REPORT TITLE:
Cigarette Stamp Tax


DESCRIPTION:
Provides that the excise tax on cigarettes shall be imposed and
collected through the use of stamps purchased by licensees, and
affixed to cigarette packages.  Includes provisions for civil and
criminal penalties, and for forfeitures of cigarettes, to be
enforced by the police departments, liquor commissions, the
attorney general, and prosecuting attorneys.  Requires the
Director of Taxation to submit findings and recommendations to
the legislature for the 2006 Session on effectiveness of Act.
(HB2961 HD1)


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2961
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO TOBACCO.



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

 1                              Part I
 
 2      SECTION 1.  Chapter 245, Hawaii Revised Statutes, is amended
 
 3 by adding 2 new parts to be appropriately designated and to read
 
 4 as follows:
 
 5                 "PART   STAMPING OF CIGARETTES
 
 6      245-A  Payment of tax through use of stamps.(a)  The tax
 
 7 imposed under section 245-3 upon the sale or use of cigarettes
 
 8 shall be paid by licensees through the use of stamps.
 
 9      (b)  The department shall furnish stamps for sale.
 
10      245-B  Sales through financial institutions; rules.  The
 
11 department may enter into agreements to permit the sale of stamps
 
12 by designated financial institutions located within the State.  A
 
13 list of financial institutions designated to sell stamps shall be
 
14 made available at the department.  The department may adopt rules
 
15 as necessary for this purpose pursuant to chapter 91.
 
16      245-C  Designs, specifications, and denominations of
 
17 stamps; affixation; cancellation.  Stamps shall be of such
 
18 designs, specifications, and denominations as may be prescribed
 
19 by the department; provided that these agreements shall be exempt
 
20 from the requirements of chapter 103D.  The department shall
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 adopt rules pursuant to chapter 91, on the method and manner in
 
 2 which stamps are to be affixed to packages of cigarettes, and may
 
 3 provide for the cancellation of stamps.
 
 4      245-D  Affixation prior to distribution.(a)  Beginning
 
 5 December 15, 2000, a licensee, or designee of a licensee, as
 
 6 provided in chapters 245 and 281, may apply to the department for
 
 7 stamps. 
 
 8      (b)  Beginning January 1, 2001, a licensee or the authorized
 
 9 agent or designee of a licensee, shall affix a stamp to the
 
10 bottom of each individual package of cigarettes, prior to
 
11 distribution.
 
12      (c)  Beginning April 1, 2001, no individual package of
 
13 cigarettes may be sold or offered for sale to the general public,
 
14 unless affixed with the stamp required under this part.
 
15      (d)  Beginning April 1, 2001, no cigarette package may be
 
16 placed or stored in a vending machine, unless affixed with the
 
17 stamp required under this part.
 
18      245-E  Approval of department required for transfer of
 
19 stamps.  Unaffixed stamps shall not be sold, exchanged, or in any
 
20 manner transferred by a licensee to another person without prior
 
21 written approval of the department.  Any person who violates this
 
22 section shall be fined not less than $500 and not more than
 
23 $1,000 for each violation.
 

 
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 1      245-F  Authority to order purchases for wholesaler or
 
 2 dealer; duration; revocation.  A licensee, in writing, shall
 
 3 authorize those persons who may order purchases of stamps for the
 
 4 licensee at a location where stamps are sold.  The authorization
 
 5 shall continue in effect until written notice of revocation of
 
 6 the authority is delivered at the sales location in the manner
 
 7 prescribed by rules adopted by the department pursuant to chapter
 
 8 91.
 
 9      245-G  Payment of tax without use of stamps in certain
 
10 transactions; rules.  The department may provide by rule pursuant
 
11 to chapter 91 that the tax imposed by this chapter with respect
 
12 to cigarettes may be paid without the use of stamps in connection
 
13 with a particular type of transaction.
 
14      245-H  Price; payment; deferred payment purchases.(a)
 
15 Stamps shall be sold to licensees at their denominated values,
 
16 plus a state stamp fee of .2 per cent of the denominated value of
 
17 the stamp to pay for the cost to the State of providing the
 
18 stamps; provided that the department may adopt rules, pursuant to
 
19 chapter 91, to modify the state stamp fee to reflect the actual
 
20 costs incurred by the State in providing the stamps.
 
21      (b)  Payment for stamps shall be made at the time of
 
22 purchase; provided that the department may adopt rules pursuant
 
23 to chapter 91 to permit a licensee to defer payments therefor as
 
24 provided for in section 245-I.
 

 
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 1      245-I  Application to fix maximum amount and time of
 
 2 deferred-payment purchases; bonding; designation of sales
 
 3 locations.(a)  A licensee may apply to the department to set
 
 4 the maximum amount of deferred-payment purchases of stamps that
 
 5 may remain unpaid by the licensee during the time specified under
 
 6 section 245-J.  Upon receipt of the application and any bond
 
 7 required pursuant to subsection (b), the department shall set the
 
 8 amount for deferred-payment purchases.
 
 9      (b)  The department may require that a licensee who submits
 
10 an application for deferred-payment purchases of stamps post a
 
11 bond in an amount of up to one hundred per cent of the maximum
 
12 amount of allowed deferred-payment purchases as a condition of
 
13 approval of the application by the department.
 
14      245-J  Time for payment of deferred-payment purchases;
 
15 manner of payment.  Amounts owing for stamps purchased on the
 
16 deferred-payment basis in any calendar month shall be due and
 
17 payable on or before the last day of the following calendar
 
18 month.  Payment shall be made by a remittance payable to the
 
19 department.
 
20      245-K  Suspension of privilege to purchase on deferred-
 
21 payment basis or reduction of amount of permissible purchases.
 
22 The department may suspend, without prior notice, a licensee's
 
23 privilege to purchase stamps on the deferred-payment basis, or
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 may reduce the amount of deferred-payment purchases allowed the
 
 2 licensee, if:
 
 3      (1)  The licensee fails to promptly pay for stamps when
 
 4           payment is due;
 
 5      (2)  The bond or bonds required of the licensee are
 
 6           canceled, become void, impaired, or unenforceable for
 
 7           any reason; or
 
 8      (3)  In the opinion of the department, collection of any
 
 9           amounts unpaid or due from the licensee under this
 
10           chapter is jeopardized.
 
11      245-L  Penalty for failure to make timely payment.  A
 
12 licensee who fails to pay any amount owing for the purchase of
 
13 stamps within the time required shall pay a penalty of ten per
 
14 cent of the amount due in addition to the amount due plus
 
15 interest at the rate specified in section 231-39, from the date
 
16 on which the amount became due and payable until the date of
 
17 payment.
 
18      245-M  Unused stamps.  The department shall adopt rules
 
19 pursuant to chapter 91 for a refund or credit to a licensee in
 
20 the amount of the denominated values of any unused stamps.
 
21      245-N  Cigarettes and tobacco products shipped outside the
 
22 State for sale or use outside the State; refund or credit of
 
23 taxes.(a)  The department shall adopt rules pursuant to chapter
 

 
Page 6                                                     2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 91 to provide a tobacco tax refund or credit to a licensee who
 
 2 has paid a tobacco tax on the distribution of cigarettes or
 
 3 tobacco products that are shipped to a point outside the State
 
 4 for subsequent sale or use outside the State.
 
 5      (b)  This part shall not apply to cigarettes or tobacco
 
 6 products that are distributed in this State to consumers and that
 
 7 are subsequently taken outside the State.
 
 8      245-O  Monthly report on distributions of cigarettes and
 
 9 tobacco products, and purchases of stamps.(a)  On or before the
 
10 last day of each month, every licensee shall file, on forms
 
11 prescribed by the department, a report of the licensee's
 
12 distributions of cigarettes and purchases of stamps during the
 
13 preceding month, and any other information that the department
 
14 may require to carry out this part.
 
15      (b)  On or before the last day of each month, every licensee
 
16 shall file, on forms prescribed by the department, a report of
 
17 the licensee's distributions of tobacco products and the
 
18 wholesale costs of tobacco products during the preceding month,
 
19 and any other information that the department may require to
 
20 carry out this part.
 
21      245-P  Counterfeiting stamps.  Any person who:
 
22      (1)  Falsely or fraudulently makes, forges, alters, reuses,
 
23           or counterfeits any stamp provided for or authorized
 
24           under this part;
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (2)  Causes any stamp to be falsely or fraudulently made,
 
 2           forged, altered, reused, or counterfeited; or
 
 3      (3)  Knowingly and wilfully utters, publishes, passes, or
 
 4           tenders as genuine, any false, forged, altered, reused,
 
 5           or counterfeited stamp,
 
 6 is guilty of a class B felony; provided the person shall be
 
 7 subject to:  imprisonment for not less than one year and not more
 
 8 than ten years; a maximum fine of $50,000; or both.
 
 9      245-Q  Sale or purchase of packages of cigarettes without
 
10 stamps; fines and penalties.(a)  Beginning April 1, 2001, a
 
11 person who knowingly possesses, keeps, stores, acquires,
 
12 transports, or retains for the purpose of sale, or sells or
 
13 offers to sell, three thousand or more cigarettes with an
 
14 aggregate wholesale price of $250 or more, to which there are not
 
15 affixed the stamps required under this part, regardless of the
 
16 source of, or method of obtaining the cigarettes, is guilty of a
 
17 class C felony; provided that:
 
18      (1)  The person shall be subject to:
 
19           (A)  Imprisonment for not less than one year and not
 
20                more than five years;
 
21           (B)  A maximum fine of not more than $10,000; or
 
22           (C)  Both; and
 
23      (2)  A corporation shall be fined not more than $50,000.
 

 
Page 8                                                     2961
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 1      (b)  Beginning April 1, 2001, a person who knowingly
 
 2 possesses, keeps, stores, acquires, transports, or retains for
 
 3 the purpose of sale, or sells or offers to sell, one thousand two
 
 4 hundred or more, but not more than two thousand nine hundred
 
 5 ninety-nine, cigarettes with an aggregate wholesale value of $100
 
 6 or more, but less than $250, to which there are not affixed the
 
 7 stamps required under this part, regardless of the source of, or
 
 8 method of obtaining the cigarettes, is guilty of a misdemeanor;
 
 9 provided that:
 
10      (1)  The person shall be subject to:
 
11           (A)  Imprisonment for not more than one year;
 
12           (B)  A maximum fine of not more than $5,000; or
 
13           (C)  Both; and
 
14      (2)  A corporation shall be fined not more than $25,000.
 
15      (c)  Beginning April 1, 2001, a person who knowingly
 
16 violates a provision of this part for which a criminal punishment
 
17 is not otherwise provided is guilty of a misdemeanor.
 
18      245-R  Vending unstamped cigarettes; offense; punishment.
 
19 Beginning April 1, 2001, a person in possession or control of, or
 
20 having access to, a cigarette vending machine, who knowingly or
 
21 wilfully places for sale in the vending machine any cigarettes
 
22 not contained in packages to which are affixed Hawaii tax stamps,
 
23 shall be guilty of a class C felony; provided that:
 

 
Page 9                                                     2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (1)  The person shall be subject to:
 
 2           (A)  Imprisonment of not less than one year and not
 
 3                more than ten years;
 
 4           (B)  A maximum fine of not more than $10,000; or
 
 5           (C)  Both; and
 
 6      (2)  A corporation shall be fined not more than $50,000.
 
 7      245-S  Treatment of unstamped cigarettes.  Beginning
 
 8 April 1, 2001, all persons in possession or control of unstamped
 
 9 cigarettes shall destroy the unstamped cigarettes or return the
 
10 unstamped cigarettes to the manufacturers.  Failure to comply may
 
11 subject persons in possession or control of unstamped cigarettes
 
12 to the criminal penalties and administrative fines provided for
 
13 in sections 245-Q, 245-R, 245-U, 245-V, 245-W, and 245-X.
 
14      245-T  Enforcement; injunction; disposition of fines.(a)
 
15 Enforcement of this part shall be under the concurrent
 
16 jurisdiction of the attorney general, liquor commission,
 
17 prosecuting attorney, and police department.
 
18      (b)  Notwithstanding other remedies at law, the attorney
 
19 general or prosecuting attorney may apply for, and the court may
 
20 grant, a temporary or permanent injunction restraining any person
 
21 from violating or continuing to violate this part.  The
 
22 injunction shall be issued without bond.
 

 
 
 
Page 10                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (c)  Where a police department, working with either the
 
 2 attorney general or prosecuting attorney, initiates and conducts
 
 3 an investigation resulting in the imposition and collection of a
 
 4 criminal fine pursuant to this part, one hundred per cent of the
 
 5 fine shall be equally distributed between the police department
 
 6 whose officers or employees initiated and conducted the
 
 7 investigation, and either the office of the attorney general or
 
 8 of the prosecuting attorney, whichever obtained the underlying
 
 9 conviction.
 
10      245-U  Liquor commission hearing, counterfeiting stamps,
 
11 or selling, purchasing, or vending unstamped cigarettes.(a)
 
12 The liquor commission or liquor control adjudication board may
 
13 assess and collect a fine against, or reprimand any person who
 
14 counterfeits Hawaii tax stamps, or sells, purchases, or vends
 
15 unstamped cigarettes in violation of this part or of any rule
 
16 applicable thereto.  Any reprimand or fine imposed by the
 
17 commission or board pursuant to this section shall be in addition
 
18 to any other fine that may be imposed by law.  The fine assessed
 
19 and collected pursuant to this section shall not exceed the sum
 
20 of $2,000 for each violation.
 
21      (b)  In every case where proceedings under this section in
 
22 which a fine may be imposed are conducted, the person subject to
 
23 those proceedings shall be entitled to notice and hearing in
 

 
Page 11                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 conformity with chapter 91.  The person shall be entitled to be
 
 2 heard in person or through counsel, and shall be given a full and
 
 3 fair opportunity to present facts showing that the alleged cause
 
 4 or causes for the proposed action do not exist, or to show any
 
 5 other reason why no fine should be imposed.  Testimony taken at
 
 6 the hearing shall be under oath and recorded stenographically, or
 
 7 by machine.  The parties shall not be bound by strict rules of
 
 8 evidence.  At the request of the person subject to the
 
 9 proceedings, certified copies of any transcript and of any other
 
10 record made of, or at the hearing, shall be provided upon payment
 
11 by the requester of the costs of providing the certified copies.
 
12      (c)  The notice required by this section shall be served in
 
13 the following manner:
 
14      (1)  Written notice of the violation shall be given to the
 
15           person charged with the violation within a reasonable
 
16           period of time after the alleged violation is
 
17           discovered, and the person charged shall be requested
 
18           to acknowledge receipt of the notice;
 
19      (2)  If the person charged cannot be found after diligent
 
20           search, notice may be served by leaving a certified
 
21           copy of the written notice at the person's dwelling
 
22           house or usual place of abode with any person of
 
23           suitable age and discretion residing therein;
 

 
Page 12                                                    2961
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 1      (3)  If the person charged cannot be found after diligent
 
 2           search, and service cannot be made, then service may be
 
 3           made by mailing a certified copy of the written notice
 
 4           by way of the United States post office certified mail,
 
 5           postage prepaid, and addressed to the person at the
 
 6           person's last known residence address; and
 
 7      (4)  Where a partnership, corporation, unincorporated
 
 8           association, or limited liability company is charged,
 
 9           service may be made upon any partner, officer, or
 
10           member thereof.
 
11      245-V  Seizure and confiscation of unstamped cigarettes.
 
12 The attorney general, liquor commission, prosecuting attorney,
 
13 and the police department may seize and confiscate any cigarette,
 
14 package of cigarettes, or carton of cigarettes that is possessed,
 
15 kept, stored, acquired, transported, or retained for the purpose
 
16 of sale, or sold or offered for sale in violation of this part,
 
17 subject to the requirements of chapter 281.
 
18      245-W  Arrest; abetters.  The owner, keeper, and any person
 
19 having custody of any cigarette, package of cigarettes, or carton
 
20 of cigarettes seized as provided in section 245-V, may be
 
21 arrested without necessity of warrant and brought before the
 
22 district court of the circuit in which the seizure occurred.  If
 
23 the owner or keeper of the cigarette, package of cigarettes, or
 

 
Page 13                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 carton of cigarettes seized is unknown to the police officer
 
 2 making the seizure, or if no person is found in apparent
 
 3 possession or custody of them, the police officer may arrest and
 
 4 bring before the court the owner or occupant of the building,
 
 5 place, or premises, or the driver, operator, owner, or other
 
 6 person in charge of the conveyance in which the cigarette,
 
 7 package of cigarettes, or carton of cigarettes is found, if the
 
 8 person is known or can be ascertained.  Any person who has
 
 9 knowingly engaged in, aided, assisted, or abetted the obtaining,
 
10 keeping, or sale of any cigarette, package of cigarettes, or
 
11 carton of cigarettes seized as provided in section 245-V, or has
 
12 been privy thereto, or has knowingly permitted the use of any
 
13 place, building, premises, or conveyance for that unlawful
 
14 purpose, shall be guilty of a misdemeanor.
 
15      245-X  Forfeitures; disposition.(a)  Any cigarette,
 
16 package of cigarettes, or carton of cigarettes unlawfully
 
17 possessed, kept, stored, acquired, transported, or retained for
 
18 the purpose of sale, or sold or offered for sale, in violation of
 
19 this part or any federal law relating to the sale of tobacco
 
20 products, may be ordered forfeited pursuant to chapter 281 by an
 
21 appropriate administrative or judicial proceeding. 
 
22      (b)  Any cigarette, package of cigarettes, or carton of
 
23 cigarettes forfeited pursuant to this section shall be sold to a
 
24 licensed wholesaler or dealer.
 

 
Page 14                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (c)  All proceeds from the sale of any cigarette, package of
 
 2 cigarettes, or carton of cigarettes forfeited as provided in this
 
 3 section, after payment of expenses of administration and sale,
 
 4 shall be distributed equally between:
 
 5      (1)  Either the county police department or county liquor
 
 6           commission whose officers, investigators, or employees
 
 7           initiated and conducted an investigation resulting in
 
 8           the forfeiture and sale of cigarettes pursuant to this
 
 9           section; and
 
10      (2)  The attorney general or prosecuting attorney who
 
11           instituted the action producing the forfeiture.
 
12      (d)  Money distributed to the attorney general, liquor
 
13 commission, police department, or prosecuting attorney shall be
 
14 used for law enforcement purposes, and shall complement but not
 
15 supplant the funds regularly appropriated for those purposes.
 
16      245-Y  Appeals.  A claimant of a cigarette, package of
 
17 cigarettes, or carton of cigarettes forfeited pursuant to section
 
18 245-X, may appeal the forfeiture in the same manner as appeals
 
19 are allowed in other cases governed by chapter 281.  If the
 
20 claimant fails to appear, or to diligently prosecute the appeal,
 
21 or fails to secure a reversal of the judgment in the appellate
 
22 court, the judgment appealed from shall be carried out.
 

 
 
 
Page 15                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      245-Z  Claims.  If the owner or possessor of any cigarette,
 
 2 package of cigarettes, or carton of cigarettes seized under this
 
 3 part appears and makes claim to the item, the owner or possessor
 
 4 shall file with the court before whom the proceedings are
 
 5 pending, a claim in writing, setting forth the claimant's
 
 6 interest therein, and the reason why the items claimed should not
 
 7 be forfeited.  The claimant shall also give bond in favor of the
 
 8 State, sufficient in amount and sureties, as required by the
 
 9 court, and conditioned so that if the claim is diligently
 
10 prosecuted and decided against the claimant, the claimant shall
 
11 pay the costs of the proceedings conducted to resolve the claim.
 
12 If the judgment is against the claimant, the cigarette, package
 
13 of cigarettes, carton of cigarettes, and all containers thereof
 
14 shall be forfeited and shall be disposed of as provided in
 
15 section 245-X.
 
16      245-ZZ  Prosecutions not to exclude other remedies
 
17 affecting goods.  The criminal penalties and administrative fines
 
18 authorized under this part shall be in addition to any
 
19 forfeitures imposed pursuant to section 245-X.
 
20              PART    EXPORT AND FOREIGN CIGARETTES
 
21      245-AA  Sale of export cigarettes prohibited.  It shall be
 
22 unlawful for a person to sell or distribute in the State, or to
 
23 acquire, hold, own, possess, or transport for sale or
 

 
Page 16                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 distribution in the State, or to import or cause to be imported
 
 2 into the State for sale or distribution in the State any of the
 
 3 following:
 
 4      (1)  Cigarettes the package of which bears any statement,
 
 5           label, stamp, sticker, or notice indicating that the
 
 6           manufacturer did not intend the cigarettes to be sold,
 
 7           distributed, or used in the United States, including
 
 8           but not limited to labels stating "for export only",
 
 9           "U.S. tax-exempt", for "use outside U.S.", or similar
 
10           wording;
 
11      (2)  Cigarettes the package of which does not comply with
 
12           all requirements imposed by federal law regarding
 
13           warnings and other information on packages of
 
14           cigarettes manufactured, packaged, or imported for
 
15           sale, distribution, or use in the United States,
 
16           including but not limited to the specific warning
 
17           labels specified in the Federal Cigarette Labeling and
 
18           Advertising Act, 15 U.S.C. 1333;
 
19      (3)  Cigarettes the package of which does not comply with
 
20           all federal trademark and copyright laws;
 
21      (4)  Cigarettes imported into the United States on or after
 
22           January 1, 2000, in violation of 26 U.S.C. 5754 or any
 
23           other federal law or regulation;
 

 
Page 17                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (5)  Cigarettes that the person otherwise knows or has
 
 2           reason to know the manufacturer did not intend to be
 
 3           sold, distributed, or used in the United States; or
 
 4      (6)  Cigarettes for which there has not been submitted to
 
 5           the Secretary of the United States Department of Health
 
 6           and Human Services the list of the ingredients added to
 
 7           tobacco in the manufacture of such cigarettes required
 
 8           by the Federal Cigarette Labeling and Advertising Act,
 
 9           15 U.S.C. 1335a.
 
10      245-BB  Alteration of packaging prohibited.  It shall be
 
11 unlawful for any person to alter the package of any cigarettes,
 
12 prior to sale or distribution to remove, conceal, or obscure:
 
13      (1)  Any statement, label, stamp, sticker, or notice
 
14           indicating that the manufacturer did not intend the
 
15           cigarettes to be sold, distributed, or used in the
 
16           United States, including but not limited to labels
 
17           stating "for export only", "U.S. tax-exempt", "for use
 
18           outside U.S.", or similar wording; or
 
19      (2)  Any health warning that is not specified in or does not
 
20           conform with the requirements of the Federal Cigarette
 
21           Labeling and Advertising Act, 15 U.S.C. 1333.
 
22      245-CC  Affixing of cigarette tax stamps to export
 
23 cigarettes or altered packages prohibited.  It shall be unlawful
 

 
Page 18                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 for any person to affix any cigarette tax stamp required under
 
 2 this chapter to the package of any cigarettes described in
 
 3 section 245-AA or to any package altered in violation of section
 
 4 245-BB.
 
 5      245-DD  Documentation of foreign cigarettes.  On the first
 
 6 business day of each month, each person licensed to affix any
 
 7 cigarette tax stamp under this chapter shall file with the
 
 8 department of taxation all of the following for all cigarettes
 
 9 imported into the United States to which such person has affixed
 
10 a cigarette tax stamp in the preceding month:
 
11      (1)  A copy of a permit issued pursuant to the Internal
 
12           Revenue Code, 26 U.S.C. 5713, to the person importing
 
13           such cigarettes into the United States permitting the
 
14           person to import those cigarettes;
 
15      (2)  A copy of the United States Customs Service form
 
16           containing, with respect to such cigarettes, the
 
17           internal revenue tax information required by the United
 
18           States Bureau of Alcohol, Tobacco and Firearms;
 
19      (3)  A statement, signed by the person under penalty of
 
20           perjury, which shall be treated as confidential by the
 
21           department of taxation, and which shall be exempt from
 
22           disclosure under chapter 92F, identifying the brand and
 
23           brand styles of all such cigarettes, the quantity of
 

 
Page 19                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           each brand style of such cigarettes, the supplier of
 
 2           the cigarettes and the person or persons, if any, to
 
 3           whom the cigarettes have been conveyed for resale; and
 
 4      (4)  A statement, signed under penalty of perjury by an
 
 5           officer of the manufacturer or importer of such
 
 6           cigarettes, certifying that the manufacturer or
 
 7           importer has complied with:
 
 8           (A)  The package health warning and ingredient
 
 9                reporting requirements of the Federal Cigarette
 
10                Labeling and Advertising Act, 15 U.S.C. 1333 and
 
11                1335a, with respect to such cigarettes; and
 
12           (B)  Chapter 675, including a statement of whether the
 
13                manufacturer is or is not a participating
 
14                manufacturer within the meaning of section 675-3.
 
15      245-EE  Illegal sale or export of foreign cigarettes;
 
16 revocation or suspension of license; civil penalties.  The
 
17 director of taxation may revoke or suspend the license of any
 
18 licensee pursuant to rules adopted under chapter 91, and impose
 
19 on the licensee a civil penalty in an amount not to exceed the
 
20 greater of five times the retail value of the cigarettes involved
 
21 or $5,000, upon finding a violation by such licensee of this part
 
22 or any implementing rule prescribed by the director.
 

 
 
 
Page 20                                                    2961
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 1      245-FF  Criminal penalties for illegal sale or export of
 
 2 foreign cigarettes.  Any person who knowingly violates section
 
 3 245-AA, 245-BB, or 245-CC shall be guilty of a class C felony,
 
 4 and upon conviction thereof, shall be fined not more than
 
 5 $10,000, and may be imprisoned not less than one year and not
 
 6 more than five years, or both; provided that a corporation shall
 
 7 be fined not more than $50,000.
 
 8      245-GG  Confiscation and seizure of illegal sale or export
 
 9 of foreign cigarettes.  The attorney general and the police
 
10 departments of each of the counties may seize and confiscate any
 
11 cigarette, package of cigarettes, or carton of cigarettes which
 
12 is possessed, kept, stored, or retained for the purpose of sale,
 
13 or sold or offered for sale in violation of this part, subject to
 
14 the requirements of chapter 281.
 
15      245-HH  Forfeiture.  The forfeiture of any cigarette,
 
16 package of cigarettes, or carton of cigarettes unlawfully
 
17 possessed, or kept, stored, or retained for the purpose of sale,
 
18 or sold or offered for sale, in violation of this part, may be
 
19 enforced pursuant to chapter 712A by an appropriate
 
20 administrative or judicial proceeding.  Any cigarette, package of
 
21 cigarettes, or carton of cigarettes forfeited as provided in this
 
22 section shall be ordered destroyed.
 

 
 
 
Page 21                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      245-II  Unfair trade practices.  Any violation of this part
 
 2 shall constitute an unfair method of competition and unfair and
 
 3 deceptive acts or practices in the conduct of any trade of
 
 4 commerce under section 480-2 and shall be subject to a civil
 
 5 penalty as provided in section 480-3.1.  Each package of
 
 6 cigarettes sold in violation of this part shall constitute a
 
 7 separate violation.
 
 8      245-JJ  Deceptive cigarette sales.  The importation or
 
 9 reimportation of cigarettes into the United States for sale or
 
10 distribution under any trade name, trade dress, or trademark that
 
11 is the same as, or is confusingly similar to, any trade name,
 
12 trade dress, or trademark used for cigarettes manufactured in the
 
13 United States for sale or distribution in the United States shall
 
14 be deemed to violate section 481A-3.
 
15      245-KK  Enforcement.(a)  Enforcement of this part shall
 
16 be under the concurrent jurisdiction of the attorney general, the
 
17 prosecuting attorneys or deputy prosecuting attorneys of the
 
18 various counties, and the police departments of the various
 
19 counties.
 
20      (b)  In addition to any other remedy provided by law,
 
21 including enforcement as provided in subsection (a), any person
 
22 may bring an action for appropriate injunctive or other equitable
 
23 relief for a violation of this part and for damages sustained by
 

 
Page 22                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 the person, and, if the judgment is for the plaintiff, the
 
 2 plaintiff shall be awarded a sum not less than $1,000 or
 
 3 threefold damages by the plaintiff sustained, whichever sum is
 
 4 the greater, and reasonable attorneys fees together with the
 
 5 costs of suit.
 
 6      245-LL  Applicability.  This part shall not apply to:
 
 7      (1)  Cigarettes allowed to be imported or brought into the
 
 8           United States for personal use free of federal tax or
 
 9           duty or voluntarily abandoned to the U.S. Secretary of
 
10           Treasury at the time of entry; or
 
11      (2)  Cigarettes sold or intended to be sold as duty-free
 
12           merchandise by a duty-free sales enterprise in
 
13           accordance with the provisions of 19 U.S.C. 1555(b) and
 
14           any implementing regulations; provided, however, that
 
15           this part shall apply to any such cigarettes that are
 
16           brought back into the customs territory for resale
 
17           within the customs territory.
 
18      245-MM  Penalties cumulative.  The penalties provided in
 
19 this part are in addition to any other penalties imposed under
 
20 other law."
 
21      SECTION 2.  Sections 245-1 to 245-15, Hawaii Revised
 
22 Statutes, are designated as "PART I.  GENERAL PROVISIONS" of
 
23 chapter 245, Hawaii Revised Statutes.
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      SECTION 3.  Section 245-1, Hawaii Revised Statutes, is
 
 2 amended by adding nine new definitions to be appropriately
 
 3 inserted and to read as follows:
 
 4      ""Attorney general" means the attorney general or deputy
 
 5 attorneys general of the State.
 
 6      ""Importer" means "importer" as that term is defined in 26
 
 7 U.S.C. 5702(1).
 
 8      "Department" means the department of taxation.
 
 9      "License" means any license granted under this chapter.
 
10      "Licensee" means a holder of a license granted under this
 
11 chapter.
 
12      "Liquor commission" means the liquor commission of each of
 
13 the respective counties.
 
14      "Liquor control adjudication board" or "board" means a board
 
15 established by county charter, within a county, that shall have
 
16 the jurisdiction to hear and determine complaints or violations
 
17 of chapter 281 and to impose penalties as may be provided in
 
18 chapter 281.
 
19      "Package" means "package" as that term is defined in 15
 
20 U.S.C. 1332(4)."
 
21      "Police department" means the police department of each of
 
22 the respective counties.
 

 
 
 
Page 24                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      "Prosecuting attorney" means the prosecuting attorney or
 
 2 deputy prosecuting attorneys of each of the respective counties.
 
 3      "Stamp" means a stamp printed, manufactured, or made by
 
 4 authority of the department, as provided in this chapter, which
 
 5 is issued, sold, or circulated by the department, and by the use
 
 6 of which the tax levied under this chapter is paid.
 
 7      SECTION 4.  Section 245-3, Hawaii Revised Statutes, is
 
 8 amended by amending the title and subsection (a) to read as
 
 9 follows:
 
10      "245-3  Taxes[; limitations].(a)  Every licensee
 
11 wholesaler, or dealer, in addition to any other taxes provided by
 
12 law, shall pay for the privilege of conducting business and other
 
13 activities in the State an:
 
14      (1)  Excise tax equal to[:
 
15           (A)  4.00 cents for each cigarette sold, used, or
 
16                possessed by the wholesaler or dealer, after
 
17                August 31, 1997; and
 
18           (B)] 5.00 cents for each cigarette sold, used, or
 
19                possessed by a licensee, wholesaler, or dealer
 
20                after June 30, 1998,
 
21           whether or not sold at wholesale, or if not sold then
 
22           at the same rate upon the use by the licensee,
 
23           wholesaler, or dealer; and
 

 
Page 25                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (2)  Excise tax equal to forty per cent of the wholesale
 
 2           price of each article or item of tobacco products sold
 
 3           by the licensee, wholesaler, or dealer, whether or not
 
 4           sold at wholesale, or if not sold then at the same rate
 
 5           upon the use by the licensee, wholesaler, or dealer.
 
 6      Where the tax imposed has been paid on cigarettes or tobacco
 
 7 products which thereafter become the subject of a casualty loss
 
 8 deduction allowable under chapter 235, the tax paid shall be
 
 9 refunded or credited to the account of the licensee, wholesaler,
 
10 or dealer.  [In applying the tax, the tax shall be applied
 
11 against the latest of the activities of selling, using, or
 
12 possessing.  The tax shall be imposed at the time of the last of
 
13 the following activities to occur:  the sale; the use; or the
 
14 possession of cigarettes or tobacco products.] The tax shall be
 
15 applied to cigarettes through the use of stamps."
 
16      SECTION 5.  Section 245-5, Hawaii Revised Statutes, is
 
17 amended to read as follows:
 
18      "245-5  Returns.  Every licensee, wholesaler, or dealer, on
 
19 or before the last day of each month, shall file with the
 
20 department [of taxation] a return showing the cigarettes and
 
21 tobacco products sold, possessed, or used by the licensee,
 
22 wholesaler, or dealer during the preceding calendar month and of
 
23 the taxes chargeable against the taxpayer in accordance with this
 

 
Page 26                                                    2961
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 1 chapter.  The form of the return shall be prescribed by the
 
 2 department and shall [contain such information including a]
 
 3 include:
 
 4      (1)  A separate statement of the number and wholesale price
 
 5           of cigarettes[,];
 
 6      (2)  The amount of stamps purchased and used; [and the]
 
 7      (3)  The wholesale price of tobacco products, sold,
 
 8           possessed, or used[, as it]; and
 
 9      (4)  Any other information that the department may deem
 
10           necessary,
 
11 for the proper administration of this chapter."
 
12      SECTION 6.  Section 245-6, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "245-6  Payment of taxes; penalties.  At the time of the
 
15 filing of the return required under section 245-5 and within the
 
16 time prescribed therefor, each licensee, wholesaler, or dealer
 
17 shall pay to the department [of taxation] the taxes imposed by
 
18 this chapter, required to be shown by the return[.], including
 
19 the unpaid amount of taxes imposed by this chapter.
 
20      Penalties and interest shall be added to and become a part
 
21 of the taxes, when and as provided by section 231-39."
 
22      SECTION 7.  Section 245-8, Hawaii Revised Statutes, is
 
23 amended by amending subsection (a) to read as follows:
 

 
Page 27                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      "(a)  Every licensee, wholesaler, and dealer shall keep a
 
 2 record of [every]:
 
 3      (1)  Every sale or use of cigarettes and tobacco products by
 
 4           the licensee, wholesaler, or dealer[, the];
 
 5      (2)  The number and wholesale price of cigarettes[, and
 
 6           the];
 
 7      (3)  The wholesale price of tobacco products, sold,
 
 8           possessed, or used[, and of the];
 
 9      (4)  The taxes payable [thereon,] on tobacco products sold,
 
10           possessed, or used, if any[,]; and
 
11      (5)  The amounts of stamps purchased and used,
 
12 in such form as the department [of taxation] may prescribe.  The
 
13 records shall be offered for inspection and examination at any
 
14 time upon demand by the department and shall be preserved for a
 
15 period of five years, except that the department, in writing, may
 
16 consent to their destruction within the five-year period or may
 
17 require that they be kept longer.  The department, by rule, may
 
18 require the licensee, wholesaler, or dealer to keep such other
 
19 records as it may deem necessary for the proper enforcement of
 
20 this chapter."
 
21      SECTION 8.  Section 245-15, Hawaii Revised Statutes, is
 
22 amended to read as follows:
 

 
 
 
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 1      "245-15  Disposition of revenues.  All moneys collected
 
 2 pursuant to this chapter shall be paid into the state treasury as
 
 3 state realizations to be kept and accounted for as provided by
 
 4 law[.], except for the amounts designated by sections 245-T and
 
 5 245-X, for distribution to the liquor commission, the police
 
 6 department, the attorney general, or the prosecuting attorney."
 
 7                              Part II
 
 8      SECTION 9.  The use of tobacco products by Hawaii's youth
 
 9 represents a public health problem of significant magnitude and
 
10 concern.  The legislature finds that tobacco use by minors in
 
11 Hawaii is widespread and is increasing.  The present law
 
12 prohibiting the sale of tobacco products to minors is not
 
13 effective by itself in reducing illegal sales to minors.  Tobacco
 
14 industry advertising targets children in order to replace the
 
15 over eleven hundred Hawaii residents who die each year as a
 
16 result of tobacco-related illness.  Of today's smokers, ninety
 
17 per cent began their addictive habit before the age of eighteen.
 
18 The economic loss created by tobacco use in Hawaii represents an
 
19 ongoing and escalating financial burden borne by every business,
 
20 large and small, and every person, smoker and nonsmoker.  These
 
21 figures also represent a health and economic drain created by
 
22 each new generation of children that begins using tobacco
 
23 products and becomes addicted to nicotine.  The purposes of this
 

 
Page 29                                                    2961
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 1 part are to promote, protect, and preserve the health of Hawaii's
 
 2 children by:  
 
 3      (1)  Reducing youth access to tobacco products; 
 
 4      (2)  Reducing the illegal sale of tobacco products to
 
 5           minors; and 
 
 6      (3)  Increasing compliance with existing laws prohibiting
 
 7           the sale of tobacco products to minors.
 
 8      SECTION 10.  Chapter 281, Hawaii Revised Statutes, is
 
 9 amended by adding a new part to be appropriately designated as
 
10 follows:
 
11                  "PART   .    TOBACCO PRODUCTS 
 
12      281-A  Tobacco licenses, classes.(a)  A tobacco license
 
13 may be granted by the liquor commission as provided in this
 
14 section.  For purposes of this section, a tobacco license
 
15 authorizes the importation or sale of tobacco products as defined
 
16 in this chapter and chapter 245.
 
17      (b)  A class 1 wholesale tobacco dealer license for the sale
 
18 of tobacco at wholesale authorizes the licensee to import and
 
19 sell only to retail tobacco dealer licensees or others who are
 
20 authorized by law to resell, but are not required to hold a
 
21 license by law.  Nothing in this subsection shall prevent a
 
22 wholesaler from selling tobacco to post exchanges, ships' service
 
23 stores, Army or Navy officers' clubs, or like organizations
 

 
Page 30                                                    2961
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 1 located on Army or Navy reservations, or to any vessel performing
 
 2 a regular water transportation service between any two or more
 
 3 ports in the state.
 
 4      (c)  A class 2 retail tobacco dealer license authorizes the
 
 5 dealer to sell tobacco products at retail.  The retail tobacco
 
 6 dealer licensee shall be responsible for providing a training
 
 7 program to all employees that shall include training in the laws
 
 8 governing the sale of tobacco, methods for recognizing and
 
 9 handling underage customers, and procedures for proper
 
10 identification to verify that customers are not underage.
 
11      (d)  It shall be unlawful for any retail tobacco dealer
 
12 licensee to purchase or acquire tobacco from any person other
 
13 than a wholesale tobacco dealer licensed pursuant to this
 
14 chapter.  It shall be unlawful for any retail tobacco dealer to
 
15 offer or sell tobacco products from vending machines, except that
 
16 the sale of tobacco products from vending machines may be
 
17 permitted in an on-premises liquor licensed establishment
 
18 pursuant to section 328K-21.
 
19      281-B  Application; tobacco licenses.(a)  Every
 
20 application for a tobacco license or the renewal of a tobacco
 
21 license shall be in writing and signed by the applicant, by the
 
22 proper officer or officers of a corporation or unincorporated
 
23 association, or by a general partner of a partnership, or other
 

 
Page 31                                                    2961
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 1 official of a legal entity responsible for the application.  The
 
 2 application shall be addressed to the liquor commission and shall
 
 3 include:
 
 4      (1)  (A)  For an individual, the full name, age, and place
 
 5                of residence of the applicant;
 
 6           (B)  For a corporation or joint-stock company, its full
 
 7                name and the names of its officers and directors;
 
 8           (C)  For a partnership, the names, ages, and respective
 
 9                places of residence of all the partners; and
 
10           (D)  For any other association of individuals or other
 
11                legal entity, the names, ages, and respective
 
12                places of residence of its officers or members;
 
13      (2)  A particular description of the place or premises where
 
14           the proposed license is to be exercised, so that the
 
15           exact location and extent thereof may be clearly and
 
16           definitely determined therefrom; provided that if the
 
17           applicant has or intends to have more than one place of
 
18           business dealing with cigarettes or tobacco, a separate
 
19           application shall be made for each place of business;
 
20           and provided further that no application for a retail
 
21           tobacco dealer license shall be accepted from a person
 
22           who conducts business from a vehicle;
 
23      (3)  The class of license applied for; and
 

 
Page 32                                                    2961
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 1      (4)  Any other information pertinent to the subject matter
 
 2           that may be required by the rules of the commission.
 
 3      (b)  An application for a tobacco license may be granted
 
 4 without notice or hearing by the liquor commission pursuant to
 
 5 commission rules.  The license shall be posted on the premises of
 
 6 the place identified in the application in a conspicuous place
 
 7 for public viewing.
 
 8      (c)  A tobacco license shall be valid for a term beginning
 
 9 July 1 through June 30 of the following year and shall be subject
 
10 to renewal pursuant to commission rules; provided that no license
 
11 shall be transferable.
 
12      281-C  Prohibitions; tobacco licensee.(a)  At no time
 
13 under any circumstances shall any tobacco licensee or its
 
14 employees sell or furnish any tobacco to:
 
15      (1)  A minor; or
 
16      (2)  Any person over the age of eighteen for distribution to
 
17           or use by a minor.
 
18      (b)  Any person who violates this section or any rule
 
19 adopted by the commission pursuant to this part shall be guilty
 
20 of a violation for each separate offense.  Each occurrence of
 
21 violation shall constitute a separate offense.
 
22      281-D  Prohibitions involving minors, cigarettes, tobacco;
 
23 liquor commission; penalty.(a)  No minor shall purchase
 
24 cigarettes or tobacco.
 

 
Page 33                                                    2961
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 1      (b)  Subsection (a) shall not apply if a person under the
 
 2 age of eighteen, with parental authorization, is participating in
 
 3 a controlled purchase as part of a law enforcement activity or a
 
 4 study authorized by the department of health to determine the
 
 5 level of incidence of tobacco sales to minors.
 
 6      (c)  Only a government issued photo identification shall be
 
 7 considered as valid proof of age.
 
 8      (d)  No minor shall possess cigarettes or tobacco under a
 
 9 retail tobacco dealer's license except that custody of cigarettes
 
10 or tobacco by the minor may be permitted in the course of
 
11 delivery pursuant to the direction of the minor's employer
 
12 lawfully engaged in business necessitating the delivery.
 
13      (e)  No minor shall falsify any identification or use any
 
14 false identification or identification of another person or of a
 
15 fictitious person for the purpose of buying or attempting to buy
 
16 cigarettes or tobacco.
 
17      (f)  No minor shall be permitted to sell cigarettes or
 
18 tobacco.
 
19      (g)  A minor who violates this section shall be subject to
 
20 the jurisdiction of the liquor commission or board who shall be
 
21 authorized to issue citations to those persons for referral and
 
22 disposition by the family court.
 

 
 
 
Page 34                                                    2961
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 1      281-E  Prohibitions involving minors, cigarettes, tobacco;
 
 2 public places; penalty.  (a)  No person age eighteen or older
 
 3 shall purchase cigarettes or tobacco for use by, or offer or
 
 4 distribute cigarettes or tobacco to, a minor.
 
 5      (b)  Any person age eighteen or older who violates
 
 6 subsection (a) shall be guilty of a petty misdemeanor.
 
 7      281-F  Fines collected.(a)  One half of all the fines
 
 8 collected pursuant to this part shall be transferred to the
 
 9 liquor commission for the county in which the citation
 
10 originated.
 
11      (b)  The moneys transferred pursuant to subsection (a) shall
 
12 be allocated for the purpose of education and training of retail
 
13 tobacco merchants pursuant to section 281-17(4)."
 
14      SECTION 11.  Section 281-17, Hawaii Revised Statutes, is
 
15 amended to read as follows:
 
16      "281-17  Jurisdiction and powers.  The liquor commission,
 
17 within its own county, shall have the sole jurisdiction, power,
 
18 authority, and discretion, subject only to this chapter[:] and
 
19 chapter 245:
 
20      (1)  To grant, refuse, suspend, and revoke any licenses for
 
21           the manufacture, importation, and sale of liquors;
 
22      (2)  To take appropriate action against a person who,
 
23           directly or indirectly, manufactures or sells any
 

 
Page 35                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           liquor without being authorized pursuant to this
 
 2           chapter; provided that in counties which have
 
 3           established by charter a liquor control adjudication
 
 4           board, the board shall have the jurisdiction, power,
 
 5           authority, and discretion to hear and determine
 
 6           administrative complaints of the director regarding
 
 7           violations of the liquor laws of the State or of the
 
 8           rules of the liquor commission, and impose penalties
 
 9           [[]for[]] violations thereof as may be provided by law;
 
10      (3)  To take appropriate action against a person who
 
11           counterfeits stamps, or sells, purchases, or vends
 
12           unstamped cigarette packages in violation of chapter
 
13           245 or any rule thereof;
 
14     [(3)] (4)  To control, supervise, and regulate the
 
15           manufacture, importation, and sale of liquors by
 
16           investigation, enforcement, and education; provided
 
17           that any educational program shall be limited to
 
18           licensees and their employees and shall be financed
 
19           through the money collected from the assessment of
 
20           fines against licensees;
 
21     [(4)] (5)  From time to time to make, amend, and repeal such
 
22           rules, not inconsistent with this chapter, as in the
 
23           judgment of the commission seem appropriate for
 

 
Page 36                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           carrying out this chapter and for the efficient
 
 2           administration thereof, and the proper conduct of the
 
 3           business of all licensees, including every matter or
 
 4           thing required to be done or which may be done with the
 
 5           approval or consent or by order or under the direction
 
 6           or supervision of or as prescribed by the commission;
 
 7           which rules, when adopted as provided in chapter 91
 
 8           shall have the force and effect of law;
 
 9     [(5)] (6)  Subject to chapters 76 and 77, to appoint and
 
10           remove an administrator, who may also be appointed an
 
11           investigator and who shall be responsible for the
 
12           operations and activities of the staff.  The
 
13           administrator may hire and remove hearing officers,
 
14           investigators, and clerical or other assistants as its
 
15           business may from time to time require, to prescribe
 
16           their duties, and fix their compensation; to engage the
 
17           services of experts and persons engaged in the practice
 
18           of a profession, if deemed expedient.  Every
 
19           investigator, within the scope of the investigator's
 
20           duties, shall have the powers of a police officer.  No
 
21           employee of any commission, aside from exercising the
 
22           right to vote, shall support, advocate, or aid in the
 
23           election or defeat of any candidate for public office,
 

 
Page 37                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           and upon satisfactory proof of such prohibited activity
 
 2           the offender shall be summarily dismissed;
 
 3     [(6)] (7)  To limit the number of licenses of any class or
 
 4           kind within the county, or the number of licenses of
 
 5           any class or kind to do business in any given locality,
 
 6           when in the judgment of the commission such limitations
 
 7           are in the public interest;
 
 8     [(7)] (8)  To prescribe the nature of the proof to be
 
 9           furnished, the notices to be given, and the conditions
 
10           to be met or observed in case of the issuance of a
 
11           duplicate license in place of one alleged to have been
 
12           lost or destroyed, including a requirement of any
 
13           indemnity deemed appropriate to the case;
 
14     [(8)] (9)  To fix the hours between which licensed premises
 
15           of any class or classes may regularly be open for the
 
16           transaction of business, which shall be uniform
 
17           throughout the county as to each class respectively;
 
18     [(9)] (10)  To prescribe all forms to be used for the
 
19           purposes of this chapter not otherwise provided for in
 
20           this chapter, or in chapter 245, and the character and
 
21           manner of keeping of books, records, and accounts to be
 
22           kept by licensees of this chapter and chapter 245 in
 
23           any matter pertaining to their business;
 

 
Page 38                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1    [(10)] (11)  To investigate violations of this chapter,
 
 2           chapter 244D, and chapter 245 and, notwithstanding any
 
 3           law to the contrary, violations of the applicable
 
 4           department of health's allowable noise levels, through
 
 5           its investigators or otherwise, to include covert
 
 6           operations, and to report violations to the prosecuting
 
 7           officer for prosecution and, where appropriate, the
 
 8           director of taxation to hear and determine complaints
 
 9           against any licensee;
 
10    [(11)] (12)  To prescribe, by rule, the terms, conditions, and
 
11           circumstances under which persons or any class of
 
12           persons may be employed by holders of licenses;
 
13    [(12)] (13)  To prescribe, by rule, the term of any license or
 
14           solicitor's and representative's permit authorized by
 
15           this chapter, the annual or prorated amount, the manner
 
16           of payment of fees for the licenses and permits, and
 
17           the amount of filing fees; and
 
18    [(13)] (14)  To prescribe, by rule, the circumstances and
 
19           penalty for the unauthorized manufacturing or selling
 
20           of any liquor.
 
21      Subject only to this chapter, the commission or board and
 
22 each member thereof shall have the same powers respecting the
 
23 administering of oaths, compelling the attendance of witnesses
 

 
Page 39                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 and the production of documentary evidence, and examining the
 
 2 witnesses as are possessed by a circuit court, except that the
 
 3 commission or board and each member thereof shall not be bound by
 
 4 the strict legal rules of evidence.  In addition, the commission
 
 5 or board shall have the power to require the production of, and
 
 6 to examine any books, papers, and records of any [licensee]
 
 7 person licensed under this chapter or chapter 245, which may
 
 8 pertain to the licensee's business under the license or which may
 
 9 pertain to a matter at a hearing before the commission or board
 
10 or to an investigation by the commission or board.
 
11      The exercise by the commission or board of the power,
 
12 authority, and discretion vested in it pursuant to this chapter
 
13 shall be final and shall not be reviewable by or appealable to
 
14 any court or tribunal, except as otherwise provided in this
 
15 chapter or chapter 91."
 
16      SECTION 12.  Title 16, Hawaii Revised Statutes, is amended
 
17 by amending its title to read as follows:
 
18       "TITLE 16.  INTOXICATING LIQUOR AND TOBACCO PRODUCTS"
 
19      SECTION 13.  Chapter 281, Hawaii Revised Statutes, is
 
20 amended by amending its title to read as follows:
 
21                           "CHAPTER 281
 
22             INTOXICATING LIQUOR AND TOBACCO PRODUCTS"
 
23      SECTION 14.  Section 281-1, Hawaii Revised Statutes, is
 
24 amended by:
 

 
Page 40                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      1.  Adding three new definitions to be appropriately
 
 2 inserted and to read as follows:
 
 3      ""Cigarettes" means any roll for smoking made wholly or in
 
 4 part of tobacco, irrespective of size or shape and regardless of
 
 5 whether the tobacco is flavored, adulterated, or mixed with any
 
 6 other ingredient, the wrapper or cover of which is made of paper
 
 7 or any other substance or material except tobacco.
 
 8      "Cigarette vending machine" means a self-service device that
 
 9 dispenses cigarettes, cigars, tobacco, or any other product
 
10 containing tobacco.
 
11      "Tobacco" or "tobacco products" means products made from
 
12 tobacco leaves in any form that are prepared or intended for
 
13 consumption by, or the personal use of, humans, including
 
14 cigarettes, cigars, and any other substitutes bearing the
 
15 semblance thereof; cheroots; stogies; periques; granulated, plug
 
16 cut, crimp cut, ready rubbed, and other smoking tobacco; snuff or
 
17 snuff flour; cavendish; plug and twist tobacco; fine cut and
 
18 other chewing tobaccos; shorts; refuse scraps, clippings,
 
19 cuttings, and sweepings of tobacco, and other kinds and forms of
 
20 tobacco, prepared in a manner as to be suitable for chewing or
 
21 smoking in a pipe or otherwise, or both for chewing and smoking."
 
22      2.  By amending the definition of "liquor control
 
23 adjudication board" to read:
 

 
Page 41                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      ""Liquor control adjudication board" or "board" means a
 
 2 board established by county charter, within a county, that shall
 
 3 have the jurisdiction to hear and determine complaints or
 
 4 violations of liquor and tobacco laws and to impose penalties as
 
 5 may be provided in this chapter."
 
 6      3.  By amending the definition of "minor" to read:
 
 7      ""Minor" means any person below the age of twenty-one
 
 8 years[.]; provided that, where applicable to tobacco as provided
 
 9 in this chapter, minor means any person under the age of
 
10 eighteen."
 
11      4.  By amending the definition of "retail license", "sell"
 
12 or "to sell", and "seller" to read:
 
13      ""Retail licensee" means any licensee holding a class 2 or
 
14 class 4 through class 14 license[.] and class 2 license under
 
15 section 281-A(c), related to its retail operation.
 
16      "Sell" or "to sell" includes:  to solicit and receive an
 
17 order for; to have or keep or offer or expose for sale; to
 
18 deliver for value or in any other way than purely gratuitously;
 
19 to peddle; to keep with intent to sell; to traffic in; and the
 
20 word "sale" includes every act of selling as [herein] defined[.]
 
21 in this chapter.  Notwithstanding the provisions above, the
 
22 delivery of liquor or tobacco by a licensee's vehicle or the
 
23 vehicle of a licensee's agent shall be deemed delivery for value.
 

 
Page 42                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      "Seller" includes the agents and employees of a seller;
 
 2 provided that any person shall be deemed to be a seller, who in
 
 3 the State, whether acting as agent or representative of a
 
 4 nonresident principal or otherwise, solicits the placing of or
 
 5 takes, receives, or forwards orders for liquor or tobacco to be
 
 6 shipped into the State from any place without the State to be
 
 7 delivered to customers, by direct shipment or otherwise."
 
 8      SECTION 15.  Section 281-3, Hawaii Revised Statutes, is
 
 9 amended to read as follows:
 
10      "281-3  Illegal manufacture, importation, or sale of
 
11 liquor[.] and tobacco.  (a)  It shall be unlawful for any person
 
12 not having a valid license to manufacture or sell any liquor
 
13 except as otherwise provided in this chapter; provided that the
 
14 head of any family may produce for family use and not for sale an
 
15 amount of wine not exceeding two hundred gallons a year, and an
 
16 amount of beer not exceeding one hundred gallons a year.
 
17      (b)  It shall [also] be unlawful for any person [not having]
 
18 who does not have a valid wholesale license or a valid
 
19 manufacturer's (including rectifier's) license, to import any
 
20 liquor from without the State, except as otherwise provided in
 
21 this chapter.  Liquor imported into this State shall come to rest
 
22 at the warehouse of the manufacturer (including rectifier) or the
 
23 wholesaler importing the liquor, shall be unloaded into [such]
 

 
Page 43                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 the warehouse, and shall be held in [such] the warehouse for at
 
 2 least forty-eight hours before further sale by [such] the
 
 3 manufacturer (including rectifier) or wholesaler.
 
 4      (c)  It shall [also] be unlawful for any person to label,
 
 5 designate, or sell any liquor using the [word] words "Hawaii",
 
 6 "Hawaiian", "Aloha State", "50th State", "Kauai", "Maui", "Oahu",
 
 7 or "Honolulu" unless [such] the liquor is wholly or partially
 
 8 manufactured in the State, and all of the primary ingredients are
 
 9 wholly rectified or combined in the State [of Hawaii] in
 
10 compliance with the Bureau of Alcohol, Tobacco and Firearms
 
11 standards.
 
12      (d)  It shall be unlawful for any person who does not have a
 
13 valid retail tobacco dealer license to sell any tobacco product
 
14 at retail except as provided in this chapter.
 
15      (e)  It shall be unlawful for any person who does not have a
 
16 valid wholesale tobacco dealer license to import any tobacco
 
17 product from without the State, and sell to retail tobacco dealer
 
18 licensees except as provided in this chapter.
 
19      (f)  A license shall constitute authority for the licensee
 
20 to sell only the liquor or tobacco thereby authorized to be sold
 
21 by the licensee.
 
22      (g)  The commission or board shall establish minimum
 
23 standards by rule under which the commission or board shall
 
24 suspend or revoke a license."
 

 
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 1      SECTION 16.  Section 281-17, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "281-17  Jurisdiction and powers.  (a)  The liquor
 
 4 commission, within its own county, shall have the sole
 
 5 jurisdiction, power, authority, and discretion, subject only to
 
 6 this chapter:
 
 7      (1)  To grant, refuse, suspend, and revoke any licenses for
 
 8           the manufacture, importation, and sale of liquors[;] or
 
 9           the importation and sale of tobacco;
 
10      (2)  To take appropriate action against a person who,
 
11           directly or indirectly, manufactures or sells any
 
12           liquor or imports or sells tobacco without being
 
13           authorized pursuant to this chapter; provided that in
 
14           counties [which] that have established by charter a
 
15           liquor control adjudication board, the board shall have
 
16           the jurisdiction, power, authority, and discretion to
 
17           hear and determine administrative complaints of the
 
18           director regarding violations of the liquor or tobacco
 
19           laws of the State or of the rules of the liquor
 
20           commission, and impose penalties [[]for[]] violations
 
21           thereof as may be provided by law;
 
22      (3)  To control, supervise, and regulate the manufacture,
 
23           importation, and sale of liquors or the importation and
 

 
Page 45                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1           sale of tobacco by investigation, enforcement, and
 
 2           education; provided that [any]:
 
 3           (A)  Any educational program shall be [limited to]
 
 4                coordinated with the department of health, the
 
 5                commission's staff, licensees, and their employees
 
 6                [and];
 
 7           (B)  Liquor education programs shall be financed
 
 8                through the money collected from the assessment of
 
 9                fines against liquor licensees; and
 
10           (C)  Tobacco education programs shall be financed
 
11                through the money collected from the assessment of
 
12                fines against tobacco licensees under section
 
13                281-F.
 
14      (4)  From time to time to make, amend, and repeal [such]
 
15           rules[,] not inconsistent with this chapter, as in 
 
16           the judgment of the commission seem appropriate for
 
17           carrying out this chapter and for the efficient
 
18           administration thereof, and the proper conduct of the
 
19           business of all licensees, including every matter or
 
20           thing required to be done or which may be done with the
 
21           approval or consent or by order or under the direction
 
22           or supervision of or as prescribed by the commission;
 
23           which rules, when adopted as provided in chapter 91,
 
24           shall have the force and effect of law;
 

 
Page 46                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (5)  Subject to chapters 76 and 77, to appoint and remove an
 
 2           administrator, who may also be appointed an
 
 3           investigator and who shall be responsible for the
 
 4           operations and activities of the staff.  The
 
 5           administrator may hire and remove hearing officers,
 
 6           investigators, and clerical or other assistants as its
 
 7           business may from time to time require, to prescribe
 
 8           their duties, and fix their compensation; to engage the
 
 9           services of experts and persons engaged in the practice
 
10           of a profession, if deemed expedient.  Every
 
11           investigator, within the scope of the investigator's
 
12           duties, shall have the powers of a police officer.  No
 
13           employee of any commission, aside from exercising the
 
14           right to vote, shall support, advocate, or aid in the
 
15           election or defeat of any candidate for public office,
 
16           and upon satisfactory proof of such prohibited activity
 
17           the offender shall be summarily dismissed;
 
18      (6)  To limit the number of licenses of any class or kind
 
19           within the county, or the number of licenses of any
 
20           class or kind to do business in any given locality,
 
21           when in the judgment of the commission such limitations
 
22           are in the public interest;
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (7)  To prescribe the nature of the proof to be furnished,
 
 2           the notices to be given, and the conditions to be met
 
 3           or observed in case of the issuance of a duplicate
 
 4           license in place of one alleged to have been lost or
 
 5           destroyed, including a requirement of any indemnity
 
 6           deemed appropriate to the case;
 
 7      (8)  To fix the hours between which licensed premises of any
 
 8           class or classes may regularly be open for the
 
 9           transaction of business, which shall be uniform
 
10           throughout the county as to each class respectively;
 
11      (9)  To prescribe all forms to be used for the purposes of
 
12           this chapter not otherwise provided for in this
 
13           chapter, and the character and manner of keeping of
 
14           books, records, and accounts to be kept by licensees in
 
15           any matter pertaining to their business;
 
16     (10)  To investigate violations of this chapter, chapter 244D
 
17           or 245, and, notwithstanding any law to the contrary,
 
18           violations of the applicable department of health's
 
19           allowable noise levels, through its investigators or
 
20           otherwise, to include covert operations, and to report
 
21           violations to the prosecuting officer for prosecution
 
22           and, where appropriate, the director of taxation to
 
23           hear and determine complaints against any licensee;
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1     (11)  To prescribe, by rule, the terms, conditions, and
 
 2           circumstances under which persons or any class of
 
 3           persons may be employed by holders of licenses;
 
 4     (12)  To prescribe, by rule, the term of any license or
 
 5           solicitor's and representative's permit authorized by
 
 6           this chapter, the annual or prorated amount, the manner
 
 7           of payment of fees for the licenses and permits, and
 
 8           the amount of filing fees; and
 
 9     (13)  To prescribe, by rule, the circumstances and penalty
 
10           for the unauthorized manufacturing or selling of any
 
11           liquor[.] or the unauthorized importation or sale of
 
12           any tobacco.
 
13      (b)  Subject only to this chapter, the commission or board
 
14 and each member thereof shall have the same powers respecting the
 
15 administering of oaths, compelling the attendance of witnesses
 
16 and the production of documentary evidence, and examining the
 
17 witnesses as are possessed by a circuit court, except that the
 
18 commission or board and each member thereof shall not be bound by
 
19 the strict legal rules of evidence.  In addition, the commission
 
20 or board shall have the power to require the production of, and
 
21 to examine any books, papers, and records of any licensee [which]
 
22 that may pertain to the licensee's business under the license or
 
23 [which] that may pertain to a matter at a hearing before the
 

 
Page 49                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 commission or board or to an investigation by the commission or
 
 2 board.
 
 3      (c)  The exercise by the commission or board of the power,
 
 4 authority, and discretion vested in it pursuant to this chapter
 
 5 shall be final and shall not be reviewable by or appealable to
 
 6 any court or tribunal, except as otherwise provided in this
 
 7 chapter or chapter 91.
 
 8      (d)  The legislature declares its intent not to preempt the
 
 9 field of regulation of the use and sale of tobacco products.
 
10 Counties may regulate smoking or tobacco use in a manner
 
11 consistent with this chapter."
 
12      SECTION 17.  Section 281-17.5, Hawaii Revised Statutes, is
 
13 amended to read as follows:
 
14      "281-17.5  Fees; justified, method of change, limitation.
 
15 (a)  Any liquor or tobacco license fee or any increase in an
 
16 existing liquor or tobacco license fee sought to be implemented
 
17 by any commission shall have, as its justification, a direct and
 
18 proportionate relationship to costs and expenses of the
 
19 commission in its control, supervision, or regulation of the
 
20 manufacture, importation, and sale of liquors, or the importation
 
21 and sale of cigarettes or tobacco, or otherwise directly relate
 
22 to actual costs and expenses of administration of the commission
 
23 as is set forth in this chapter.
 

 
Page 50                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (b)  Any such [liquor] license fees or any moneys collected
 
 2 or received by any liquor commission under this chapter may only
 
 3 be used for costs and expenses directly relating to operational
 
 4 and administrative costs actually incurred by the liquor
 
 5 commission collecting or receiving [such liquor] license fees or
 
 6 moneys.  [Such] The fees or moneys shall not be used for any
 
 7 costs or expenses other than those directly relating to its
 
 8 operation and administration.
 
 9      (c)  Any increase in the [liquor] license fee structure
 
10 shall only be initiated by the liquor commission seeking the
 
11 change with the approval of the county's legislative body and
 
12 mayor.
 
13      (d)  Any liquor commission seeking a change in [liquor]
 
14 license fee structure shall notify all licensees under this
 
15 chapter affected by [the change of] the proposed change and shall
 
16 notify each [such] licensee of the outcome and resolution of the
 
17 change.
 
18      (e)  Any liquor commission [which] that currently receives a
 
19 license fee from a licensee in excess of the amount prescribed by
 
20 this section shall immediately revise its [liquor] license fee
 
21 structure to conform with the requirements of this section.  All
 
22 liquor license fees and all tobacco license fees shall be
 
23 maintained in separate accounts.  Any funds in excess of twenty
 

 
Page 51                                                    2961
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 1 per cent of the commission's current budget shall be returned or
 
 2 credited annually to existing licensees."
 
 3      SECTION 18.  Section 281-20, Hawaii Revised Statutes, is
 
 4 amended to read as follows:
 
 5      "281-20  General right of inspection.  Any investigator
 
 6 [may], at all times, without notice and without any search
 
 7 warrant or other legal process, may visit and have immediate
 
 8 access to every part of the premises of every liquor and tobacco
 
 9 licensee, for the purpose of making any examination or inspection
 
10 thereof or inquiry into the books and records therein, to
 
11 ascertain whether all of the conditions of the license and all
 
12 provisions of this chapter and chapter 244D or 245 are being
 
13 complied with by the licensee."
 
14      SECTION 19.  Section 281-79, Hawaii Revised Statutes, is
 
15 amended to read as follows:
 
16      "281-79  Entry for examination; obstructing liquor
 
17 commission operations; penalty.  (a)  Every investigator shall,
 
18 and any officer having police power may, at all reasonable times,
 
19 and at any time whatsoever if there is any reasonable ground for
 
20 suspicion that the conditions of any liquor or tobacco license
 
21 are being violated, without warrant, enter into and upon any
 
22 licensed premises and inspect the [same] premises and every part
 
23 thereof, and any books or records therein, to ascertain whether
 

 
Page 52                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 [or not] all conditions of the license and all provisions of this
 
 2 chapter and chapter 244D or 245 are being complied with by the
 
 3 licensee.
 
 4      (b)  If any investigator or officer, or any person called by
 
 5 the investigator or officer to the investigator's or officer's
 
 6 aid, is threatened with the use of violence, force, or physical
 
 7 interference or obstacle, or is hindered, obstructed, or
 
 8 prevented by any licensee, the licensee's employees, or any other
 
 9 person from entering into [any such] the premises, or whenever
 
10 any investigator or officer is [by any licensee, the licensee's
 
11 employees, or any other person opposed,] obstructed[,] or
 
12 molested in the performance of the officer's duty in any
 
13 respect[,] by any licensee, the licensee's employees, or any
 
14 other person, the licensee, the licensee's employee, or any other
 
15 person shall be fined not more than $2,000 or imprisoned not more
 
16 than one year, or both.
 
17      (c)  Whenever any investigator or officer, having demanded
 
18 admittance into any licensed premises and declared the
 
19 investigator's or officer's name and office, is not admitted by
 
20 the licensee or the person in charge of the premises, it shall be
 
21 lawful for the investigator or officer to forcibly and in any
 
22 manner to break into and enter the premises."
 

 
 
 
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 1      SECTION 20.  Section 281-97, Hawaii Revised Statutes, is
 
 2 amended to read as follows:
 
 3      "281-97  When sale without license authorized.  (a)  In
 
 4 case a liquor or tobacco license is revoked [or], canceled, or
 
 5 not renewed, the licensee [may], with the permission of and upon
 
 6 the conditions set by the liquor commission, may sell
 
 7 intoxicating liquors or tobacco then in the licensee's possession
 
 8 within sixty days, or within such additional time allowed by the
 
 9 commission, unless under this chapter the same are seized or
 
10 forfeited.
 
11      (b)  Any bank, trust company, or financial institution
 
12 owning or possessing intoxicating liquor [which] or tobacco that
 
13 was acquired by the bank, trust company, or financial institution
 
14 in the ordinary course of its business, may sell the intoxicating
 
15 liquor or tobacco with the permission of and upon conditions set
 
16 by the commission.
 
17      (c)  Any person acting as personal representative[,] or
 
18 guardian of a licensee's estate, or any receiver, assignee for
 
19 benefit of creditors, or trustee in bankruptcy, may sell the
 
20 stock of intoxicating liquor or tobacco with the permission of
 
21 and upon conditions set by the commission, except as otherwise
 
22 provided in this chapter.
 

 
 
 
Page 54                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      (d)  Any insurance company, or any common carrier acting as
 
 2 an insurer for losses to persons shipping intoxicating liquor[,]
 
 3 or tobacco, may take possession of and sell the intoxicating
 
 4 liquor[,] or tobacco, the containers of which have been damaged
 
 5 by fire or otherwise, with the permission of and upon conditions
 
 6 set by the commission.
 
 7      (e)  Any person in possession of a stock of lawfully
 
 8 acquired intoxicating liquor or tobacco under a foreclosure
 
 9 proceeding, proceedings for enforcement of a lien, civil
 
10 execution, or under any other proceeding or process, may sell
 
11 such intoxicating liquor or tobacco with the permission of and
 
12 upon conditions set by the commission."
 
13      SECTION 21.  Section 281-101, Hawaii Revised Statutes, is
 
14 amended to read as follows:
 
15      "281-101  Manufacture or sale without license; penalty.  If
 
16 any person, acting in person or by or through any agent, servant,
 
17 or employee, manufactures or sells any liquor[,] or sells any
 
18 tobacco, either directly or indirectly, or upon any pretense or
 
19 by any subterfuge, except as authorized pursuant to this chapter,
 
20 the person shall be fined not more than $2,000 or imprisoned not
 
21 more than one year, or both."
 
22      SECTION 22.  Section 281-101.4, Hawaii Revised Statutes, is
 
23 amended to read as follows:
 

 
Page 55                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      "281-101.4  Hearing, illegal manufacture, importation, or
 
 2 sale of liquor[.] or tobacco.  (a)  The liquor commission or
 
 3 liquor control adjudication board may assess and collect a
 
 4 penalty, or reprimand a person for not having a valid license to
 
 5 manufacture or sell any liquor or to sell any tobacco in
 
 6 violation of this chapter or of any rule [or regulation]
 
 7 applicable thereto.
 
 8      (b)  In every case where the administrator elects to conduct
 
 9 proceedings under this section where it is proposed to assess and
 
10 collect a penalty from a person for not having a valid license to
 
11 manufacture or sell any liquor or to sell any tobacco in
 
12 violation of this chapter or of any rule [or regulation]
 
13 applicable thereto, that person shall be entitled to notice and
 
14 hearing in conformity with chapter 91.
 
15      (c)  At the hearing, before final action is taken by the
 
16 commission or board, the person shall be entitled to be heard in
 
17 person or through counsel and shall be given a full and fair
 
18 opportunity to present facts showing that the alleged cause or
 
19 causes for the proposed action do not exist, or any reason why no
 
20 penalty should be imposed.  The testimony taken at the hearing
 
21 shall be under oath and recorded stenographically, or by machine,
 
22 but the parties shall not be bound by the strict rules of
 
23 evidence; certified copies of any transcript and of any other
 

 
Page 56                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 record made of or at the hearing shall be furnished to a person
 
 2 upon that person's request and at that person's expense.
 
 3      (d)  Any order, reprimand, or penalty imposed by the
 
 4 commission or board upon a person for not having a valid license
 
 5 to manufacture or sell any liquor or to sell any tobacco in
 
 6 violation of this chapter or of any rule [or regulation]
 
 7 applicable thereto shall be in addition to any penalty that might
 
 8 be imposed upon that person's conviction in a court of law for
 
 9 any violation of this chapter.  The amount of penalty assessed
 
10 and collected by the commission or board from any person under
 
11 this section for not having a valid license to manufacture or
 
12 sell any liquor or to sell any tobacco shall not exceed the sum
 
13 of $2,000 for each charge.
 
14      (e)  Whenever the service of any order or notice [shall be]
 
15 is required by this section the service shall be made in the
 
16 following manner[:  in the case of any].  If a violation is based
 
17 upon the personal observation of any investigator, a written
 
18 notice of the violation shall be given to the person charged with
 
19 a violation within a reasonable period of time after the alleged
 
20 violation occurred[, the].  The person charged shall be requested
 
21 to acknowledge receipt of the notice of alleged violation, or, if
 
22 the person cannot be found after diligent search, by leaving a
 
23 certified copy thereof at the person's dwelling house or usual
 

 
Page 57                                                    2961
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 place of abode with some person of suitable age and discretion
 
 2 residing therein[; and if].  If the person cannot be found after
 
 3 diligent search, and service cannot be made, then service may be
 
 4 made by depositing another certified copy thereof in the
 
 5 certified mail of the United States post office, postage prepaid,
 
 6 addressed to the person at the person's last known residence
 
 7 address; provided[,] that in the case of a partnership,
 
 8 corporation, unincorporated association, or limited liability
 
 9 company, service may be made upon any partner, officer, or member
 
10 thereof."
 
11                             Part III
 
12      SECTION 23.  There is appropriated out of the general
 
13 revenues of the State of Hawaii the sum of $35,000 or so much
 
14 thereof as may be necessary for fiscal year 2000-2001 for start-
 
15 up costs for implementing the cigarette stamp tax system,
 
16 including a one year supply of stamps and stamp cylinders.
 
17      The sum appropriated shall be expended by the department of
 
18 taxation for purposes of this Act.
 
19      SECTION 24.  There is appropriated out of the general
 
20 revenues of the State of Hawaii the sum of $405,500 or so much
 
21 thereof as may be necessary for fiscal year 2000-2001 to be
 
22 apportioned to the following county liquor commissions:
 

 
 
 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1      Honolulu                             $220,500
 
 2      Hawaii                                 49,500
 
 3      Maui                                  110,000
 
 4      Kauai                                  24,500
 
 5      There is appropriated out of the general revenues of the
 
 6 State of Hawaii the sum of $591,500 or so much thereof as may be
 
 7 necessary for fiscal year 2002-2003 to be apportioned to the
 
 8 following county liquor commissions:
 
 9      Honolulu                             $350,500
 
10      Hawaii                                 58,500
 
11      Maui                                  133,500
 
12      Kauai                                  49,000
 
13      The sums appropriated shall be expended by the respective
 
14 liquor commissions of each county for the purposes of this Act.
 
15      SECTION 25.  The director of taxation shall submit findings
 
16 and recommendations to the legislature twenty days prior to the
 
17 regular session of 2006 as to the effectiveness of this Act in
 
18 reducing the loss of cigarette tax revenue to the State from
 
19 illegal sales of untaxed cigarettes.  The director of taxation
 
20 may submit an interim report to the legislature on any findings
 
21 relating to the effectiveness of this Act before 2006.
 
22      SECTION 26.  The county liquor commission for each of the
 
23 counties of Honolulu, Hawaii, Maui, and Kauai shall report to the
 

 
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                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 legislature no later than twenty days before the convening of
 
 2 each of the regular sessions of 2002 and 2003 on their respective
 
 3 activities relating to this Act, including expenses, fines, and
 
 4 penalties collected, and forfeitures.
 
 5      SECTION 27.  This Act does not affect the rights and duties
 
 6 that matured, penalties that were incurred, and proceedings that
 
 7 were begun, before its effective date.
 
 8      SECTION 28.  In codifying the new parts added to chapter 245
 
 9 and 281, Hawaii Revised Statutes, the revisor of statutes shall
 
10 substitute appropriate section numbers for the letters used in
 
11 designating the new sections in this Act.
 
12      SECTION 29.  Statutory material to be repealed is bracketed.
 
13 New statutory material is underscored.
 
14      SECTION 30.  This Act shall take effect upon its approval;
 
15 provided that:
 
16      (1)  Sections 23 and 24 shall take effect on July 1, 2000;
 
17      (2)  On June 30, 2006, this Act shall be repealed and
 
18           sections 245-1, 245-3, 245-5, 245-6, 245-8, 245-15, and
 
19           281-17, Hawaii Revised Statutes, shall be reenacted in
 
20           the form in which they read on the day before the
 
21           approval of this Act.