CHAPTER 51-25TOBACCO PRODUCT MANUFACTURER SALES51-25-01. Definitions.1."Adjusted for inflation" means increased in accordance with the formula for inflation<br>adjustment set forth in exhibit C to the master settlement agreement.2."Affiliate" means a person who directly or indirectly owns or controls, is owned or<br>controlled by, or is under common ownership or control with, another person. Solely<br>for purposes of this definition, the terms "owns", "is owned", and "ownership" mean<br>ownership of an equity interest, or the equivalent thereof, of ten percent or more,<br>and the term "person" means an individual, partnership, committee, association,<br>corporation, or any other organization or group of persons.3."Allocable share" means allocable share as that term is defined in the master<br>settlement agreement.4."Cigarette" means any product that contains nicotine, is intended to be burned or<br>heated under ordinary conditions of use, and consists of or contains:a.Any roll of tobacco wrapped in paper or in any substance not containing<br>tobacco;b.Tobacco, in any form, that is functional in the product, which, because of its<br>appearance, the type of tobacco used in the filler, or its packaging and labeling,<br>is likely to be offered to, or purchased by, consumers as a cigarette; orc.Any roll of tobacco wrapped in any substance containing tobacco which,<br>because of its appearance, the type of tobacco used in the filler, or its<br>packaging and labeling, is likely to be offered to, or purchased by, consumers<br>as a cigarette described in subdivision a.The term "cigarette" includes "roll-your-own", which means any tobacco that,<br>because of its appearance, type, packaging, or labeling is suitable for use and likely<br>to be offered to, or purchased by, consumers as tobacco for making cigarettes. For<br>purposesofthisdefinitionof"cigarette",0.09ounces[2.556 grams]of"roll-your-own" tobacco constitutes one individual "cigarette".5."Master settlement agreement" means the settlement agreement and related<br>documents entered on November 23, 1998, by the state and leading United States<br>tobacco product manufacturers.6."Qualified escrow fund" means an escrow arrangement with a federally or state<br>chartered financial institution having no affiliation with any tobacco product<br>manufacturer and having assets of at least one billion dollars if the arrangement<br>requires that the financial institution hold the escrowed funds' principal for the benefit<br>of releasing parties and prohibits the tobacco product manufacturer placing the<br>funds into escrow from using, accessing, or directing the use of the funds' principal<br>except as consistent with subdivision b of subsection 2 of section 51-25-02.7."Released claims" means released claims as that term is defined in the master<br>settlement agreement.8."Releasing parties" means releasing parties as that term is defined in the master<br>settlement agreement.Page No. 19."Tobacco product manufacturer" means an entity that after April 8, 1999, directly,<br>and not exclusively through any affiliate:a.Manufactures cigarettes anywhere that the manufacturer intends to be sold in<br>the United States, including cigarettes intended to be sold in the United States<br>through an importer (except when the importer is an original participating<br>manufacturer, as that term is defined in the master settlement agreement,<br>which will be responsible for the payments under the master settlement<br>agreement with respect to such cigarettes as a result of the provisions of<br>subsection II(mm) of the master settlement agreement and which pays the<br>taxes specified in subsection II(z) of the master settlement agreement, and<br>provided that the manufacturer of such cigarettes does not market or advertise<br>the cigarettes in the United States);b.Is the first purchaser anywhere for resale in the United States of cigarettes<br>manufactured anywhere which the manufacturer does not intend to be sold in<br>the United States; orc.Becomes a successor of an entity described in subdivision a or b.The term "tobacco product manufacturer" does not include an affiliate of a tobacco<br>product manufacturer unless the affiliate itself falls within subdivision a, b, or c.10."Units sold" means the number of individual cigarettes sold in the state by the<br>applicable tobacco product manufacturer, whether directly or through a distributor,<br>retailer, or similar intermediary or intermediaries, during the year in question, as<br>measured by excise taxes collected by the state on packs or "roll-your-own" tobacco<br>containers.The state tax commissioner shall adopt rules as are necessary toascertain the amount of state excise tax paid on the cigarettes of the tobacco<br>product manufacturer for each year.51-25-02.Requirements.A tobacco product manufacturer selling cigarettes toconsumers within the state, whether directly or through a distributor, retailer, or similar<br>intermediary or intermediaries, after April 8, 1999, must do one of the following:1.Become a participating manufacturer, as that term is defined in section II(jj) of the<br>master settlement agreement, and generally perform its financial obligations under<br>the master settlement agreement; or2.a.Place into a qualified escrow fund by April fifteenth of the year following the<br>year in question, the following amounts, as such amounts are adjusted for<br>inflation:(1)1999: $.0094241 per unit sold after April 8, 1999;(2)2000: $.0104712 per unit sold;(3)For each of 2001 and 2002: $.0136125 per unit sold;(4)For each of 2003 through 2006: $.0167539 per unit sold; and(5)For each of 2007 and each year thereafter: $.0188482 per unit sold.b.A tobacco product manufacturer that places funds into escrow pursuant to<br>subdivision a shall receive the interest or other appreciation on the funds as<br>earned.The funds may be released from escrow only under the followingcircumstances:Page No. 2(1)To pay a judgment or settlement on any released claim brought against<br>the tobacco product manufacturer by the state or any releasing party<br>located or residing in the state. Funds must be released from escrow<br>under this paragraph in the order in which they were placed into escrow<br>and only to the extent and at the time necessary to make payments<br>required under the judgment or settlement;(2)To the extent that a tobacco product manufacturer establishes that the<br>amount it was required to place into escrow on account of units sold in<br>the state in a particular year was greater than the master settlement<br>agreement payments, as determined pursuant to section IX(i) of that<br>agreement, including after final determination of all adjustments, that the<br>manufacturer would have been required to make on account of such<br>units sold had it been a participating manufacturer, the excess must be<br>released from escrow and revert back to such tobacco product<br>manufacturer; or(3)To the extent not released from escrow under paragraph 1 or 2, funds<br>must be released from escrow and revert back to the tobacco product<br>manufacturer twenty-five years after the date on which they were placed<br>into escrow.c.Each tobacco product manufacturer that elects to place funds into escrow<br>pursuant to this subsection shall annually certify to the state tax commissioner<br>that it is in compliance with this subsection. The state tax commissioner shall<br>refer every instance of noncompliance to the attorney general. The attorney<br>general may bring a civil action on behalf of the state against any tobacco<br>product manufacturer that fails to place into escrow the funds required under<br>this section. Any tobacco product manufacturer that fails in any year to place<br>into escrow the funds required under this section must:(1)Be required within fifteen days to place the funds into escrow as will bring<br>it into compliance with this section.The court, upon a finding of aviolation of this subdivision, may impose a civil penalty to be paid to the<br>general fund of the state in an amount not to exceed five percent of the<br>amount improperly withheld from escrow per day of the violation and in a<br>total amount not to exceed one hundred percent of the original amount<br>improperly withheld from escrow;(2)In the case of a knowing violation, be required within fifteen days to place<br>the funds into escrow as will bring it into compliance with this section.<br>The court, upon a finding of a knowing violation of this subdivision, may<br>impose a civil penalty to be paid to the general fund of the state in an<br>amount not to exceed fifteen percent of the amount improperly withheld<br>from escrow per day of the violation and in a total amount not to exceed<br>three hundred percent of the original amount improperly withheld from<br>escrow; and(3)In the case of a second knowing violation, be prohibited from selling<br>cigarettes to consumers within the state, whether directly or through a<br>distributor, retailer, or similar intermediary, for a period not to exceed two<br>years.Each failure to make an annual deposit required under this section constitutes a separate<br>violation.Page No. 3Document Outlinechapter 51-25 tobacco product manufacturer sales
CHAPTER 51-25TOBACCO PRODUCT MANUFACTURER SALES51-25-01. Definitions.1."Adjusted for inflation" means increased in accordance with the formula for inflation<br>adjustment set forth in exhibit C to the master settlement agreement.2."Affiliate" means a person who directly or indirectly owns or controls, is owned or<br>controlled by, or is under common ownership or control with, another person. Solely<br>for purposes of this definition, the terms "owns", "is owned", and "ownership" mean<br>ownership of an equity interest, or the equivalent thereof, of ten percent or more,<br>and the term "person" means an individual, partnership, committee, association,<br>corporation, or any other organization or group of persons.3."Allocable share" means allocable share as that term is defined in the master<br>settlement agreement.4."Cigarette" means any product that contains nicotine, is intended to be burned or<br>heated under ordinary conditions of use, and consists of or contains:a.Any roll of tobacco wrapped in paper or in any substance not containing<br>tobacco;b.Tobacco, in any form, that is functional in the product, which, because of its<br>appearance, the type of tobacco used in the filler, or its packaging and labeling,<br>is likely to be offered to, or purchased by, consumers as a cigarette; orc.Any roll of tobacco wrapped in any substance containing tobacco which,<br>because of its appearance, the type of tobacco used in the filler, or its<br>packaging and labeling, is likely to be offered to, or purchased by, consumers<br>as a cigarette described in subdivision a.The term "cigarette" includes "roll-your-own", which means any tobacco that,<br>because of its appearance, type, packaging, or labeling is suitable for use and likely<br>to be offered to, or purchased by, consumers as tobacco for making cigarettes. For<br>purposesofthisdefinitionof"cigarette",0.09ounces[2.556 grams]of"roll-your-own" tobacco constitutes one individual "cigarette".5."Master settlement agreement" means the settlement agreement and related<br>documents entered on November 23, 1998, by the state and leading United States<br>tobacco product manufacturers.6."Qualified escrow fund" means an escrow arrangement with a federally or state<br>chartered financial institution having no affiliation with any tobacco product<br>manufacturer and having assets of at least one billion dollars if the arrangement<br>requires that the financial institution hold the escrowed funds' principal for the benefit<br>of releasing parties and prohibits the tobacco product manufacturer placing the<br>funds into escrow from using, accessing, or directing the use of the funds' principal<br>except as consistent with subdivision b of subsection 2 of section 51-25-02.7."Released claims" means released claims as that term is defined in the master<br>settlement agreement.8."Releasing parties" means releasing parties as that term is defined in the master<br>settlement agreement.Page No. 19."Tobacco product manufacturer" means an entity that after April 8, 1999, directly,<br>and not exclusively through any affiliate:a.Manufactures cigarettes anywhere that the manufacturer intends to be sold in<br>the United States, including cigarettes intended to be sold in the United States<br>through an importer (except when the importer is an original participating<br>manufacturer, as that term is defined in the master settlement agreement,<br>which will be responsible for the payments under the master settlement<br>agreement with respect to such cigarettes as a result of the provisions of<br>subsection II(mm) of the master settlement agreement and which pays the<br>taxes specified in subsection II(z) of the master settlement agreement, and<br>provided that the manufacturer of such cigarettes does not market or advertise<br>the cigarettes in the United States);b.Is the first purchaser anywhere for resale in the United States of cigarettes<br>manufactured anywhere which the manufacturer does not intend to be sold in<br>the United States; orc.Becomes a successor of an entity described in subdivision a or b.The term "tobacco product manufacturer" does not include an affiliate of a tobacco<br>product manufacturer unless the affiliate itself falls within subdivision a, b, or c.10."Units sold" means the number of individual cigarettes sold in the state by the<br>applicable tobacco product manufacturer, whether directly or through a distributor,<br>retailer, or similar intermediary or intermediaries, during the year in question, as<br>measured by excise taxes collected by the state on packs or "roll-your-own" tobacco<br>containers.The state tax commissioner shall adopt rules as are necessary toascertain the amount of state excise tax paid on the cigarettes of the tobacco<br>product manufacturer for each year.51-25-02.Requirements.A tobacco product manufacturer selling cigarettes toconsumers within the state, whether directly or through a distributor, retailer, or similar<br>intermediary or intermediaries, after April 8, 1999, must do one of the following:1.Become a participating manufacturer, as that term is defined in section II(jj) of the<br>master settlement agreement, and generally perform its financial obligations under<br>the master settlement agreement; or2.a.Place into a qualified escrow fund by April fifteenth of the year following the<br>year in question, the following amounts, as such amounts are adjusted for<br>inflation:(1)1999: $.0094241 per unit sold after April 8, 1999;(2)2000: $.0104712 per unit sold;(3)For each of 2001 and 2002: $.0136125 per unit sold;(4)For each of 2003 through 2006: $.0167539 per unit sold; and(5)For each of 2007 and each year thereafter: $.0188482 per unit sold.b.A tobacco product manufacturer that places funds into escrow pursuant to<br>subdivision a shall receive the interest or other appreciation on the funds as<br>earned.The funds may be released from escrow only under the followingcircumstances:Page No. 2(1)To pay a judgment or settlement on any released claim brought against<br>the tobacco product manufacturer by the state or any releasing party<br>located or residing in the state. Funds must be released from escrow<br>under this paragraph in the order in which they were placed into escrow<br>and only to the extent and at the time necessary to make payments<br>required under the judgment or settlement;(2)To the extent that a tobacco product manufacturer establishes that the<br>amount it was required to place into escrow on account of units sold in<br>the state in a particular year was greater than the master settlement<br>agreement payments, as determined pursuant to section IX(i) of that<br>agreement, including after final determination of all adjustments, that the<br>manufacturer would have been required to make on account of such<br>units sold had it been a participating manufacturer, the excess must be<br>released from escrow and revert back to such tobacco product<br>manufacturer; or(3)To the extent not released from escrow under paragraph 1 or 2, funds<br>must be released from escrow and revert back to the tobacco product<br>manufacturer twenty-five years after the date on which they were placed<br>into escrow.c.Each tobacco product manufacturer that elects to place funds into escrow<br>pursuant to this subsection shall annually certify to the state tax commissioner<br>that it is in compliance with this subsection. The state tax commissioner shall<br>refer every instance of noncompliance to the attorney general. The attorney<br>general may bring a civil action on behalf of the state against any tobacco<br>product manufacturer that fails to place into escrow the funds required under<br>this section. Any tobacco product manufacturer that fails in any year to place<br>into escrow the funds required under this section must:(1)Be required within fifteen days to place the funds into escrow as will bring<br>it into compliance with this section.The court, upon a finding of aviolation of this subdivision, may impose a civil penalty to be paid to the<br>general fund of the state in an amount not to exceed five percent of the<br>amount improperly withheld from escrow per day of the violation and in a<br>total amount not to exceed one hundred percent of the original amount<br>improperly withheld from escrow;(2)In the case of a knowing violation, be required within fifteen days to place<br>the funds into escrow as will bring it into compliance with this section.<br>The court, upon a finding of a knowing violation of this subdivision, may<br>impose a civil penalty to be paid to the general fund of the state in an<br>amount not to exceed fifteen percent of the amount improperly withheld<br>from escrow per day of the violation and in a total amount not to exceed<br>three hundred percent of the original amount improperly withheld from<br>escrow; and(3)In the case of a second knowing violation, be prohibited from selling<br>cigarettes to consumers within the state, whether directly or through a<br>distributor, retailer, or similar intermediary, for a period not to exceed two<br>years.Each failure to make an annual deposit required under this section constitutes a separate<br>violation.Page No. 3Document Outlinechapter 51-25 tobacco product manufacturer sales
CHAPTER 51-25TOBACCO PRODUCT MANUFACTURER SALES51-25-01. Definitions.1."Adjusted for inflation" means increased in accordance with the formula for inflation<br>adjustment set forth in exhibit C to the master settlement agreement.2."Affiliate" means a person who directly or indirectly owns or controls, is owned or<br>controlled by, or is under common ownership or control with, another person. Solely<br>for purposes of this definition, the terms "owns", "is owned", and "ownership" mean<br>ownership of an equity interest, or the equivalent thereof, of ten percent or more,<br>and the term "person" means an individual, partnership, committee, association,<br>corporation, or any other organization or group of persons.3."Allocable share" means allocable share as that term is defined in the master<br>settlement agreement.4."Cigarette" means any product that contains nicotine, is intended to be burned or<br>heated under ordinary conditions of use, and consists of or contains:a.Any roll of tobacco wrapped in paper or in any substance not containing<br>tobacco;b.Tobacco, in any form, that is functional in the product, which, because of its<br>appearance, the type of tobacco used in the filler, or its packaging and labeling,<br>is likely to be offered to, or purchased by, consumers as a cigarette; orc.Any roll of tobacco wrapped in any substance containing tobacco which,<br>because of its appearance, the type of tobacco used in the filler, or its<br>packaging and labeling, is likely to be offered to, or purchased by, consumers<br>as a cigarette described in subdivision a.The term "cigarette" includes "roll-your-own", which means any tobacco that,<br>because of its appearance, type, packaging, or labeling is suitable for use and likely<br>to be offered to, or purchased by, consumers as tobacco for making cigarettes. For<br>purposesofthisdefinitionof"cigarette",0.09ounces[2.556 grams]of"roll-your-own" tobacco constitutes one individual "cigarette".5."Master settlement agreement" means the settlement agreement and related<br>documents entered on November 23, 1998, by the state and leading United States<br>tobacco product manufacturers.6."Qualified escrow fund" means an escrow arrangement with a federally or state<br>chartered financial institution having no affiliation with any tobacco product<br>manufacturer and having assets of at least one billion dollars if the arrangement<br>requires that the financial institution hold the escrowed funds' principal for the benefit<br>of releasing parties and prohibits the tobacco product manufacturer placing the<br>funds into escrow from using, accessing, or directing the use of the funds' principal<br>except as consistent with subdivision b of subsection 2 of section 51-25-02.7."Released claims" means released claims as that term is defined in the master<br>settlement agreement.8."Releasing parties" means releasing parties as that term is defined in the master<br>settlement agreement.Page No. 19."Tobacco product manufacturer" means an entity that after April 8, 1999, directly,<br>and not exclusively through any affiliate:a.Manufactures cigarettes anywhere that the manufacturer intends to be sold in<br>the United States, including cigarettes intended to be sold in the United States<br>through an importer (except when the importer is an original participating<br>manufacturer, as that term is defined in the master settlement agreement,<br>which will be responsible for the payments under the master settlement<br>agreement with respect to such cigarettes as a result of the provisions of<br>subsection II(mm) of the master settlement agreement and which pays the<br>taxes specified in subsection II(z) of the master settlement agreement, and<br>provided that the manufacturer of such cigarettes does not market or advertise<br>the cigarettes in the United States);b.Is the first purchaser anywhere for resale in the United States of cigarettes<br>manufactured anywhere which the manufacturer does not intend to be sold in<br>the United States; orc.Becomes a successor of an entity described in subdivision a or b.The term "tobacco product manufacturer" does not include an affiliate of a tobacco<br>product manufacturer unless the affiliate itself falls within subdivision a, b, or c.10."Units sold" means the number of individual cigarettes sold in the state by the<br>applicable tobacco product manufacturer, whether directly or through a distributor,<br>retailer, or similar intermediary or intermediaries, during the year in question, as<br>measured by excise taxes collected by the state on packs or "roll-your-own" tobacco<br>containers.The state tax commissioner shall adopt rules as are necessary toascertain the amount of state excise tax paid on the cigarettes of the tobacco<br>product manufacturer for each year.51-25-02.Requirements.A tobacco product manufacturer selling cigarettes toconsumers within the state, whether directly or through a distributor, retailer, or similar<br>intermediary or intermediaries, after April 8, 1999, must do one of the following:1.Become a participating manufacturer, as that term is defined in section II(jj) of the<br>master settlement agreement, and generally perform its financial obligations under<br>the master settlement agreement; or2.a.Place into a qualified escrow fund by April fifteenth of the year following the<br>year in question, the following amounts, as such amounts are adjusted for<br>inflation:(1)1999: $.0094241 per unit sold after April 8, 1999;(2)2000: $.0104712 per unit sold;(3)For each of 2001 and 2002: $.0136125 per unit sold;(4)For each of 2003 through 2006: $.0167539 per unit sold; and(5)For each of 2007 and each year thereafter: $.0188482 per unit sold.b.A tobacco product manufacturer that places funds into escrow pursuant to<br>subdivision a shall receive the interest or other appreciation on the funds as<br>earned.The funds may be released from escrow only under the followingcircumstances:Page No. 2(1)To pay a judgment or settlement on any released claim brought against<br>the tobacco product manufacturer by the state or any releasing party<br>located or residing in the state. Funds must be released from escrow<br>under this paragraph in the order in which they were placed into escrow<br>and only to the extent and at the time necessary to make payments<br>required under the judgment or settlement;(2)To the extent that a tobacco product manufacturer establishes that the<br>amount it was required to place into escrow on account of units sold in<br>the state in a particular year was greater than the master settlement<br>agreement payments, as determined pursuant to section IX(i) of that<br>agreement, including after final determination of all adjustments, that the<br>manufacturer would have been required to make on account of such<br>units sold had it been a participating manufacturer, the excess must be<br>released from escrow and revert back to such tobacco product<br>manufacturer; or(3)To the extent not released from escrow under paragraph 1 or 2, funds<br>must be released from escrow and revert back to the tobacco product<br>manufacturer twenty-five years after the date on which they were placed<br>into escrow.c.Each tobacco product manufacturer that elects to place funds into escrow<br>pursuant to this subsection shall annually certify to the state tax commissioner<br>that it is in compliance with this subsection. The state tax commissioner shall<br>refer every instance of noncompliance to the attorney general. The attorney<br>general may bring a civil action on behalf of the state against any tobacco<br>product manufacturer that fails to place into escrow the funds required under<br>this section. Any tobacco product manufacturer that fails in any year to place<br>into escrow the funds required under this section must:(1)Be required within fifteen days to place the funds into escrow as will bring<br>it into compliance with this section.The court, upon a finding of aviolation of this subdivision, may impose a civil penalty to be paid to the<br>general fund of the state in an amount not to exceed five percent of the<br>amount improperly withheld from escrow per day of the violation and in a<br>total amount not to exceed one hundred percent of the original amount<br>improperly withheld from escrow;(2)In the case of a knowing violation, be required within fifteen days to place<br>the funds into escrow as will bring it into compliance with this section.<br>The court, upon a finding of a knowing violation of this subdivision, may<br>impose a civil penalty to be paid to the general fund of the state in an<br>amount not to exceed fifteen percent of the amount improperly withheld<br>from escrow per day of the violation and in a total amount not to exceed<br>three hundred percent of the original amount improperly withheld from<br>escrow; and(3)In the case of a second knowing violation, be prohibited from selling<br>cigarettes to consumers within the state, whether directly or through a<br>distributor, retailer, or similar intermediary, for a period not to exceed two<br>years.Each failure to make an annual deposit required under this section constitutes a separate<br>violation.Page No. 3Document Outlinechapter 51-25 tobacco product manufacturer sales
