Prohibits the sale and distribution of cigarettes designated for
export and sale outside the United States.  Prohibits the
altering of cigarette packages.  Establishes civil and criminal
penalties, confiscation provisions, and forfeiture provisions.

THE SENATE                              S.B. NO.           H.D. 3
TWENTIETH LEGISLATURE, 2000                                C.D. 1
STATE OF HAWAII                                            

                     A BILL FOR AN ACT



 1      SECTION 1.  Chapter 245, Hawaii Revised Statutes, is amended
 2 by adding a new part to be appropriately designated and to read
 3 as follows:
 5      245-A Sale of export cigarettes prohibited.  It shall be
 6 unlawful for a person to sell or distribute in the State; to
 7 acquire, hold, own, possess, or transport for sale or
 8 distribution in the State, or to import or cause to be imported
 9 into the State for sale or distribution in the State any of the
10 following cigarettes:
11      (1)  The package of which bears any statement, label, stamp,
12           sticker, or notice indicating that the manufacturer did
13           not intend the cigarettes to be sold, distributed, or
14           used in the United States, including but not limited to
15           labels stating "for export only", "U.S. tax-exempt",
16           for "use outside U.S.", or similar wording;
17      (2)  The package of which does not comply with all
18           requirements imposed by federal law regarding warnings
19           and other information on packages of cigarettes
20           manufactured, packaged, or imported for sale,

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 1           distribution, or use in the United States, including
 2           but not limited to the specific warning labels
 3           specified in the federal Cigarette Labeling and
 4           Advertising Act, title 15 U.S.C. section 1333;
 5      (3)  The package of which does not comply with all federal
 6           trademark and copyright laws;
 7      (4)  Imported into the United States on or after January 1,
 8           2000, in violation of title 26 U.S.C. section 5754 or
 9           any other federal law or regulation;
10      (5)  For which the person otherwise knows or has reason to
11           know the manufacturer did not intend to be sold,
12           distributed, or used in the United States; or
13      (6)  For which there has not been submitted to the Secretary
14           of the United States Department of Health and Human
15           Services the list of the ingredients added to tobacco
16           in the manufacture of such cigarettes required by the
17           federal Cigarette Labeling and Advertising Act,
18           title 15 U.S.C. section 1335a.
19      245-B Alteration of packaging prohibited.  It shall be
20 unlawful for any person to alter the package of any cigarettes,
21 prior to sale or distribution to remove, conceal, or obscure:
22      (1)  Any statement, label, stamp, sticker, or notice
23           indicating that the manufacturer did not intend the

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 1           cigarettes to be sold, distributed, or used in the
 2           United States, including but not limited to labels
 3           stating "for export only", "U.S. tax-exempt", "for use
 4           outside U.S.", or similar wording; or
 5      (2)  Any health warning that is not specified in or does not
 6           conform with the requirements of the federal Cigarette
 7           Labeling and Advertising Act, title 15 U.S.C.
 8           section 1333.
 9      245-C Criminal penalties for illegal sale of export or
10 foreign cigarettes.  Any person who knowingly violates section
11 245-A or 245-B shall be guilty of a class C felony, and upon
12 conviction thereof, shall be fined not more than $10,000, and may
13 be imprisoned not less than one year and not more than five
14 years, or both.
15      245-D Confiscation and seizure of illegal sale or export
16 of foreign cigarettes.  The attorney general and the police
17 departments of each of the counties may seize and confiscate any
18 cigarette, package of cigarettes, or carton of cigarettes that is
19 possessed, kept, stored, or retained for the purpose of sale, or
20 sold or offered for sale in violation of this part.
21      245-E Forfeiture.  The forfeiture of any cigarette,
22 package of cigarettes, or carton of cigarettes unlawfully
23 possessed, or kept, stored, or retained for the purpose of sale,

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 1 or sold or offered for sale, in violation of this part, may be
 2 enforced pursuant to chapter 712A by an appropriate
 3 administrative or judicial proceeding.  Any cigarette, package of
 4 cigarettes, or carton of cigarettes forfeited as provided in this
 5 section shall be ordered destroyed.
 6      245-F  Affixing of cigarette tax stamps to export
 7 cigarettes or altered packages prohibited.  It shall be unlawful
 8 for any person to affix any cigarette tax stamp required under
 9 this chapter to the package of any cigarettes described in
10 section 245-A or altered in violation of section 245-B.
11      245-G  Documentation of foreign cigarettes.  On the first
12 business day of each month, each licensee shall file the
13 following documents with the department and the attorney general
14 for all cigarettes imported into the United States to which the
15 licensee or licensee's agent has affixed a cigarette tax stamp in
16 the preceding month:
17      (1)  A copy of a permit issued pursuant to the Internal
18           Revenue Code, title 26 U.S.C. section 5713, to the
19           person importing the cigarettes into the United States,
20           permitting the person to import the cigarettes;
21      (2)  A copy of the United States Customs Service form
22           containing, with respect to the cigarettes, the
23           internal revenue tax information required by the United

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 1           States Bureau of Alcohol, Tobacco and Firearms;
 2      (3)  A statement, signed by the licensee under penalty of
 3           perjury, that shall be treated as confidential by the
 4           department and shall be exempt from disclosure under
 5           chapter 92F, identifying:
 6           (A)  The brand and brand styles of all cigarettes;
 7           (B)  The quantity of each brand style of the
 8                cigarettes;
 9           (C)  The supplier of the cigarettes; and
10           (D)  The person or persons, if any, to whom the
11                cigarettes have been conveyed for resale; and
12      (4)  A statement, signed under penalty of perjury by an
13           officer of the manufacturer or importer of the
14           cigarettes, certifying that the manufacturer or
15           importer has complied with:
16           (A)  The package health warning and ingredient
17                reporting requirements of the Federal Cigarette
18                Labeling and Advertising Act, title 15 U.S.C.
19                sections 1333 and 1335a, with respect to the
20                cigarettes; and
21           (B)  Chapter 675, including a statement of whether the
22                manufacturer is or is not a participating
23                manufacturer within the meaning of section 675-3.

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 1      245-H  Illegal sale of export or foreign cigarettes;
 2 revocation or suspension of license; civil penalties.  If any
 3 licensee violates this part or any rule adopted pursuant to this
 4 part, the director may:
 5      (1)  Revoke or suspend the licensee's license pursuant to
 6           procedures complying with chapter 91; and
 7      (2)  Impose a civil penalty in an amount not to exceed the
 8           greater of five times the retail value of the
 9           cigarettes involved, or $5,000.
10      245-I  Unfair trade practices.  Any violation of this part
11 shall constitute an unfair method of competition and unfair and
12 deceptive acts or practices in the conduct of any trade of
13 commerce under section 480-2 and shall be subject to a civil
14 penalty as provided in section 480-3.1.  Each package of
15 cigarettes sold in violation of this part shall constitute a
16 separate violation.
17      245-J  Deceptive cigarette sales.  The importation or
18 reimportation of cigarettes into the United States for sale or
19 distribution under any trade name, trade dress, or trademark that
20 is the same as, or is confusingly similar to, any trade name,
21 trade dress, or trademark used for cigarettes manufactured in the
22 United States for sale or distribution in the United States shall
23 be deemed to violate section 481A-3.

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 1      245-K  Enforcement.(a)  Enforcement of this part shall be
 2 under the concurrent jurisdiction of the attorney general, the
 3 prosecuting attorneys or deputy prosecuting attorneys of the
 4 various counties, and the police departments of the various
 5 counties.
 6      (b)  In addition to any other remedy provided by law,
 7 including enforcement as provided in subsection (a), any person
 8 may bring an action for appropriate injunctive or other equitable
 9 relief for a violation of this part and for damages sustained by
10 the person, and, if the judgment is for the plaintiff, the
11 plaintiff shall be awarded a sum not less than $1,000 or
12 threefold damages by the plaintiff sustained, whichever sum is
13 the greater, and reasonable attorneys fees together with the
14 costs of suit.
15      245-L  Applicability.  This part shall not apply to:
16      (1)  Cigarettes allowed to be imported or brought into the
17           United States for personal use free of federal tax or
18           duty or voluntarily abandoned to the United States
19           Secretary of Treasury at the time of entry; or
20      (2)  Cigarettes sold or intended to be sold as duty-free
21           merchandise by a duty-free sales enterprise in
22           accordance with the provisions of title 19 U.S.C.
23           section 1555(b) and any implementing regulations;

Page 8                                                     3179
                                     S.B. NO.           H.D. 3
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 1           provided that this part shall apply to any such
 2           cigarettes that are brought back into the customs
 3           territory for resale within the customs territory.
 4      245-M  Penalties cumulative.  The penalties provided in
 5 this part are in addition to any other penalties imposed under
 6 other law."
 7      SECTION 2.  Section 712-1257, Hawaii Revised Statutes, is
 8 amended by amending subsection (4) to read as follows:
 9      "(4)  Any person who violates subsection (1), shall be fined
10 not more than $2,500 for the first offense.  Any subsequent
11 offense shall subject the person to a fine of not less than $100
12 and not more than $5,000.  Any person who knowingly violates
13 subsection (1) shall be guilty of a class C felony."
14      SECTION 3.  In codifying the new part added to chapter 245,
15 Hawaii Revised Statutes, the revisor of statutes shall substitute
16 appropriate section numbers for the letters used in designating
17 the new sections in this Act.
18      SECTION 4.  This Act shall take effect on July 1, 2000, only
19 if Senate Bill No. 2486, in any form passed by the legislature,
20 Regular Session of 2000, becomes an Act.