OUTSIDE THE ORDINARY CHANNELS OF TRADE; TO PROVIDE FOR THE ENFORCEMENT OF THIS ACT; TO AMEND SECTION 27-69-3, MISSISSIPPI CODE OF 1972, TO REQUIRE CIGARETTE TAX STAMPS TO IDENTIFY THE PERMITTEE WHO AFFIXED THE STAMP; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. As used in this act:

(a) "Commission" means the Mississippi State Tax Commission.

(b) "Cigarette" means any roll for smoking made wholly or in part of tobacco, irrespective of size or shape and whether such tobacco is flavored, adulterated or mixed with any other ingredient, the wrapper or cover of which is made of paper or any other substance or material except tobacco.

(c) "Person" means any individual, firm, association, agency, syndicate, the State of Mississippi, county, municipal corporation or other political subdivision of this state, receiver, trustee, fiduciary or trade association.

SECTION 2. It shall be unlawful for any person:

(a) To sell or distribute in this state or to acquire, hold, own, possess or transport, for sale or distribution in this state; or to import, or cause to be imported, into this state for sale or distribution in this state:

(i) Any cigarettes the package of which:

1. Bears any statement, label, stamp, sticker or notice indicating that the manufacturer did not intend the cigarettes to be sold, distributed or used in the United States, including, but not limited to, labels stating "For Export Only," "U.S. Tax-Exempt," "For Use Outside U.S." or similar wording; or

2. Does not comply with:

a. All requirements imposed by or pursuant to federal law regarding warnings and other information on packages of cigarettes manufactured, packaged or imported for sale, distribution or use in the United States, including, but not limited to, the precise warning labels specified in the Federal Cigarette Labeling and Advertising Act, 15 USCS 1333; and

b. All federal trademark and copyright laws;

(ii) Any cigarettes imported into the United States in violation of 26 USCS 5754 or any other federal law, or implementing federal regulations;

(iii) Any cigarettes that such person otherwise knows or has reason to know the manufacturer did not intend to be sold, distributed or used in the United States; or

(iv) Any cigarettes for which there has not been submitted to the Secretary of the United States Department of Health and Human Services the list or lists of the ingredients added to tobacco in the manufacture of such cigarettes required by the Federal Cigarette Labeling and Advertising Act, 15 USCS 1335a;

(b) To alter the package of any cigarettes, prior to sale or distribution to the ultimate consumer, so as to remove, conceal or obscure:

(i) Any statement, label, stamp, sticker or notice described in paragraph (a)(i)1 of this section;

(ii) Any health warning that is not specified in, or does not conform with the requirements of, the Federal Cigarette Labeling and Advertising Act, 15 USCS 1333; or

(c) To affix any stamp required pursuant to Chapter 69, Title 27, Mississippi Code of 1972, to the package of any cigarettes described in paragraph (a) of this section or altered in violation of paragraph (b) of this section.

SECTION 3. Any person who commits any of the acts prohibited by Section 2 of this act, either knowing or having reason to know he is doing so, shall be guilty of a felony, and upon conviction thereof shall be punished by a fine of not more than Five Thousand Dollars ($5,000.00) or imprisonment of not more than five (5) years, or both.

SECTION 4. (1) Upon finding a violation of this act or a regulation promulgated pursuant to this act, the commission may revoke or suspend the license or licenses of any permittee pursuant to the procedures set forth in Section 27-69-9 and may also impose on the permittee a civil penalty in an amount not to exceed the greater of five hundred percent (500%) of the retail value of the cigarettes involved or Five Thousand Dollars ($5,000.00).

(2) Cigarettes that are acquired, held, owned, possessed, transported in, imported into, or sold or distributed in this state in violation of this act shall be deemed contraband under Sections 27-69-53 through 27-69-57 and shall be subject to seizure and forfeiture as provided therein. Such cigarettes so seized and forfeited shall be destroyed. Such cigarettes shall be deemed contraband whether the violation of this act is knowing or otherwise.

SECTION 5. For purposes of Chapter 23, Title 75, Mississippi Code of 1972, cigarettes imported or reimported into the United States for sale or distribution under any trade name, trade dress or trademark that is the same as, or is confusingly similar to, any trade name, trade dress or trademark used for cigarettes manufactured in the United States for sale or distribution in the United States shall be presumed to have been purchased outside of the ordinary channels of trade.

SECTION 6. (1) This act shall be enforced by the Attorney General, local district attorneys and local county prosecuting attorneys. The authority enforcing this act may request the assistance of local law enforcement agencies, and local law enforcement agencies receiving a request for assistance in the enforcement of this act shall provide the necessary assistance.

(2) The commission may provide assistance to the enforcing authority, including, but not limited to, the providing of information to the enforcing authority. The commission and any enforcing authority may request information from each other and from any other state agency, local or federal agency, or permittee.

(3) In addition to any other remedy provided by law, any person may bring an action for appropriate injunctive or other equitable relief, actual damages, if any, sustained by reason of a violation of this act, interest, reasonable attorney's fees and court costs. For purposes of promoting enforcement of this act, information identifying which permittee affixed the tax stamp to a particular package of cigarettes shall be public information.

(4) If the trier of fact finds that the violation is egregious, it may increase recovery to an amount not in excess of three (3) times the actual damages sustained by reason of the violation.

SECTION 7. (1) This act shall not apply to:

(a) Cigarettes allowed to be imported or brought into the United States for personal use; and

(b) Cigarettes sold or intended to be sold as duty-free merchandise by a duty-free sales enterprise in accordance with the provisions of 19 USCS 1555(b) and any implementing regulations; provided, however, that this act shall apply to any such cigarettes that are brought back into the customs territory for resale within the customs territory.

(2) The penalties provided in this act are in addition to any other penalties imposed under other law.

SECTION 8. Section 27-69-3, Mississippi Code of 1972, is amended as follows:

27-69-3. When used in this chapter:

(a) * * * "State" means the State of Mississippi as geographically defined, and any and all waters under the jurisdiction of the State of Mississippi.

(b) * * * "State Auditor" means the Auditor of Public Accounts of the State of Mississippi, or his legally appointed deputy, clerk, or agent.

(c) * * * "Commissioner" means the Chairman of the State Tax Commission of the State of Mississippi, and his authorized agents and employees.

(d) * * * "Person" means any individual, company, corporation, partnership, association, joint venture, estate, trust, or any other group, or combination acting as a unit, and the plural as well as the singular, unless the intention to give a more limited meaning is disclosed by the context.

(e) * * * "Consumer" means a person who comes into possession of tobacco for the purpose of consuming it, giving it away, or disposing of it in any way by sale, barter or exchange.

(f) * * * "Tobacco" means any cigarettes, cigars, cheroots, stogies, smoking tobacco (including granulated, plug cut, crimp cut, ready rubbed, and other kinds and forms of tobacco, or substitutes therefor, prepared in such manner as to be suitable for smoking in a pipe or cigarette) and including plug and twist chewing tobacco and snuff, when such "tobacco" is manufactured and prepared for sale or personal consumption. All words used herein shall be given the meaning as defined in the regulations of the Treasury Department of the United States of America.

(g) * * * "First sale" means and includes the first sale, or distribution of such tobacco in intrastate commerce, or the first use or consumption of such tobacco within this state.

(h) * * * "Drop shipment" means and includes any delivery of tobacco received by any person within this state, when payment for such tobacco is made to the shipper, or seller by or through a person other than a consignee.

(i) * * * "Distributor" includes every person, except retailers as defined herein, in the state who manufactures or produces tobacco or who ships, transports, or imports into this state, or in any manner acquires or possesses tobacco, and makes a first sale of the same in the state.

(j) * * * "Wholesaler" includes dealers, whose principal business is that of a wholesale dealer or jobber, who is known to the retail trade as such, and whose place of business is located in Mississippi or in a state which affords reciprocity to wholesalers domiciled in Mississippi, who shall sell any taxable tobacco to retail dealers only for the purpose of resale.

(k) * * * "Retailer" includes every person, other than a wholesale dealer, as defined above, whose principal business is that of selling merchandise at retail, who shall sell, or offer for sale tobacco to the consumer. The sale of tobacco in quantity lots by retailers to other retailers, transient vendors, or other persons, shall not be construed as wholesale and shall not qualify such retailer for a permit as a wholesaler.

(l) * * * "Dealer" includes every person, firm, corporation or association of persons, except retailers as defined herein, who manufacture tobacco for distribution, for sale, for use or for consumption in the State of Mississippi.

The word "dealer" is further defined to mean any person, firm, corporation or association of persons, except retailers as defined herein, who imports tobacco from any state or foreign country for distribution, sale, use, or consumption in the State of Mississippi.

(m) * * * "Distributing agent" includes every person in the state who acts as an agent of any person outside the State of Mississippi, by receiving tobacco in interstate commerce, and storing such tobacco in this state subject to distribution, or delivery upon order from said person outside the state to distributors, wholesalers, retailers and dealers.

(n) * * * "Transient vendor" means and includes every person commonly and generally termed "peddlers" and every person acting for himself, or as an agent, employee, salesman, or in any capacity for another, whether as owner, bailee, or other custodian of tobacco, and going from person to person, dealer to dealer, house to house, or place to place, and selling or offering for sale at retail or wholesale tobacco, and every person who does not keep a regular place of business open at all times in regular hours, and every person who goes from person to person, dealer to dealer, house to house, or place to place, and sells or offers for sale tobacco which he carries with him, and who delivers the same at the time of, or immediately after the sale, or without returning to the place of business operations (a permanent place of business within the state) between the taking of the order and the delivery of the tobacco, or

All persons who go from person to person, house to house, place to place, or dealer to dealer, soliciting orders by exhibiting samples, or taking orders, and thereafter making delivery of tobacco, or filling the order without carrying or sending the order to the permanent place of business, and thereafter making delivery of the tobacco pursuant to the terms of the order, or

All persons who go from person to person, place to place, house to house, or dealer to dealer, carrying samples and selling tobacco from samples, and afterwards making delivery without taking and sending an order therefor to a permanent place of business for the filling of the order, and delivery of the tobacco, or the exchange of tobacco having become damaged or unsalable, or the purchase by tobacco of advertising space, or

All persons who have in their possession, or under their control, any tobacco offered, or to be offered for sale or to be delivered, unless the sale or delivery thereof is to be made in pursuance of a bona fide order for the tobacco, to be sold or delivered, said order to be evidenced by an invoice or memorandum.

(o) * * * "Contraband tobacco" means all tobacco found in the possession of any person whose permit to engage in dealing in tobacco has been revoked by the commissioner; and any cigarettes found in the possession of any person to which the proper tax stamps have not been affixed; and any cigarettes improperly stamped when found in the possession of any person; and all other tobacco upon which the excise tax has not been paid.

(p) * * * "Sale" means an exchange for money or goods, giving away, or distributing any tobacco as defined in this chapter.

(q) * * * "Forty-eight (48) hours" and "seventy-two (72) hours" means two (2) calendar days and three (3) calendar days, respectively, excluding Sundays and legal holidays.

(r) * * * "Stamp" or "stamping," or the import of such word, when used in this chapter, means any manner of stamp or impression permitted by the commissioner that carries out the purposes of the chapter in clearly indicating upon the packages of cigarettes taxed the due payment of the tax and clearly identifying, by serial number or otherwise, the permittee who affixed the stamp to the particular package.

(s) "Manufacturer's list price" means the full sales price at which tobacco is sold or offered for sale by a manufacturer to the wholesaler or distributor in this state without any deduction for freight, trade discount, cash discounts, special discounts or deals, cash rebates, or any other reduction from the regular selling price. In the event freight charges on shipments to wholesalers or distributors are not paid by the manufacturer, then such freight charges required to be paid by the wholesalers and distributors shall be added to the amount paid to the manufacturer in order to determine "manufacturer's list price." In the case of a wholesaler or distributor whose place of business is located outside this state, the "manufacturer's list price" for tobacco sold in this state by such wholesaler or distributor shall in all cases be considered to be the same as that of a wholesaler or distributor located within this state.

SECTION 9. The provisions of Sections 1 through 7 of this act shall be codified as a new article in Chapter 23, Title 75, Mississippi Code of 1972.

SECTION 10. Sections 1 through 7 of this act shall take effect and be in force from and after passage; Section 8 of this act shall take effect and be in force from and after July 1, 2001.