STAND. COM. REP. 1002

Honolulu, Hawaii

, 2003

RE: S.B. No. 1267

H.D. 1

 

 

 

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred S.B. No. 1267 entitled:

"A BILL FOR AN ACT RELATING TO TOBACCO,"

begs leave to report as follows:

The purpose of this bill is to:

(1) Improve the State's ability to collect settlement moneys under the tobacco master settlement agreement (MSA), by increasing the ability of the Department of the Attorney General (AG) to diligently enforce chapter 675, Hawaii Revised Statutes (HRS); and

(2) Improve the ability of the AG to enforce the cigarette tax stamping and the "gray market," or export and foreign cigarette provisions of chapter 245, HRS.

The AG submitted testimony in support of this bill and offered amendments.

Your Committee recognizes that continued and enhanced monitoring, enforcement, and diligent administration of the MSA and of tax stamping, gray market, and tobacco reporting requirements under state law, are necessary to curb the sale of contraband cigarettes and ensure that Hawaii's fair share of the MSA settlement each year is not jeopardized.

Furthermore, your Committee finds that chapter 675, HRS, applies to tobacco companies who did not sign the MSA and refused to participate in settlement payments to the states. The chapter requires these nonsignatories to pay a fraction of moneys from their cigarette sales into a contingency fund from which the State would satisfy any judgment against the company in the event the State elects to litigate against it. MSA requires states to diligently enforce statutes like chapter 675, and failure to do so may have an adverse effect on the amount of settlement dollars a state receives in any year – payments which will likely be made for decades into the future.

This bill provides the AG with a strong mechanism for enforcement of chapter 675. It makes compliance with chapter 675 a prerequisite for nonsignatory companies to place tax stamps on their cigarettes, and thus, to legally sell their products in Hawaii.

It is also anticipated that this bill will allow the State to collect a higher percentage of revenues from the stamp tax, which will be paid into the state general fund.

Your Committee notes that this bill is not intended to amend chapter 675 or affect MSA.

Your Committee has amended this bill by replacing its contents with the contents of a similar bill, H.B. No. 1114

H.D. 1. As amended, the bill differs from S.B. No. 1267 in that:

(1) Instead of adding the terms "receive" and "acquire" to the definition of "distribute," the terms "possess, keep, store, hold, own, acquire, receive, retain, transport, import, cause to be imported," and "offer to sell," or variations thereof, are added to the activities that are unlawful with regard to export and foreign cigarettes, to clarify that one who receives or acquires these tobacco products at the end of the distribution chain falls within the prohibited conduct known as distribution; and

(2) Technical, nonsubstantive changes have been made for purposes of clarity and style.

 

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1267, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1267, H.D. 1, and be referred to the Committee on Judiciary.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection and Commerce,

 

____________________________

KENNETH T. HIRAKI, Chair