§ 7–1803.01. Findings and purpose.
The Council finds that violations of part A of this subchapter threaten the integrity of the tobacco Master Settlement Agreement, as defined in § 7-1801.01, the fiscal soundness of the District, and the public health and that enacting the procedural enhancements set forth in this part will aid in the enforcement of part A of this subchapter and thereby safeguard the Master Settlement Agreement, the fiscal soundness of the District, and the public health.
§ 7–1803.02. Definitions.
For the purposes of this part, the term:
(1) “Brand Family” means all styles of cigarettes sold under the same trademark and differentiated from one another by additional modifiers or descriptors, including “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.
(2) “Cigarette” has the same meaning as in § 7-1801.01(4).
(3) “Master Settlement Agreement” has the same meaning as in § 7-1801.01(5).
(4) “Non-participating Manufacturer” means any Tobacco Product Manufacturer that is not a Participating Manufacturer.
(5) “Participating Manufacturer” has the meaning given that term in Section II(jj) of the Master Settlement Agreement and all amendments to it.
(6) “Qualified Escrow Fund” has the same meaning as that term is defined in § 7-1801.01(6).
(7) “Tobacco Product Manufacturer” has the same meaning as that term is defined in § 7-1801.01(9).
(8) “Units Sold” has the same meaning as that term is defined in § 7-1801.01(10).
(9) “Wholesaler” means a wholesaler licensed under § 47-2404(b)(1).
§ 7–1803.03. Certifications; directory; tax stamps.
(a) Every Tobacco Product Manufacturer whose cigarettes are sold in the District whether directly or through a wholesaler, retailer, or similar intermediary shall execute and deliver on a form prescribed by the Mayor, a certification to the Mayor, no later than the April 13th of each year, certifying under penalty of perjury that, as of the date of such certification, the Tobacco Product Manufacturer is a Participating Manufacturer or is in full compliance with § 7-1801.02(2), including all quarterly installment payments required by regulations promulgated pursuant to § 7-1803.05(e); and:
(1) A Participating Manufacturer shall include in its certification a list of its Brand Families, which shall be updated 30 days prior to any addition to or modification of its Brand Families by executing and delivering a supplemental certification to the Mayor.
(2)(A) A Non-Participating Manufacturer shall include in its certification the following information:
(i) A list of all of its Brand Families and the number of Units Sold for each Brand Family that were sold in the District during the preceding calendar year;
(ii) A list of all of its Brand Families that have been sold in the District at any time during the current calendar year;
(iii) Indicating, by an asterisk, any Brand Family sold in the District of Columbia during the preceding calendar year that is no longer being sold in the District of Columbia as of the date of such certification;
(iv) Identifying by name and address, any other manufacturer of such Brand Families in the preceding or current calendar year;
(v) That it is registered to do business in the District or has appointed a resident agent for service of process and provided notice thereof as required by § 7-1803.04;
(vi) That it has established and continues to maintain a Qualified Escrow Fund, and that it has executed a qualified escrow agreement, which shall govern the Qualified Escrow Fund, that has been reviewed and approved by the Mayor;
(viii) The name, address, and telephone number of the financial institution where the Non-Participating Manufacturer has established such Qualified Escrow Fund required pursuant to § 7-1801.02(2) and all regulations promulgated pursuant to part A of this subchapter;
(ix) The account number of the Qualified Escrow Fund and any sub-account number for the District;
(x) The amount the Non-Participating Manufacturer has placed in the fund for cigarettes sold in the District during the preceding calendar year, including the date and amount of each deposit, and such evidence or verification as may be deemed necessary by the Mayor to confirm this information; and
(xi) The amount and date of any withdrawal or transfer of funds the Non-Participating Manufacturer has made at any time from the fund or from any other Qualified Escrow Fund into which it ever made escrow payments pursuant to § 7-1801.02(2) and all regulations promulgated pursuant to part A of this subchapter.
(B) The Non-Participating Manufacturer shall update the lists required by this paragraph 30 calendar days prior to any addition to or modification of its Brand Families by executing and delivering a supplemental certification to the Mayor.
(3)(A) A Tobacco Product Manufacturer may not include a Brand Family in its certification unless:
(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 Master Settlement Agreement for the relevant year, in the volume and shares determined pursuant to the Master Settlement Agreement; and
(ii) In the case of a Non-Participating Manufacturer, the Non-Participating Manufacturer affirms that the Brand Family is to be deemed to be its cigarettes for purposes of part A of this subchapter.
(B) Nothing in this section shall be construed as limiting or otherwise affecting the District of Columbia’s right to maintain that a Brand Family constitutes cigarettes of a different Tobacco Product Manufacturer for purposes of calculating payments under the Master Settlement Agreement or for purposes of § 7-1801.02(2).
(4) Tobacco Product Manufacturers shall maintain all invoices and documentation of sales and other such information relied upon for the required certification for a period of 5 years, unless required by law to maintain them for a greater period of time.
(b) Not later than 150 days after April 22, 2004, the Mayor shall develop and make available for public inspection a directory (“Directory”) listing all Tobacco Product Manufacturers that have provided current and accurate certifications conforming to the requirements of subsection (a) of this section and of all Brand Families that are listed in the certifications; provided, that:
(1) The Mayor shall not include or retain in the Directory the name or Brand Families of any Non-Participating Manufacturer that has failed to provide the required certification or whose certification the Mayor determines is not in compliance with subsection (a)(2) of this section, unless the Mayor has determined that the violation has been cured to the satisfaction of the Mayor.
(2) Neither a Tobacco Product Manufacturer nor Brand Family shall be included or retained in the Directory if the Mayor concludes, in the case of a Non-Participating Manufacturer, that:
(A) Any escrow payment required pursuant to § 7-1801.02(2) for any period for any Brand Family, whether or not listed by such Non-Participating Manufacturer, has not been fully paid into a Qualified Escrow Fund governed by a qualified escrow agreement that has been approved by the Mayor; or
(B) Any outstanding final judgment, including interest, for a violation of § 7-1801.02(2) has not been fully satisfied for the Brand Family or the manufacturer.
(3)(A) The Mayor 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 part and shall post in the Directory notice of any removal from the Directory of a Tobacco Product Manufacturer or Brand Family at least 30 days prior to removal from the Directory of the Tobacco Product Manufacturer or Brand Family; and unless otherwise provided by agreement between:
(i) A Wholesaler and a Tobacco Product Manufacturer, the Wholesaler shall be entitled to a refund from a Tobacco Product Manufacturer for any money paid by the Wholesaler to the Tobacco Product Manufacturer for any cigarettes of the Tobacco Product Manufacturer in the possession of the Wholesaler on the effective date of removal from the Directory, or as subsequently received from a retail dealer as provided herein, of that Tobacco Product Manufacturer or Brand Family of cigarettes.
(ii) A retail dealer and a Wholesaler, a retail dealer shall be entitled to a refund from a Wholesaler or a Tobacco Product Manufacturer for any money paid by the retail dealer to such Wholesaler or Tobacco Product Manufacturer for any cigarettes of the Tobacco Product Manufacturer still in the possession of the retail dealer on the effective date of removal from the Directory of that Tobacco Product Manufacturer or Brand Family of cigarettes.
(B) The Mayor shall not restore to the Directory the Tobacco Product Manufacturer or the Brand Family until the Tobacco Product Manufacturer has paid the Wholesaler or retail dealer any refund due.
(4) Every Wholesaler shall provide and update as necessary an electronic mail address to the Mayor for the purpose of receiving any notifications as may be required by this part.
(c) It shall be unlawful for any person to:
(1) Affix a stamp to a package or other container of cigarettes of a Tobacco Product Manufacturer or Brand Family not included in the Directory, or
(2) Sell, offer, or possess for sale, in the District, or import for personal consumption in the District, cigarettes of a Tobacco Product Manufacturer or Brand Family not included in the Directory.
§ 7–1803.04. Agent for service of process.
(a)(1) Any non-resident or foreign Non-Participating Manufacturer that has not registered to do business in the District as a foreign corporation or business entity shall, prior to having its Brand Families included or retained in the Directory, appoint and continually engage without interruption the services of an agent in the District 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 part or part A of this subchapter, may be served in any manner authorized by law and which shall constitute legal and valid service of process on the Non-Participating Manufacturer.
(2) The Non-Participating Manufacturer shall provide the name, address, phone number, and proof of the appointment and availability of the agent to, and to the satisfaction of, the Mayor.
(b)(1) The Non-Participating Manufacturer shall provide notice to the Mayor 30 calendar days prior to termination of the authority of an agent and shall further provide proof, to the satisfaction of the Mayor, of the appointment of a new agent no less than 5 calendar days prior to the termination of an existing agent appointment.
(2) If an agent terminates an agency appointment, the Non-Participating Manufacturer shall notify the Mayor of the termination within 5 calendar days and shall include proof, to the satisfaction of the Mayor, of the appointment of a new agent.
This section is referenced in § 7-1803.03.
§ 7–1803.05. Reporting of information; escrow installments.
(a) Not later than 20 calendar days after the end of each calendar quarter, and more frequently if so directed by the Mayor, each Wholesaler shall submit such information as the Mayor requires to facilitate compliance with this part, including a list, by Brand Family, of the total number of cigarettes, or, in the case of roll your own, the equivalent stick count, for which the Wholesaler affixed stamps during the previous calendar quarter or otherwise paid the tax due for such cigarettes. The Wholesaler shall maintain, and make available to the Mayor, all invoices and documentation of sales of all Non-Participating Manufacturer cigarettes and any other information relied upon in reporting to the Mayor for a period of 5 years.
(b) The Attorney General is authorized to disclose any information to the Mayor received under this part and requested by the Mayor for purposes of determining compliance with and enforcing the provisions of this part. The Attorney General and the Mayor shall share with each other the information received under this part, and may share such information with other federal, state, District, or local agencies only for purposes of enforcement of this part, part A of this subchapter, or corresponding laws of other jurisdictions. The Attorney General may also disclose the information received under this part with the data clearinghouse created to implement the term sheet agreed to by the District and Participating Manufacturers, and given effect by a March 12, 2013, arbitral award.
(c) The Mayor may require, at any time, from the Non-Participating Manufacturer, proof from the financial institution in which the Manufacturer has established a Qualified Escrow Fund, for the purpose of compliance with § 7-1801.02(2), of the amount of money in the fund, exclusive of interest, the amount and date of each deposit to the fund, and the amount and date of each withdrawal from the fund.
(d) In addition to the information required to be submitted pursuant to this part, the Mayor may require a Wholesaler or Tobacco Product Manufacturer to submit any additional information, including samples of the packaging or labeling of each Brand Family, as is necessary to enable the Mayor to determine whether a Tobacco Product Manufacturer is in compliance with this part.
(e) To promote compliance with this part, the Mayor may promulgate regulations requiring a Tobacco Product Manufacturer, subject to the requirements of § 7-1803.03(a)(2), to make the escrow deposits required in quarterly installments during the year in which the sales covered by such deposits are made. The Mayor may require production of information sufficient to enable the Mayor to determine the adequacy of the amount of the installment deposit.
Effect of Amendments
The 2015 amendment by D.C. Law 20-155, in (b), substituted “Attorney General” for “Corporation Counsel” throughout, and added the last sentence.
For temporary (90 days) amendment of this section, see § 2 of the Tobacco Product Manufacturer Reserve Fund Emergency Amendment Act of 2014 (D.C. Act 20-294, March 14, 2014, 61 DCR 2437).
For temporary (90 days) amendment of this section, see § 5132 of the Fiscal Year 2015 Budget Support Emergency Act of 2014 (D.C. Act 20-377, July 14, 2014, 61 DCR 7598, 20 STAT 3696).
For temporary (90 days) amendment of this section, see § 5122 of the Fiscal Year 2015 Budget Support Congressional Review Emergency Act of 2014 (D.C. Act 20-449, October 10, 2014, 61 DCR 10915, 20 STAT 4188).
For temporary (90 days) amendment of this section, see § 5122 of the Fiscal Year 2015 Budget Support Second Congressional Review Emergency Act of 2014 (D.C. Act 20-566, January 9, 2015, 62 DCR 884, 21 STAT 541).
For temporary (225 days) amendment of this section, see § 2 of the Tobacco Product Manufacturer Reserve Fund Temporary Amendment Act of 2014 (D.C. Law 20-116, June 21, 2014, 61 DCR 4677).
§ 7–1803.06. Penalties and other remedies.
(a)(1) In addition to, or in lieu of, any other civil or criminal remedy provided by law, upon a determination that any person has violated § 7-1803.03(c) or any regulation adopted pursuant to this part, the Mayor may revoke or suspend the license of the Wholesaler in the manner provided by § 47-2404(f).
(2) Each stamp affixed and each sale or offer to sell cigarettes in violation of § 7-1803.03(c) shall constitute a separate violation. Pursuant to Chapter 18 of Title 2, the Mayor may also impose a civil fine in an amount not to exceed the greater of 500% of the retail value of the cigarettes or $5,000 for any violation of § 7-1803.03(c) or any regulations adopted pursuant to this part.
(b) Any cigarettes that have been sold, offered for sale, or possessed for sale, in the District, or imported for personal consumption in the District, in violation of § 7-1803.03(c) shall be deemed contraband under § 47-2405(b) and the cigarettes shall be subject to seizure and forfeiture as provided in § 47-2409; provided, that all such cigarettes so seized and forfeited shall be destroyed and not resold.
(c) The Corporation Counsel, on behalf of the District, may seek an injunction to restrain a threatened or actual violation of § 7-1803.03(c), § 7-1803.05(a), or § 7-1803.05(d) by a Wholesaler and compel the Wholesaler to comply with the subsections.
(d)(1) It shall be unlawful for a person to:
(A) Sell or distribute cigarettes, or
(B) Acquire, hold, own, possess, transport, import, or cause to be imported cigarettes that the person knows or should know are intended for distribution or sale in the District in violation of § 7-1803.03(c).
(2) A violation of this subsection shall, upon conviction, be punishable by a fine of not more than $5,000 or imprisonment of not more than 1 year, or both. Prosecutions for violations of this subsection shall be brought in Superior Court of the District of Columbia in the name of the District by the Corporation Counsel.
§ 7–1803.07. Miscellaneous provisions.
(a) A determination of the Mayor to not include or to remove from the Directory a Brand Family or Tobacco Product Manufacturer shall be subject to review in the manner prescribed by subchapter I of Chapter 5 of Title 2.
(b) No person shall be issued a license or granted a renewal of a license to act as a Wholesaler unless that person has certified in writing, under penalty of perjury, that he or she will comply fully with this part.
(c) The first report of Wholesalers required by § 7-1803.05(a) shall be due 45 calendar days after April 22, 2004; the certifications by a Tobacco Product Manufacturer described in § 7-1803.03(a) shall be due 45 calendar days after April 22, 2004; and the Directory described in § 7-1803.03(b) shall be published or made available within 150 calendar days after April 22, 2004.
(d) The Mayor may promulgate regulations necessary to effect the purposes of this part.
(e) In any action brought by the District to enforce this part, the District shall be entitled to recover the costs of investigation, expert witness fees, costs of the action, and reasonable attorney fees.
(f) If a court determines that a person has violated this part, the court shall order any profits, gain, gross receipts, or other benefit derived from the violation to be disgorged and paid to the District. Unless otherwise expressly provided, the remedies or penalties provided by this part are cumulative to each other and to the remedies or penalties available under all other laws of the District.
(g)(1) If a court of competent jurisdiction finds that the provisions of this part and of part A of this subchapter conflict and cannot be harmonized, then the provisions of part A of this subchapter shall control.
(2)(A) If any section, subsection, subdivision, paragraph, sentence, clause, or phrase of this part causes part A of this subchapter to no longer constitute a Qualifying or Model Statute, as those terms are defined in the Master Settlement Agreement, then that portion of this part shall not be valid.
(B) If any section, subsection, subdivision, paragraph, sentence, clause, or phrase of this part is for any reason held to be invalid, unlawful, or unconstitutional, that holding shall not affect the validity of the remaining portions of this part or any part of this part.
Effect of Amendments
D.C. Law 15-534, in subsec. (g)(2)(A), validated a previously made technical correction.