Amendment #30 to H.3382

Smokeless Tobaco

Mr. Costello of Newburyport move that the bill be amended by adding the following sections:



Section XX

Section 1 of chapter 64C, as so appearing, is hereby amended by adding at the end of the first paragraph the following language:

Whenever used in this chapter unless the context otherwise requires, the following terms shall have the following meanings – “counterfeit” means, with respect to units of smokeless tobacco, such units that (i) have false manufacturing labels, (ii) are not manufactured by the manufacturer indicated on the container, or (iii) have affixed to the container a false indicia of tax payment; “unit” means a single container to be purchased by the consumer with respect to smokeless tobacco.



Section XX

Chapter 64C is further amended by adding the following new section 37A:

Section 37A. Counterfeit Smokeless Tobacco; Penalties.



It is unlawful to sell, distribute or possess counterfeit smokeless tobacco.



Any person who knowingly distributes or possesses with the intent to distribute a total quantity of fewer than two units of counterfeit smokeless tobacco is guilty of a misdemeanor. Any person who is convicted of a second or subsequent offense involving a total quantity of fewer than two units of counterfeit smokeless tobacco is guilty of a felony provided that the accused was at liberty between each conviction, and it is admitted, or found by the jury or judge before whom the person is tried, that the accused was previously convicted of a violation of this subsection. Any person who knowingly distributes or possesses with the intent to distribute a total quantity of two or more units of counterfeit smokeless tobacco is guilty of a felony.



Any person who knowingly violates this section with a total quantity of fewer than two units of smokeless tobacco shall be punished by a civil penalty of no more than $1,000. Any person who knowingly violates this section shall, for a second or subsequent offense involving a total quantity of fewer than two units of smokeless tobacco, be punished by a civil penalty of no more than $5,000 and, if applicable, the revocation by the commissioner of his wholesaler license.



Any person who knowingly violates this section with a total quantity of two or more units of smokeless tobacco shall be punished by a civil penalty of no more than $2,000. Any person who knowingly violates this section shall, for a second or subsequent offense involving a total quantity of two or more units of smokeless tobacco, be punished by a civil penalty of no more than $50,000 and, if applicable, the revocation by the commissioner of his wholesaler license.





Section XX

Chapter 64C is further amended by adding the following new section 38B:

Section 38B. Forfeiture of Counterfeit Smokeless Tobacco.



Counterfeit smokeless tobacco possessed in violation of Section thirty-seven A of this Chapter sixty-four C shall be subject to seizure, forfeiture, and destruction by the commissioner or any law-enforcement officer of the Commonwealth of Massachusetts. All fixtures, equipment, materials, and personal property used in substantial connection with (i) the sale or possession of counterfeit smokeless tobacco in a knowing and intentional violation of Section thirty-seven A of this Chapter sixty-four C shall be subject to seizure and forfeiture as provided in sections fifty to fifty-five, inclusive, of chapter one hundred and thirty-eight in the case of alcoholic beverages.



Section XX



Section 1 of Chapter 94F is hereby amended by adding the following definitions:



“Contraband”, with respect to smokeless tobacco, such units that are sold, purchased, transported, imported, received, or possessed and (i) upon which any required tax has not been paid, (ii) has been imported in violation of federal, state or local law, (iii) the packaging of which has been altered so as to remove, conceal or obscure any statement, label, stamp, sticker, or notice or any health warning in violation of federal, state or local law.



“Smokeless Tobacco”, snuff, snuff flour and any other tobacco or tobacco product prepared in such manner as to be suitable for chewing, including, but not limited to Cavendish, plug, twist and fine-cut tobaccos.



And by adding to the definition of “units sold” the following language:

“ with respect to cigarettes; “unit”, with respect to smokeless tobacco, shall mean a single container to be purchased by the consumer.



Section XXX

Chapter 94F is hereby further amended by adding the following new sections:



Section 5A. Contraband Smokeless Tobacco; Possession without licens; Penalties.



Any person, except as otherwise provided by law, who sells, purchases, transports, imports, receives, or possesses smokeless tobacco upon which tax has not been paid shall be required to pay any tax owed pursuant Massachusetts law. In addition, such person shall be required to pay a civil penalty of (i) $2.50 per unit of smokeless tobacco, up to $500, for the first violation by a legal entity within a 36-month period; (ii) $5 per unit of smokeless tobacco, up to $1,000, for the second violation by the legal entity within a 36-month period; and (iii) $10 per unit of smokeless tobacco, up to $50,000, for the third and any subsequent violation by the legal entity within a 36-month period, to be assessed and collected by the commissioner as other taxes are collected. In addition, where willful intent exists to defraud the Commonwealth of any tax levied on smokeless tobacco pursuant to Massachusetts law, such person shall be required to pay a civil penalty of $25 per unit of smokeless tobacco, up to $250,000.



B. It shall be unlawful for any person, except as otherwise provided by law, to sell, purchase, transport, import, receive or possess fewer than 500 units of smokeless tobacco unless the tax on those units has been paid. Any person violating the provisions of this subsection shall be guilty of a misdemeanor.



C. It shall be unlawful for any person, except as otherwise provided by law, to sell, purchase, transport, import, receive or possess 500 or more units of smokeless tobacco unless the tax on those units has been paid. Any person violating the provisions of this subsection shall be guilty of a felony



D. If a person who (i) has not been issued a license, as provided in Section two of Chapter sixty-four C or (ii) is not a retail dealer who has lawfully purchased smokeless tobacco from such license holder has in his possession within the Commonwealth more than 25 units smokeless tobacco upon which no tax has been paid, such possession shall be presumed to be for the purpose of evading the payment of the taxes due thereon.



E. Any person other than an authorized holder who possesses, with intent to distribute, more than 25, but fewer than 500, units of tax-paid smokeless tobacco is guilty of a misdemeanor for a first offense and is guilty of a felony for any second or subsequent offense.



F. Any person other than an authorized holder who possesses, with intent to distribute, more than 500, units of tax-paid smokeless tobacco is guilty of a felony.



G. Additionally, any person who violates the provisions of this section shall be assessed a civil penalty of (i) $2.50 per unit, but no more than $5,000, for a first offense; (ii) $5 per unit, but no more than $10,000, for a second such offense committed within a 36-month period; and (iii) $10 per unit, but no more than $50,000, for a third or subsequent such offense committed within a 36-month period. The civil penalties shall be assessed and collected by the commissioner as other taxes are collected.





Section 5B. Illegal distribution of contraband smokeless tobacco.



It shall be unlawful for any person to:



Sell or distribute in the Commonwealth of Massachusetts, acquire, hold, own possess, or transport, for sale or distribution in the Commonwealth, or import, or cause to be imported, into the Commonwealth for sale or distribution in the Commonwealth any smokeless tobacco, (i) the packages of which bear any statement, label, stamp, sticker, or notice indicating that the manufacturer did not intend the smokeless tobacco to be sold, distributed, or used in the United States, including but not limited to labels stating “For Export Only,” “U.S. Tax-Exempt,” “For Use Outside U.S.,” or similar wording; (ii) the packages of which do not comply with all requirements imposed by or pursuant to federal law regarding warnings and any other information on packages manufactured, packaged, or imported for sale, distribution, or use in the United States or all federal trademark and copyright laws; (iii) imported into the United States in violation of any federal law or regulation; or (iv) that such person otherwise knows or has reason to know the manufacturer did not intend to be sold, distributed, or used in the United States.



Alter any package of any smokeless tobacco, prior to sale or distribution to the ultimate consumer, so as to remove, conceal or obscure (i) any statement, label, stamp, sticker, or notice described in clause (i) of the foregoing paragraph or (ii) any health warning that is not specified in, or does not conform with the requirements of federal law.



The commissioner may impose a civil penalty in an amount not to exceed the greater of 500 percent of the retail value of the smokeless tobacco involved or $5,000 upon finding a violation of this provision and may assess the tax due and any interest upon the product acquired, possessed, sold, or offered for sale in violation of this provision.



Any person who commits any of the acts prohibited by this section, either knowingly or having reason to know he is doing so shall be guilty of a felony.



In addition to any other remedy provided by law, any person may bring an action for appropriate injunctive or other equitable relief for a violation of this provision, for actual damages, if any, sustained by reason of the violation, and as determined by the court, interest on the damages from the date of the complaint, and taxable costs. If the court finds that the violation was willful, it may increase damages to an amount not exceeding three times the actual damages sustained by reason of the violation.



For the purpose of enforcing this provision, the commissioner may request or share information with any federal, state or local agency, including any agency of another state or local agency thereof.



Section 5C. Forfeiture of Contraband Smokeless Tobacco.



Contraband smokeless tobacco possessed in violation of Sections five A and B of this Chapter ninety-four F shall be subject to seizure, forfeiture, and destruction by the commissioner or any law-enforcement officer of the Commonwealth. All fixtures, equipment, materials, and personal property used in substantial connection with the sale or possession of smokeless tobacco in a knowing and intentional violation of Sections five A and B of this Chapter ninety-four F shall be subject to seizure and forfeiture as provided in sections fifty to fifty-five, inclusive, of chapter one hundred and thirty-eight in the case of alcoholic beverages.