2005 California Revenue and Taxation Code Sections 30161-30165.1 Article 1. Use of Stamps and Impressions

30161.  Except for the use or consumption of cigarettes by other
than a licensed distributor, and as may be authorized under the
provisions of Section 30165, the tax imposed by this part with
respect to distributions of cigarettes shall be paid by distributors
through the use of stamps or meter impressions.  The board shall
furnish stamps for sale and provide for the sale of meter register
settings for metering machines approved by the board.
30162.  (a) Stamps and meter impressions shall be of the designs,
specifications, and denominations as may be prescribed by the board.
Stamps and meter impressions shall be generated by a technology
capable of being read by a scanning or similar device and shall be
encrypted with, at a minimum, the following information:
   (1) The name and address of the distributor affixing the stamp or
meter impression.
   (2) The date the stamp or meter impression was affixed.
   (3) The denominated value of the stamp or meter impression.
   (b) The board shall prescribe by regulation the method and manner
in which stamps or meter impressions are to be affixed to packages of
cigarettes and may provide for the cancellation of stamps or meter
impressions.
   (c) This section shall become operative on January 1, 2005.
30163.  (a) Except as otherwise provided in this section, an
appropriate stamp shall be affixed to, or an appropriate meter
impression shall be made on each package of cigarettes prior to the
distribution of the cigarettes.
   (b) No stamp or meter impression may be affixed to, or made upon,
any package of cigarettes if any one of the following occurs:
   (1) The package does not comply with all requirements of the
Federal Cigarette Labeling and Advertising Act (15 U.S.C. Sec. 1331
and following) for the placement of labels, warnings, or any other
information upon a package of cigarettes that is to be sold within
the United States.
   (2) The package is labeled "For Export Only," "U.S. Tax Exempt,"
"For Use Outside U.S.," or similar wording indicating that the
manufacturer did not intend that the product be sold in the United
States.
   (3) The package, or a package containing individually stamped
packages, has been altered by adding or deleting the wording, labels,
or warnings described in paragraph (1) or (2).
   (4) The package was imported into the United States after January
1, 2000, in violation of Section 5754 of Title 26 of the United
States Code.
   (5) (A) The package bears a cigarette brand name which is a
registered U.S. trademark of a participating manufacturer and the
package was imported by anyone other than the participating
manufacturer of that cigarette brand.
   (B) For purposes of this paragraph, "participating manufacturer"
has the same meaning as defined in paragraph (1) of subdivision (a)
of Section 104557 of the Health and Safety Code and in Section II(jj)
of the Master Settlement Agreement described in Article 3
(commencing with Section 104555) of Chapter 1 of Part 3 of Division
103 of the Health and Safety Code.
   (c) Pursuant to its authority under Section 30148, the board shall
revoke the license issued to a distributor that is determined to be
in violation of this section.
   (d) A violation of subdivision (b) shall constitute unfair
competition under Section 17200 of the Business and Professions Code.
30164.  A metering machine may be used and a meter may be stored,
transferred, transported, repaired, opened, set or used only in
accordance with rules and regulations prescribed by the board.
Meters, meter register settings, or unaffixed stamps shall not be
sold, exchanged or in any manner transferred by a distributor to
another person without prior written approval of the board.
30165.  The board by regulation may provide that the tax imposed by
this part with respect to cigarettes shall be paid without the use of
stamps or meter impressions in connection with a particular type of
transaction.
30165.1.  (a) The following definitions shall apply for purposes of
this section:
   (1) "Board" means the State Board of Equalization.
   (2) "Brand family" means all styles of cigarettes sold under the
same trademark and differentiated from one another by means of
additional modifiers, including, but not limited to, "menthol,"
"lights," "kings," and "100s" and includes any brand name, alone or
in conjunction with any other word, trademark, logo, symbol, motto,
selling message, recognizable pattern of colors, or any other indicia
of product identification identical or similar to, or identifiable
with, a previously known brand of cigarettes.
   (3) "Cigarette" has the same meaning as in subdivision (d) of
Section 104556 of the Health and Safety Code and includes tobacco
products defined as a cigarette under that subdivision.
   (4) "Distributor" has the same meaning as in Section 30011.
   (5) "MSA" means the Master Settlement Agreement, as defined in
subdivision (e) of Section 104556 of the Health and Safety Code.
   (6) "Nonparticipating manufacturer" means any tobacco product
manufacturer that is not a participating manufacturer.
   (7) "Participating manufacturer" has the same meaning as in
subsection II(jj) of the MSA.
   (8) "Qualified escrow fund" has the same meaning as in subdivision
(f) of Section 104556 of the Health and Safety Code.
   (9) "Tobacco product manufacturer" has the same meaning as in
subdivision (i) of Section 104556 of the Health and Safety Code.
   (10) "Units sold" has the same meaning as in subdivision (j) of
Section 104556 of the Health and Safety Code.
   (b) Every tobacco product manufacturer whose cigarettes are sold
in this state, whether directly or through a distributor, retailer,
or similar intermediary or intermediaries, shall execute and deliver
on a form and in the manner prescribed by the Attorney General a
certification to the Attorney General no later than the 30th day of
April each year that, as of the date of the certification, the
tobacco product manufacturer is either a participating manufacturer,
or is in full compliance with Article 3 (commencing with Section
104555) of Chapter 1 of Part 3 of Division 103 of the Health and
Safety Code, including all installment payments required by that
article and this section, and any regulations promulgated pursuant
thereto.  Any person who makes a certification pursuant to this
subdivision that asserts the truth of any material matter that he or
she knows to be false is guilty of a misdemeanor punishable by
imprisonment of up to one year in the county jail, or a fine of not
more than one thousand dollars ($1,000), or both the imprisonment and
the fine.
   (1) A participating manufacturer shall include in its
certification a complete list of its brand families.  The
participating manufacturer shall update the list 30 days prior to any
addition to or modification of its brand families by executing and
delivering a supplemental certification to the Attorney General.
   (2) A nonparticipating manufacturer shall include in its
certification a complete list of all of its brand families, in
accordance with the following requirements:
   (A) Separately listing brand families of cigarettes and the number
of units sold for each brand family that were sold in the state
during the preceding calendar year.
   (B) Separately listing all of its brand families that have been
sold in the state at any time during the current calendar year.
   (C) Indicating by an asterisk any brand family sold in the state
during the preceding calendar year that is no longer being sold in
the state as of the date of the certification.
   (D) Identifying by name and address any other manufacturer,
including all fabricators or makers of the brand families in the
preceding or current calendar year in a form, manner, and detail as
required by the Attorney General.  The nonparticipating manufacturer
shall update the list 30 days prior to any change in a fabricator for
any brand family or any addition to or modification of its brand
families by executing and delivering a supplemental certification to
the Attorney General.
   (3) In the case of a nonparticipating manufacturer, the
certification shall further certify all of the following:
   (A) That the nonparticipating manufacturer is registered to do
business in the state, or has appointed a resident agent for service
of process and provided notice thereof as required by subdivision
(f).
   (B) That the nonparticipating manufacturer has done all of the
following:
   (i) Established and continues to maintain a qualified escrow fund
as that term is defined in subdivision (f) of Section 104556 of the
Health and Safety Code and implementing regulations.
   (ii) Executed a qualified escrow agreement that has been reviewed
and approved by the Attorney General and that governs the qualified
escrow fund.
   (iii) If the nonparticipating manufacturer is not the fabricator
or maker of the cigarettes, that the escrow agreement, certification,
reports, and any other forms required by Article 3 (commencing with
Section 104555) of Chapter 1 of Part 3 of Division 103 of the Health
and Safety Code and implementing regulations are signed by the
company that fabricates or makes the cigarettes and in the manner
required by the Attorney General.
   (C) That the nonparticipating manufacturer is in full compliance
with Article 3 (commencing with Section 104555) of Chapter 1 of Part
3 of Division 103 of the Health and Safety Code, including paragraph
(2) of subdivision (a) of Section 104557 of the Health and Safety
Code, this section, and any regulations promulgated pursuant thereto.
   (D) That the manufacturer has provided all of the following:
   (i) The name, address, and telephone number of the financial
institution where the nonparticipating manufacturer has established
the qualified escrow fund required pursuant to Article 3 (commencing
with Section 104555) of Chapter 1 of Part 3 of Division 103 of the
Health and Safety Code and all regulations promulgated thereto.
   (ii) The account number of the qualified escrow fund and
subaccount number for the State of California.
   (iii) The amount the nonparticipating manufacturer placed in the
fund for cigarettes sold in the state during the preceding calendar
year, the date and amount of each deposit, and any confirming
evidence or verification as may be deemed necessary by the Attorney
General.
   (iv) The amounts and dates of any withdrawal or transfer of funds
the nonparticipating manufacturer made at any time from the fund or
from any other qualified escrow fund into which it ever made escrow
payments pursuant to Article 3 (commencing with Section 104555) of
Chapter 1 of Part 3 of Division 103 of the Health and Safety Code and
all regulations promulgated thereto.
   (4) (A) A tobacco product manufacturer may not include a brand
family in its certification unless either of the following is true:
   (i) In the case of a participating manufacturer, the participating
manufacturer affirms that the brand family is to be deemed to be its
cigarettes for purposes of calculating its payments under the MSA
for the relevant year, in the volume and shares determined pursuant
to the MSA.
   (ii) In the case of a nonparticipating manufacturer, the
nonparticipating manufacturer affirms that the brand family is to be
deemed to be its cigarettes for purposes of Article 3 (commencing
with Section 104555) of Chapter 1 of Part 3 of Division 103 of the
Health and Safety Code, including paragraph (2) of subdivision (a) of
Section 104557 of the Health and Safety Code, and any regulations
promulgated pursuant thereto and this section.
   (B) Nothing in this section shall be construed as limiting or
otherwise affecting the state's right to maintain that a brand family
constitutes cigarettes of a different tobacco product manufacturer
for purposes of calculating payments under the MSA or for purposes of
Article 3 (commencing with Section 104555) of Chapter 1 of Part 3 of
Division 103 of the Health and Safety Code and any regulations
promulgated pursuant thereto.
   (5) A tobacco product manufacturer shall maintain all invoices and
documentation of sales and other information relied upon for the
certification for a period of five years, unless otherwise required
by law to maintain them for a longer period of time.
   (c) Not later than June 30, 2004, the Attorney General shall
develop and publish on its Internet Web site a directory listing of
all tobacco product manufacturers that have provided current, timely,
and accurate certifications conforming to the requirements of
subdivision (b) and all brand families that are listed in the
certifications, except as specified below.
   (1) The Attorney General may not include or retain in the
directory the name or brand families of any nonparticipating
manufacturer that fails to provide the required certification or
whose certification the Attorney General determines is not in
compliance with subdivision (b), unless the Attorney General has
determined that the violation has been cured to the satisfaction of
the Attorney General.
   (2) Neither a tobacco product manufacturer nor brand family shall
be included or retained in the directory if the Attorney General
concludes that either of the following is true:
   (A) In the case of a nonparticipating manufacturer, any escrow
deposit required pursuant to Section 104557 of the Health and Safety
Code for any period for any brand family, whether or not listed by
the nonparticipating manufacturer, has not been fully deposited into
a qualified escrow fund governed by a qualified escrow agreement that
has been approved by the Attorney General.
   (B) Any outstanding final judgment, including interest thereon,
for violations of Article 3 (commencing with Section 104555) of
Chapter 1 of Part 3 of Division 103 of the Health and Safety Code,
this section, and any regulations promulgated pursuant thereto, has
not been fully satisfied for the brand family and the manufacturer.
   (3) The Attorney General shall update the directory as necessary
in order to correct mistakes and to add or remove a tobacco product
manufacturer or brand family to keep the directory in conformity with
the requirements of this section.  The Attorney General shall
promptly provide distributors with written notice of each tobacco
product manufacturer and brand family that the Attorney General has
added to, or excluded or removed from the list.
   (4) Every distributor shall provide to the Attorney General and
update, as necessary, an electronic mail address for the purpose of
receiving any notifications as may be required by this section.
   (5) The Attorney General shall provide each tobacco product
manufacturer that has provided all certifications and other
information required by this section with a written acknowledgment of
receipt within seven business days after receiving the
certifications and other materials.  Each tobacco product
manufacturer shall provide to each distributor to whom it sells or
ships cigarettes, or any tobacco product defined as a cigarette under
this section, a copy of each acknowledgment of receipt provided to
the manufacturer by the Attorney General.  Upon request, the Attorney
General shall provide any distributor with a copy of the most recent
written acknowledgment of receipt provided to the tobacco product
manufacturer.
   (d) (1) The Attorney General may exclude or remove from the list
required by subdivision (c) a tobacco product manufacturer or any of
its brand families, based on a determination that the manufacturer is
not a participating manufacturer and has not made all escrow
payments required by paragraph (2) of subdivision (a) of Section
104557 of the Health and Safety Code, in accordance with that
subdivision, or has not complied with this section.  Before the
exclusion or removal may take effect, the Attorney General shall
notify the manufacturer of this determination.
   (2) Upon receiving notice from the Attorney General pursuant to
paragraph (1), the manufacturer may challenge the Attorney General's
determination as erroneous, and may seek relief from the
determination, by filing a petition for writ of mandate pursuant to
Section 1085 of the Code of Civil Procedure for that purpose in the
Superior Court for the County of Sacramento, or as otherwise provided
by law.  The filing of the petition shall operate to stay the
Attorney General's determination, if the manufacturer has paid into
escrow the full amount of any deficiency in the escrow payments that
the Attorney General has determined the tobacco product manufacturer
was required to have made under paragraph (2) of subdivision (a) of
Section 104557 of the Health and Safety Code, including any
installment payments required under subdivision (h), pending final
resolution of the action.
   (e) (1) No person shall affix, or cause to be affixed, any tax
stamp or meter impression to a package of cigarettes pursuant to
subdivision (a) of Section 30163, or pay the tax levied pursuant to
Sections 30123 and 30131.2 on a tobacco product defined as a
cigarette under this section, unless the brand family of the
cigarettes or tobacco product, and the tobacco product manufacturer
that makes or sells the cigarettes or tobacco product, are included
on the list posted by the Attorney General pursuant to subdivision
(c).
   (2) No person shall sell, offer, or possess for sale in this
state, or import for personal consumption in this state, cigarettes
of a tobacco product manufacturer or brand family not included in the
directory.
   (3) No person shall do either of the following:
   (A) Sell or distribute cigarettes that the person knows or should
know are intended to be distributed in violation of paragraphs (1)
and (2).
   (B) Acquire, hold, own, possess, transport, import, or cause to be
imported cigarettes that the person knows or should know are
intended to be distributed in violation of paragraphs (1) and (2).
   (f) (1) Any nonresident or foreign nonparticipating manufacturer
that has not registered to do business in the state as a foreign
corporation or business entity shall, as a condition precedent to
having its brand families listed or retained in the directory,
appoint and continually engage without interruption the services of
an agent in this state to act as agent for the service of process on
whom all process, and any action or proceeding against it concerning
or arising out of the enforcement of this section, Article 3
(commencing with Section 104555) of Chapter 1 of Part 3 of Division
103 of the Health and Safety Code, and any regulations promulgated
pursuant thereto, may be served in any manner authorized by law.
This service shall constitute legal and valid service of process on
the nonparticipating manufacturer.  The nonparticipating manufacturer
shall provide the name, address, telephone number, and proof of the
appointment and availability of the agent to the satisfaction of the
Attorney General.
   (2) The nonparticipating manufacturer shall provide notice to the
Attorney General 30 calendar days prior to termination of the
authority of an agent and shall further provide proof to the
satisfaction of the Attorney General of the appointment of a new
agent no less than five calendar days prior to the termination of an
existing agent appointment.  In the event an agent terminates an
agency appointment, the nonparticipating manufacturer shall notify
the Attorney General of said termination within five calendar days
and shall include proof to the satisfaction of the Attorney General
of the appointment of a new agent.
   (3) Any nonparticipating manufacturer whose products are sold in
this state without appointing or designating an agent as herein
required shall be deemed to have appointed the Secretary of State as
its agent, as provided in Section 2105 of the Corporations Code, and
may be proceeded against in courts of this state by service of
process upon the Secretary of State.  However, the appointment of the
Secretary of State pursuant to this provision as the agent for
service of process does not satisfy the condition precedent specified
in paragraph (1) to having its brand families listed or retained in
the directory.
   (g) (1) Not later than 25 days after the end of each calendar
quarter, and more frequently if so directed by the board or the
Attorney General, each distributor shall submit any information as
the board or Attorney General requires to facilitate compliance with
this section, including, but not limited to, a list by brand family
of the total number of cigarettes or in the case of roll your own,
the total ounces for which the distributor affixed stamps during the
previous calendar month or otherwise paid the tax due for those
cigarettes.  The distributor shall maintain, and shall make available
to the board and the Attorney General, all invoices and
documentation of sales of all nonparticipating manufacturer
cigarettes and any other information relied upon in reporting to the
board and the Attorney General for a period of five years.
   (2) Notwithstanding Section 30455, the board is authorized to
disclose to the Attorney General any information received under this
part for purposes of determining compliance with and enforcing the
provisions of this section and Article 3 (commencing with Section
104555) of Chapter 1 of Part 3 of Division 103 of the Health and
Safety Code, and any regulations promulgated pursuant thereto.  The
board and Attorney General shall share with each other the
information received under this section, and may share that
information with other federal, state, or local agencies, only for
purposes of enforcement of this section, Article 3 (commencing with
Section 104555) of Chapter 1 of Part 3 of Division 103 of the Health
and Safety Code, and any regulations promulgated pursuant thereto, or
corresponding laws of other states.
   (3) At any time, the Attorney General may require from the
nonparticipating manufacturer proof from the financial institution in
which the manufacturer has established a qualified escrow fund for
the purpose of compliance with Article 3 (commencing with Section
104555) of Chapter 1 of Part 3 of Division 103 of the Health and
Safety Code, and any regulations promulgated pursuant thereto, of the
amount of money in the fund being held on behalf of the state and
the dates of deposits, and listing the amounts of all withdrawals
from the fund and the dates thereof.
   (4) In addition to the information required to be submitted
pursuant to this section or Article 3 (commencing with Section
104555) of Chapter 1 of Part 3 of Division 103 of the Health and
Safety Code and any regulations promulgated pursuant thereto, the
board or the Attorney General may require a retailer, wholesaler,
distributor, or tobacco product manufacturer to submit any additional
information, including, but not limited to, samples of the packaging
or labeling of each brand family, as is necessary to enable the
Attorney General to determine whether a tobacco product manufacturer
is in compliance with this section, or Article 3 (commencing with
Section 104555) of Chapter 1 of Part 3 of Division 103 of the Health
and Safety Code, and any regulations promulgated pursuant thereto.
   (h) To promote compliance with this section, the Attorney General
may promulgate regulations requiring a tobacco product manufacturer
subject to the requirements of paragraph (2) of subdivision (a) of
Section 104557 to make the escrow deposits required in quarterly or
other specified installments during the year in which the sales
covered by the deposits are made.  The Attorney General may require
production of information sufficient to enable the Attorney General
to determine the adequacy of the amount of the installment deposit.
   (i) (1) In addition to any other civil or criminal penalty
provided by law, upon a finding that a distributor has violated
subdivision (e), or paragraph (1) of subdivision (g), the board may
take the following actions:
   (A) In the case of the first offense, the board may revoke or
suspend the license or licenses of the distributor pursuant to the
procedures applicable to the revocation of a license set forth in
Section 30148.
   (B) In the case of a second or any subsequent offense, in addition
to the action authorized under subparagraph (A), the board may
impose a civil penalty in an amount not to exceed the greater of
either of the following:
   (i) Five times the retail value of the cigarettes or tobacco
products defined as cigarettes under this section.
   (ii) Five thousand dollars ($5,000).
   (2) A distributor in any action for a violation of subdivision (e)
shall have a defense provided that either of the following is true:
   (A) At the time of the violation, the cigarettes or tobacco
products claimed to be the subject of the alleged violation belonged
to a brand family that was included on the list required by
subdivision (c).
   (B) At the time of the violation, the distributor possessed a copy
of the Attorney General's most recent written acknowledgment of
receipt of the certifications and other information required as a
condition of including the brand family on the list required by
subdivision (c).
   (3) The defense described in subparagraph (B) of paragraph (2) is
not available to a distributor if, at the time of the violation, the
Attorney General had provided the distributor with written notice
that the brand family had been excluded or removed from the list
required by subdivision (c), or the distributor failed to provide the
Attorney General with a current address for the receipt of written
notice through electronic mail as required by paragraph (4) of
subdivision (c).
   (4) A violation of paragraph (3) of subdivision (e) shall
constitute a misdemeanor.
   (j) If a distributor affixes a stamp or meter impression to a
package of cigarettes under subdivision (a) of Section 30163, or pays
the tax levied under Sections 30123 and 30131.2 on a tobacco product
defined as a cigarette under this section, during the period between
the date on which the brand family of the cigarettes or tobacco
product was excluded or removed from the list required by subdivision
(c) and the date on which the distributor received notice of the
exclusion or removal under paragraph (4) of subdivision (c), then
both of the following shall apply:
   (1) The distributor shall be entitled to a credit for the tax paid
by the distributor with respect to the cigarette or tobacco product
to which the stamp or meter impression was affixed, or the tax paid
during that period.  The distributor shall comply with regulations
prescribed by the board regarding refunds and credits that are
adopted pursuant to Section 30177.5.  If the distributor has sold the
cigarette or tobacco product to a wholesaler or retailer, and has
received payment from the wholesaler or retailer, the distributor
shall provide the credit to the wholesaler or retailer.
   (2) The brand family may not be included on or restored to the
list until the tobacco product manufacturer has reimbursed the
distributor for the cost to the distributor of the cigarettes or
tobacco product to which the stamp or meter impression was affixed,
or the tax paid, during that period.
   (k) Any tobacco product manufacturer that falsely represents any
of the following to any person shall be guilty of a misdemeanor for
each false representation:
   (1) Any information required under subdivision (b).
   (2) That the tobacco product manufacturer is a participating
manufacturer.
   (3) That the tobacco product manufacturer or any other person has
made any or all escrow payments required by paragraph (2) of
subdivision (a) of Section 104557 of the Health and Safety Code, if
applicable to the manufacturer.
   (4) That it has complied with subdivision (b), or with paragraph
(1) of subdivision (g), if applicable to the manufacturer.
   (l) A violation of subdivision (e) shall constitute unfair
competition under Section 17200 of the Business and Professions Code.
   (m) No person shall be issued a distributor's license, pursuant to
Section 30140, unless that person has certified in writing that the
person will comply fully with this section.  Any person who makes a
certification pursuant to this subdivision that asserts the truth of
any material matter that he or she knows to be false is guilty of a
misdemeanor punishable by imprisonment of up to one year in the
county jail, or a fine of not more than one thousand dollars
($1,000), or both the imprisonment and the fine.
   (n) For the year 2003, if the effective date of the act that added
this section is later than March 16, 2003, the first report of
distributors required by paragraph (1) of subdivision (g) shall be
due 30 days after that effective date, the certifications by a
tobacco product manufacturer described in subdivision (b) shall be
due 45 days after that effective date, and the directory described in
subdivision (c) shall be published or made available within 90 days
after that effective date.
   (o) The Attorney General may adopt rules and regulations to
implement this section.  The rules and regulations may establish
procedures for including in the list described in subdivision (c)
tobacco product manufacturers that are not participating
manufacturers and were not required to make escrow payments under
paragraph (2) of subdivision (a) of Section 104557 of the Health and
Safety Code, for sales made during any preceding calendar year, and
brand families of those manufacturers.  The rules and regulations may
also establish procedures for seizure and destruction of cigarettes
forfeited to the state pursuant to Section 30436 or Section 30449,
including, but not limited to, the state facilities that may be used
for the destruction of contraband cigarettes.  Nothing in this
section shall affect the authority of local law enforcement and local
government officials to seize and destroy contraband under existing
state or local law.  The regulations adopted to effect the purposes
of this section are emergency regulations in accordance with Chapter
3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title
2 of the Government Code.  For purposes of that chapter, including
Section 11349.6 of the Government Code, the adoption of the
regulations shall be considered by the Office of Administrative Law
to be necessary for the immediate preservation of the public peace,
health and safety, and general welfare.  Notwithstanding subdivision
(e) of Section 11346.1 of the Government Code, the regulations shall
be repealed 180 days after their effective date, unless the adopting
authority or agency complies with that chapter, as provided in
subdivision (e) of Section 11346.1 of the Government Code.
   (p) In any action brought by the state to enforce this section,
the state shall be entitled to recover the costs of investigation,
expert witness fees, costs of the action, and reasonable attorney's
fees.
   (q) Unless otherwise expressly provided, the remedies or penalties
provided by this section are cumulative to each other and to the
remedies or penalties available under all other laws of this state.