00 CS FOR SENATE BILL NO. 168(L&C) 01 "An Act relating to issuance and revocation of licenses for the importation, sale, 02 distribution, or manufacture of cigarettes and tobacco products; relating to a tax refund 03 or credit for unsaleable, returned, or destroyed tobacco products; relating to restrictions 04 on and penalties for shipping or transporting cigarettes; relating to records concerning 05 the sale of cigarettes; amending and adding definitions relating to cigarette taxes; 06 relating to the payment of cigarette taxes; relating to penalties applicable to cigarette 07 taxes; relating to the definition of the wholesale price of tobacco products; relating to 08 payment of cigarette taxes through the use of cigarette tax stamps; relating to provisions 09 making certain cigarettes contraband and subject to seizure and forfeiture; relating to 10 certain crimes, penalties, and interest concerning tobacco taxes and stamps; relating to 11 cigarette sales; and providing for an effective date." 12 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 01 * Section 1. The uncodified law of the State of Alaska is amended by adding a new section 02 to read: 03 SHORT TITLE. AS 43.50.710 - 43.50.849, enacted in sec. 17 of this Act, may be 04 known as the Unfair Cigarette Sales Act. 05 * Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to 06 read: 07 INTENT OF AS 43.50.710 - 43.50.849. It is the intent of AS 43.50.710 - 43.50.849, 08 enacted in sec. 17 of this Act, to 09 (1) encourage fair and honest competition and to safeguard the public against 10 unfair, dishonest, deceptive, destructive, and fraudulent business practices existing in 11 transactions involving the sale of, offer to sell, or inducement to sell cigarettes in the 12 wholesale and retail trades in the state; 13 (2) prohibit the advertising, offering for sale, or sale of cigarettes below cost 14 in the wholesale or retail trades with the intent of injuring competitors or destroying or 15 substantially lessening competition as an unfair and deceptive trade practice; and 16 (3) promote the general welfare and public interest through the prohibition of 17 unfair cigarette sales. 18 * Sec. 3. AS 43.50.035 is amended to read: 19 Sec. 43.50.035. Wholesaler-distributor license. A person outside of this 20 state who sells cigarettes into this state and is not required to be licensed under 21 AS 43.50.010 may apply [QUALIFY] for a wholesaler-distributor license [BY 22 FURNISHING A GOOD AND SUFFICIENT SURETY BOND IN AN AMOUNT 23 EQUAL TO TWICE THE AVERAGE MONTHLY RETURN AND IN NO CASE 24 LESS THAN $5,000, PAYABLE TO THE DEPARTMENT AND APPROVED BY 25 THE DEPARTMENT OF LAW. IF A WHOLESALER-DISTRIBUTOR FAILS TO 26 PAY THE CIGARETTE TAX WHEN DUE, THE BOND MAY BE FORFEITED 27 AND THE LICENSE REVOKED]. The department shall adopt reasonable 28 regulations necessary for the collection of cigarette taxes on cigarette sales made 29 by the [MAY ISSUE PERMITS IN PLACE OF BONDS TO RESIDENT HOLDERS 30 OF] wholesaler-distributor licensee into this state and standards for 31 (1) application and issuance of the license; and 01 (2) refusal to issue the license [LICENSES DOING BUSINESS 02 WHOLLY IN THE STATE WHO PAY THE TAX BEFORE SHIPMENT]. 03 * Sec. 4. AS 43.50.040 is amended to read: 04 Sec. 43.50.040. Expiration of licenses. A license issued under AS 43.50.010 05 or 43.50.035 expires on June 30 [,] following the date of issue. If a license is revoked, 06 or the business for which the license is issued changes ownership or the licensee 07 changes the place of business from the premises covered by the license, the licensee 08 shall immediately return the license to the department. If the licensee moves the 09 business to another location in the state, the license shall, upon the payment of a fee of 10 50 cents, be reissued for the new location for the balance of the unexpired term. 11 Before a license issued under AS 43.50.010 or 43.50.035 expires, the [THE] 12 licensee may apply to [, ON APPLICATION TO THE DEPARTMENT 13 ACCOMPANIED BY THE RENEWAL FEE, MAY, BEFORE THE EXPIRATION 14 OF THE LICENSE,] renew the license for one year from the expiration date of the 15 license. The renewal fee required by AS 43.50.030 must accompany the 16 application. The department shall adopt reasonable regulations that it considers 17 necessary regarding the renewal of licenses. 18 * Sec. 5. AS 43.50.070 is amended to read: 19 Sec. 43.50.070. Suspension or revocation of or refusal to renew a license 20 [REVOCATION OF LICENSES]. The department may suspend, [OR] revoke, or 21 refuse to renew a license issued under this chapter [AS 43.50.010 - 43.50.180] (1) 22 for a negligent violation of AS 11.76.100, 11.76.106, 11.76.107, or a violation of this 23 chapter [AS 43.50.010 - 43.50.180] or a regulation of the department adopted under 24 this chapter [AS 43.50.010 - 43.50.180]; (2) if a licensee ceases to act in the capacity 25 for which the license was issued; or (3) if a licensee [MANUFACTURER, 26 DISTRIBUTOR, OR WHOLESALE DISTRIBUTOR] negligently sells tobacco or 27 products containing tobacco to a person who is required to, but does not, hold a 28 license endorsement under AS 43.70.075 or [NONLICENSED RETAILER OR A 29 RETAILER] whose license endorsement under AS 43.70.075 has been suspended. A 30 person whose license is suspended or revoked may not sell cigarettes or tobacco 31 products, or permit cigarettes or tobacco products to be sold, during the period of 01 the suspension or revocation on the premises occupied or controlled by that person. A 02 disciplinary proceeding or action is not barred or abated by the expiration, transfer, 03 surrender, renewal, or extension of a license issued under this chapter [AS 43.50.010 04 - 43.50.180]. The department shall comply with the provisions of AS 44.62 ( [THE] 05 Administrative Procedure Act), except that a hearing officer of the department, 06 rather than a hearing officer assigned under AS 44.62.350, may conduct hearings 07 [(AS 44.62)]. 08 * Sec. 6. AS 43.50.070 is amended by adding a new subsection to read: 09 (b) In this section, "licensee" means a person licensed under AS 43.50.010 - 10 43.50.180 or 43.50.300 - 43.50.390. 11 * Sec. 7. AS 43.50.090(a) is amended to read: 12 (a) There is levied an excise tax of 38 mills on each cigarette imported or 13 acquired in the state. The tax shall be paid through the use of stamps as provided 14 in AS 43.50.500 - 43.50.700. The failure to pay the tax through the use of stamps 15 does not relieve a person of the obligation to pay taxes due under this chapter. 16 The person shall still pay the tax, and the tax is due on or before the end of the 17 month following the month in which cigarettes were manufactured, imported, 18 acquired, or sold in this state [EACH LICENSEE SHALL, AT THE TIME OF 19 FILING THE RETURN REQUIRED BY AS 43.50.080, PAY TO THE 20 DEPARTMENT THE EXCISE FOR THE CALENDAR MONTH COVERED BY 21 THE RETURN, DEDUCTING FOUR-TENTHS OF ONE PERCENT OF THE 22 TOTAL TAX DUE, WHICH THE LICENSEE SHALL RETAIN TO COVER THE 23 EXPENSE OF ACCOUNTING AND FILING RETURNS]. Cigarettes upon which 24 the excise is imposed are not again subject to the excise when acquired by another 25 person. 26 * Sec. 8. AS 43.50.100(d) is amended to read: 27 (d) A person or licensee who is in control or possession of cigarettes contrary 28 to this chapter [AS 43.50.010 - 43.50.180,] or who offers to sell or dispose of 29 cigarettes to others for the purpose of resale without being licensed to do so is 30 considered to have possession of the cigarettes as a consumer and is personally liable 31 for the cigarette taxes imposed by this chapter [TAX], plus a penalty of 100 percent 01 [PER CENT]. 02 * Sec. 9. AS 43.50 is amended by adding a new section to read: 03 Sec. 43.50.105. Restrictions on shipping or transporting cigarettes. (a) A 04 person who is not licensed under this chapter may not ship or cause to be shipped 05 cigarettes to a person in this state unless the person receiving the cigarettes is 06 (1) licensed under this chapter; 07 (2) an operator of a customs bonded warehouse under 19 U.S.C. 1311 08 or 19 U.S.C. 1555; or 09 (3) an instrumentality of the federal government or an Indian tribal 10 organization authorized by law to possess cigarettes not taxed under this chapter. 11 (b) A person who is licensed under this chapter may not ship or cause to be 12 shipped cigarettes to a person in this state unless the person receiving the cigarettes 13 (1) is licensed under this chapter; 14 (2) holds a tobacco endorsement under AS 43.70.075; 15 (3) is an operator of a customs bonded warehouse under 19 U.S.C. 16 1311 or 19 U.S.C. 1555; or 17 (4) is an instrumentality of the federal government or an Indian tribal 18 organization authorized by law to possess cigarettes not taxed under this chapter. 19 (c) A common or contract carrier may not knowingly transport cigarettes to a 20 person in this state unless the person 21 (1) shipping the cigarettes is licensed under this chapter and provides 22 the common or contract carrier with a copy of the person's current license issued by 23 the department and the person receiving the cigarettes is a person described under 24 (b)(1) - (4) of this section; or 25 (2) receiving the cigarettes is a person described under (a)(2) or (3) of 26 this section or is licensed under this chapter and provides the common or contract 27 carrier with a copy of the person's current license issued by the department. 28 (d) If the cigarettes are transported by a common or contract carrier to a home 29 or residence, it is rebuttably presumed that the common or contract carrier knew that 30 the person receiving the cigarettes was not a person described under (b)(1) - (4) of this 31 section. 01 (e) A person, other than a common or contract carrier, may not knowingly 02 transport cigarettes to a person in this state, unless the person receiving the cigarettes 03 is a person described under (b)(1) - (4) of this section. 04 (f) A person who ships or causes to be shipped cigarettes to a person in this 05 state shall plainly and visibly mark the container or wrapping with the word 06 "cigarettes" if the cigarettes are shipped in a container or wrapping other than the 07 cigarette manufacturer's original container or wrapping. 08 (g) A person who violates the provisions of this section is guilty of a 09 (1) class A misdemeanor if the person unlawfully ships, causes to be 10 shipped, or transports at least one but fewer than 1,000 cigarettes; 11 (2) class C felony if the person unlawfully ships, causes to be shipped, 12 or transports 1,000 or more cigarettes. 13 (h) In addition to the criminal penalty under (g) of this section, the department 14 may assess a civil fine of not more than $5,000 for each violation of this section. 15 * Sec. 10. AS 43.50.130(d) is amended to read: 16 (d) An invoice for the sale of cigarettes given or accepted by a licensee under 17 this chapter [AS 43.50.010 - 43.50.180] must state whether the taxes [TAX] imposed 18 by this chapter have [AS 43.50.010 - 43.50.180 HAS] been paid. 19 * Sec. 11. AS 43.50.170(7) is amended to read: 20 (7) "person" includes an individual, company, partnership, limited 21 liability partnership, joint venture, joint agreement, limited liability company, 22 association, mutual or otherwise, corporation, estate, trust, business trust, receiver, 23 trustee, syndicate, or political subdivision of this state, or combination acting as a unit; 24 * Sec. 12. AS 43.50.170 is amended by adding new paragraphs to read: 25 (11) "tobacco product" has the meaning given in AS 43.50.390; 26 (12) "wholesaler-distributor" means a person outside this state who 27 sells or distributes cigarettes into this state and who is not required to be licensed 28 under AS 43.50.010. 29 * Sec. 13. AS 43.50.190(b) is amended to read: 30 (b) The tax levied by this section is in addition to the tax levied by 31 AS 43.50.010 - 43.50.180. The tax shall be administered and collected in the same 01 manner as the tax levied by AS 43.50.010 - 43.50.180, except that receipts from the 02 tax shall be deposited in the general fund. The penalties provided in AS 43.05 and 03 this chapter apply to the tax levied in this section. 04 * Sec. 14. AS 43.50.320(f) is amended to read: 05 (f) The department may suspend, [OR] revoke, or refuse to renew a license 06 issued under this section as provided in AS 43.50.070 [IF THE LICENSEE 07 VIOLATES A PROVISION OF AS 43.50.300 - 43.50.390 OR A REGULATION 08 ADOPTED UNDER AS 43.50.370]. 09 * Sec. 15. AS 43.50 is amended by adding a new section to read: 10 Sec. 43.50.335. Tax credits and refunds. The department shall adopt 11 procedures for a refund or credit to a licensee of the tax paid for tobacco products that 12 have become unfit for sale, are destroyed, or are returned to the manufacturer for 13 credit or replacement if the licensee provides proof acceptable to the department that 14 the tobacco products have not been and will not be consumed in this state. 15 * Sec. 16. AS 43.50.390(5) is repealed and reenacted to read: 16 (5) "wholesale price" means 17 (A) the established price for which a manufacturer sells a 18 tobacco product to a distributor after deduction of a discount or other reduction 19 received by the distributor for quantity or cash if the manufacturer's established 20 price is adequately supported by bona fide arm's length sales as determined by 21 the department; or 22 (B) the price, as determined by the department, for which 23 tobacco products of comparable retail price are sold to distributors in the 24 ordinary course of trade if the manufacturer's established price does not meet 25 the standards of (A) of this paragraph. 26 * Sec. 17. AS 43.50 is amended by adding new sections to read: 27 Article 5. Cigarette Tax Stamps. 28 Sec. 43.50.500. Tax payment by use of stamps. A licensee shall pay the tax 29 imposed under AS 43.50.090(a) and 43.50.190(a) through the use of stamps issued 30 under AS 43.50.500 - 43.50.700. 31 Sec. 43.50.510. Stamp design; manner of affixing. (a) The department shall 01 design and furnish stamps of sizes and denominations as determined by the 02 department. 03 (b) Notwithstanding the packaging requirements of AS 43.70.075(g)(1), a 04 stamp required under AS 43.50.500 - 43.50.700 must be affixed 05 (1) on the smallest package that will be handled, sold, used, consumed, 06 or distributed in this state; and 07 (2) in a denomination equal to the amount of tax due under this chapter 08 on the cigarettes in the package. 09 (c) A stamp required under AS 43.50.500 - 43.50.700 shall be affixed to the 10 bottom of each individual package of cigarettes in a manner so that the stamp cannot 11 be removed from the package without being mutilated or destroyed. 12 (d) For purposes of this section, a stamp is considered affixed only if more 13 than 80 percent of the stamp is attached to the individual package in accordance with 14 (c) of this section and regulations adopted by the department. 15 Sec. 43.50.520. Stamp required before sale, distribution, or consumption. 16 (a) Except as provided in AS 43.50.580, a licensee or the authorized agent or designee 17 of the licensee shall affix a stamp, in the manner required by AS 43.50.510, to each 18 package of cigarettes immediately upon the opening of the shipping container 19 containing the package and before sale, distribution, or consumption in this state. 20 (b) Except as provided in AS 43.50.580 and 43.50.610, a person may not 21 engage in the following activities in this state unless the package containing the 22 cigarettes is affixed with the required stamp: 23 (1) sell or distribute cigarettes to a person who is a consumer in this 24 state; 25 (2) acquire, hold, own, possess, or transport cigarettes for sale or 26 distribution in this state; 27 (3) import or cause to be imported cigarettes into this state for sale, 28 distribution, or consumption; or 29 (4) place or store cigarette packages in a vending machine in this state. 30 Sec. 43.50.530. Sale of stamps. (a) The department shall furnish stamps for 31 sale to licensees. 01 (b) The department may enter into agreements with financial institutions to 02 permit the sale of stamps by those institutions. The department shall make a list of 03 financial institutions authorized to sell stamps under this section available to the 04 public. 05 Sec. 43.50.540. Purchase of and payment for stamps. (a) A licensee shall 06 apply to the department or a financial institution authorized under AS 43.50.530(b) to 07 purchase stamps required by AS 43.50.500 - 43.50.700. 08 (b) A licensee may authorize an agent or designee to purchase stamps for the 09 licensee at a location where stamps are sold. The licensee's authorization of an agent 10 or designee must be in writing and must be signed by the licensee. The licensee shall 11 provide a copy of the authorization to the department. The authorization continues in 12 effect until the department receives the licensee's written notice of revocation of the 13 authorization. 14 (c) Except as otherwise provided in this subsection, each stamp shall be sold 15 to a licensee at its denominated value less the discount provided in this subsection. 16 The discount under this subsection is provided as compensation for affixing stamps to 17 packages as required by AS 43.50.500 - 43.50.700. The department may reduce or 18 eliminate the discount to a licensee under this subsection if the licensee fails to meet 19 the requirements of AS 43.50.500 - 43.50.700. The discount under this subsection is 20 equal to the sum of the amounts calculated using the following percentages of 21 denominated value of stamps purchased by a licensee under this section in a calendar 22 year: 23 (1) $1,000,000 or less, three percent; 24 (2) the amount that is more than $1,000,000 but not more than 25 $2,000,000, two percent; 26 (3) the amount that is over $2,000,000, zero percent. 27 (d) Payment for stamps shall be made at the time of purchase, except that the 28 department may permit a licensee to defer payments as provided in AS 43.50.550. 29 (e) The licensee or the licensee's agent or designee must obtain the stamps in 30 person from the department or a financial institution authorized to sell stamps under 31 AS 43.50.530(b). Alternatively, the licensee may request in writing that the stamps be 01 shipped or transported in a manner specified by the licensee that is acceptable to the 02 department. The department may accept only United States mail or common or 03 private carrier as a shipping or transportation method. 04 (f) Title to the stamps passes immediately to the licensee at the time the 05 stamps are obtained in person or, if the stamps are shipped or transported, at the time 06 the stamps are placed in the United States mail or received by the common or private 07 carrier. The licensee bears all costs associated with shipping or transporting the 08 stamps and all risks of possible loss or damage while in transit. 09 (g) Loss, destruction, or theft of stamps does not absolve the licensee of its 10 obligation to make payment for the stamps, including payment on a deferred-payment 11 basis under AS 43.50.550. 12 (h) For purposes of the discount provided in (c) of this section, "stamps 13 purchased by a licensee" includes stamps purchased by affiliated licensees. 14 Sec. 43.50.550. Deferred-payment basis for stamps. (a) A licensee may 15 apply to the department to purchase stamps on a deferred-payment basis. Upon 16 receipt of the application and the bond required under (b) of this section, the 17 department may set the maximum dollar amount of stamps that the licensee is 18 authorized to purchase on a deferred-payment basis in a calendar month. 19 (b) A licensee who submits an application for the purchase of stamps on a 20 deferred-payment basis shall post a bond acceptable to the department in an amount 21 equal to 200 percent of the maximum dollar amount of allowed monthly purchases 22 under this section as a condition of approval of the application. 23 (c) Amounts owing for stamps purchased on a deferred-payment basis in a 24 calendar month are due on or before the last day of the next calendar month. Payment 25 shall be made by a remittance acceptable to the department that is made payable to the 26 department. 27 (d) The department may designate the sales locations where the licensee may 28 make purchases of stamps on a deferred-payment basis and fix the dollar amount of 29 purchases that the licensee may make under this section at each designated sales 30 location each month. 31 Sec. 43.50.560. Suspension of deferred-payment basis privilege. The 01 department may suspend, without prior notice, a licensee's privilege to purchase 02 stamps on a deferred-payment basis or may reduce the monthly dollar amount of 03 purchases the licensee may make under AS 43.50.550 if 04 (1) the licensee fails to pay for stamps when payment is due; 05 (2) the licensee's bond is cancelled or becomes void, impaired, or 06 unenforceable; 07 (3) the department determines that the collection of an amount unpaid 08 or due from the licensee under this chapter is jeopardized; or 09 (4) the licensee violates a state statute or regulation related to the 10 collection of taxes under this chapter. 11 Sec. 43.50.570. Interest. A licensee who fails to pay an amount due for the 12 purchase of stamps within the time required 13 (1) is considered to have failed to pay the cigarette taxes due under this 14 chapter; and 15 (2) shall pay interest at the rate established under AS 43.05.225 from 16 the date on which the amount became due until the date of payment. 17 Sec. 43.50.580. Possession of unstamped cigarettes. (a) Except as provided 18 in (b) of this section and in AS 43.50.610, a person may not possess unstamped 19 cigarettes in this state. 20 (b) A licensee may possess unstamped cigarettes in this state if 21 (1) the licensee posts a surety bond in an amount satisfactory to the 22 department to ensure performance of its duties under this chapter; and 23 (2) unstamped cigarettes are necessary for the conduct of the licensee's 24 business in making sales or distributions to an instrumentality of the federal 25 government or an Indian tribal organization authorized by law to possess cigarettes not 26 taxed under this chapter. 27 (c) At the time of shipping or delivering cigarettes to an instrumentality of the 28 federal government or an Indian tribal organization authorized by law to possess 29 cigarettes not taxed under this chapter, a licensee shall make a duplicate invoice 30 showing complete details of the shipment or other distribution and a statement 31 indicating whether stamps were affixed to each cigarette package in accordance with 01 AS 43.50.500 - 43.50.700. The licensee shall transmit the duplicate invoice to the 02 department as an attachment to the monthly report required under AS 43.50.630. 03 (d) If a licensee who is authorized to possess unstamped cigarettes under (b) 04 of this section fails to comply with the requirements of this section, the licensee is no 05 longer authorized to and may not possess unstamped cigarettes under this section and 06 is subject to the imposition of any applicable penalty under this title or other law. 07 (e) For purposes of (a) of this section, "person" does not include entities to 08 whom sales or distributions are made as described in (b)(2) of this section. 09 Sec. 43.50.590. Refunds or credits for unused stamps and for unsalable, 10 destroyed, or certain returned cigarette packages. (a) The department shall adopt 11 procedures for a refund or credit to a licensee in the amount of the denominated value, 12 less the discount given under AS 43.50.540, for 13 (1) unused or damaged stamps; or 14 (2) stamps affixed to cigarette packages that have become unfit for use 15 or sale, are destroyed, or are returned to the manufacturer for credit or replacement if 16 the licensee provides proof acceptable to the department that the cigarettes have not 17 been and will not be consumed in this state. 18 (b) A refund or credit under (a) of this section may not be allowed for stamps 19 affixed to cigarette packages in violation of this chapter or AS 45.53. 20 Sec. 43.50.600. Stamps prohibited on cigarette packages not complying 21 with federal and state laws. A licensee or the licensee's authorized agent or designee 22 may not affix a stamp to a cigarette package if the cigarettes 23 (1) may not be acquired, held, owned, imported, possessed, sold, or 24 distributed in this state under AS 43.50.400; or 25 (2) are not in compliance with other state or federal laws. 26 Sec. 43.50.610. Unstamped cigarettes as contraband; seizure. Unstamped 27 cigarettes found in this state are contraband and may be seized by the commissioner or 28 an agent or employee of the commissioner or by any peace officer of the state, unless 29 (1) the cigarettes are 30 (A) in the possession of a licensee or are in transit from outside 31 the state and are consigned to a licensee; and 01 (B) in the original and unopened shipping container; or 02 (2) possession of the unstamped cigarettes is not a violation of this 03 chapter. 04 Sec. 43.50.620. Forfeiture and destruction of seized cigarettes. Cigarettes 05 seized under AS 43.50.500 - 43.50.700 are forfeited to the state. After notice and an 06 opportunity for a hearing, the commissioner shall destroy the cigarettes forfeited under 07 this section. 08 Sec. 43.50.630. Monthly reports; records retention; inspection of records. 09 (a) On or before the last day of each calendar month, a licensee shall file the 10 following information for each place of business with the department, on a form or in 11 a format prescribed by the department: 12 (1) the quantity and brands of cigarettes manufactured, imported, 13 acquired, or sold in the state during the preceding calendar month; 14 (2) the number and dollar amount of stamps 15 (A) purchased during the preceding calendar month; 16 (B) affixed to cigarette packages during the preceding calendar 17 month; 18 (C) not affixed to cigarette packages and on hand at the end of 19 the preceding calendar month; and 20 (D) refunded or credited to a licensee under AS 43.50.590; and 21 (3) any other information that the department requires to carry out its 22 duties under this chapter. 23 (b) If a licensee ceases to manufacture, import, acquire, or sell cigarettes in 24 this state, the licensee shall immediately file the form required under (a) of this section 25 with the department, for the period ending with the cessation. 26 (c) All statements and other records required by AS 43.50.500 - 43.50.700 27 must be 28 (1) in a form or format prescribed by the department; 29 (2) preserved by a licensee for a period of three years; and 30 (3) available for inspection at any time upon oral or written demand by 31 the department or its authorized agent. 01 (d) A summary of information filed under (a) of this section shall be prepared 02 by the department and released to the public upon request. 03 Sec. 43.50.640. Misconduct involving unstamped cigarettes or stamps in 04 the first degree. (a) A person commits the crime of misconduct involving unstamped 05 cigarettes or stamps in the first degree if the person 06 (1) with reckless disregard that the cigarettes are unstamped 07 (A) sells or distributes 1,000 or more unstamped cigarettes in a 08 single transaction; 09 (B) owns or possesses 1,000 or more unstamped cigarettes with 10 the intent to sell; or 11 (C) acquires, holds, transports, imports, or possesses 10,000 or 12 more unstamped cigarettes; or 13 (2) with reckless disregard that the stamp was previously affixed to 14 another cigarette package; 15 (A) affixes a previously used stamp to a cigarette package; or 16 (B) possesses, sells, or distributes a previously used stamp. 17 (b) Misconduct involving unstamped cigarettes or stamps in the first degree is 18 a class C felony. 19 Sec. 43.50.650. Misconduct involving unstamped cigarettes or stamps in 20 the second degree. (a) A person commits the crime of misconduct involving 21 unstamped cigarettes or stamps in the second degree if the person 22 (1) with reckless disregard that the cigarettes are unstamped 23 (A) sells or distributes at least one but less than 1,000 24 unstamped cigarettes in a single transaction; 25 (B) owns or possesses at least one but less than 1,000 26 unstamped cigarettes, with intent to sell; or 27 (C) acquires, holds, transports, imports, or possesses at least 28 one but less than 10,000 unstamped cigarettes; or 29 (2) is not licensed under this chapter or otherwise authorized by the 30 department to possess stamps and possesses a stamp that is not affixed to a cigarette 31 package. 01 (b) Misconduct involving unstamped cigarettes or stamps in the second degree 02 is a class A misdemeanor. 03 Sec. 43.50.660. Construction of criminal statutes. (a) The provisions of 04 AS 11.16, AS 11.81.600, 11.81.610, and 11.81.900 apply to AS 43.50.640 and 05 43.50.650. 06 (b) For purposes of AS 43.50.640 and 43.50.650, display of cigarettes by a 07 person, or possession other than in the original and unopened shipping container of 08 cigarettes by a person who holds a business license endorsement under AS 43.70.075, 09 is prima facie evidence of possession with intent to sell cigarettes. In this subsection, 10 "display" means to openly exhibit. 11 Sec. 43.50.670. Unauthorized transfer of unaffixed stamps. (a) A licensee 12 may not sell, exchange, or otherwise transfer stamps not affixed to a package of 13 cigarettes in accordance with this chapter to another person without the prior written 14 approval of the department. 15 (b) After notice and opportunity for a hearing, the department may assess a 16 civil fine of not less than $1,000 nor more than $10,000 for a violation of (a) of this 17 section. The fine assessed is in addition to any other penalty available under the law. 18 Sec. 43.50.700. Definitions. In AS 43.50.500 - 43.50.700, unless the context 19 otherwise requires, 20 (1) "affiliated licensees" means two or more licensees in which the 21 same person holds, directly or indirectly, at least a 50 percent ownership interest; 22 (2) "carton" means a box or container originating from the 23 manufacturer that contains packages of that manufacturer's cigarettes; 24 (3) "cigarette" has the meaning given in AS 43.50.170; 25 (4) "licensee" means a person licensed by the department under 26 AS 43.50.010 or 43.50.035 to sell, distribute, purchase, possess, or acquire cigarettes; 27 (5) "package" means the individual packet, box, or other container, 28 originating from the manufacturer, in which retail sales of cigarettes are normally 29 made or intended to be made; "package" does not include containers that are cartons, 30 cases, bales, or boxes that contain packages of cigarettes; 31 (6) "person" has the meaning given in AS 43.50.170; 01 (7) "shipping container" means the case, box, parcel, or other container 02 in which cartons or packages of cigarettes are placed for shipment or transportation 03 from one place to another; "shipping container" does not include a package in which 04 retail sales of cigarettes are normally made or intended to be made; 05 (8) "stamp" means a stamp or other indicium that is 06 (A) printed, manufactured, or made under authorization of the 07 department under this chapter; 08 (B) issued, sold, or circulated by the department; and 09 (C) used to pay the cigarette taxes levied under this chapter; 10 (9) "unstamped cigarettes" means a package containing cigarettes that 11 is not affixed with the stamp required by AS 43.50.500 - 43.50.700. 12 Article 6. Unfair Cigarette Sales. 13 Sec. 43.50.710. Sale at less than cost; rebate in price. (a) A wholesaler or 14 retailer may not, with intent to injure competitors or destroy or substantially lessen 15 competition, 16 (1) advertise, offer to sell, or sell, at retail or wholesale, cigarettes at 17 less than actual cost to the wholesaler or retailer; or 18 (2) offer a rebate in price, give a rebate in price, offer a concession of 19 any kind, or give a concession of any kind or nature in connection with the sale of 20 cigarettes. 21 (b) A retailer may not induce or attempt to induce or procure or attempt to 22 procure 23 (1) the purchase of cigarettes at a price less than the actual cost to a 24 wholesaler; 25 (2) a rebate or concession of any kind or nature in connection with the 26 purchase of cigarettes. 27 (c) Evidence of advertisement, offering to sell, or sale of cigarettes by a 28 wholesaler or retailer at less than actual cost, or evidence of an offer of a rebate in the 29 price, the giving of a rebate in price, offer of a concession, or the giving of a 30 concession of any kind or nature in connection with the sale of cigarettes, or the 31 inducing, attempt to induce, the procuring, or the attempt to procure the purchase of 01 cigarettes at a price less than actual cost to a wholesaler or retailer is prima facie 02 evidence of intent to injure competitors and to destroy or substantially lessen 03 competition. 04 (d) A wholesaler or retailer who violates the provisions of this section is guilty 05 of a class B misdemeanor. 06 Sec. 43.50.720. Sale at less than cost; with gift or concession. In all 07 advertisements, offers for sale, or sales involving two or more items when at least one 08 of the items is cigarettes at a combined price, and in all advertisements, offers for sale, 09 or sales involving the giving of any gift, concession, or coupon of any kind in 10 conjunction with the sale of cigarettes, the wholesaler's or retailer's combined selling 11 price may not be below the actual cost to the wholesaler or the actual cost to the 12 retailer, respectively, of the total of all articles, products, commodities, gifts, and 13 concessions included in the transactions, except that, if any articles, products, 14 commodities, gifts, or concessions are not cigarettes, the basic cost shall be 15 determined as provided under AS 43.50.800. 16 Sec. 43.50.730. Sale to another wholesaler. When one wholesaler sells 17 cigarettes to another wholesaler, the seller is not required to include the actual cost of 18 the selling wholesaler. Upon resale to a retailer, the purchasing wholesaler is required 19 to include the actual cost of the purchasing wholesaler or the actual cost of the selling 20 wholesaler, whichever is greater, in the selling price. 21 Sec. 43.50.740. Sales at price to meet competition. (a) A wholesaler may 22 advertise, offer to sell, or sell cigarettes at a price made in good faith to meet the price 23 of a competitor who is rendering the same type of service and is selling the same 24 article at cost to a competing wholesaler. A retailer may advertise, offer to sell, or sell 25 cigarettes at a price made in good faith to meet the price of a competitor who is selling 26 the same article at cost to a competing retailer. 27 (b) In the absence of proof of the actual cost to a competing wholesaler or the 28 competing retailer, actual cost may be presumed to be the presumptive wholesale cost 29 to the wholesaler or the presumptive retail cost to the retailer as determined by the 30 department from the manufacturer's price list. 31 (c) A manufacturer whose product is sold in the state directly or through an 01 intermediary shall provide the department with a current price list for all brands of 02 cigarettes of the manufacturer and shall notify the department at least 10 days before a 03 price increase takes effect. 04 Sec. 43.50.750. Contracts in violation of law are illegal. A contract, express 05 or implied, made by a person in violation of the provisions of AS 43.50.710 - 06 43.50.849 is illegal and void. 07 Sec. 43.50.760. Determination of cost. (a) In determining actual cost to the 08 wholesaler or retailer, a court shall consider as establishing the cost evidence tending 09 to show that a wholesaler or retailer complained against under a provision of 10 AS 43.50.710 - 43.50.849 purchased the cigarettes involved in the complaint at a 11 fictitious price, or upon terms, in a manner, or under invoices, in a manner that 12 conceals the true cost, discounts, or terms of purchase. The court shall also consider 13 evidence of the normal, customary, and prevailing terms and discounts in connection 14 with other sales of a similar nature in the state. 15 (b) The presumptive wholesale and presumptive retail cost of cigarettes as 16 determined by the department from the manufacturer's price list is considered 17 competent evidence in a court action or proceeding as tending to prove actual cost to 18 the wholesaler or retailer complained against. A party against whom the presumptive 19 wholesale or presumptive retail cost as determined by the department is introduced in 20 evidence has the right to offer evidence tending to prove any inaccuracy of the 21 presumptive wholesale or presumptive retail cost or any statement of facts that would 22 impair its probative value. 23 Sec. 43.50.770. Determination of cost of cigarettes purchased outside of 24 ordinary channels of trade. In establishing the basic cost of cigarettes to a 25 wholesaler or retailer, the invoice cost or the actual cost of cigarettes purchased at a 26 forced, bankrupt, or closeout sale, or other sale outside the ordinary channels of trade 27 may not be used. 28 Sec. 43.50.780. Injunction. (a) The department or a person injured by a 29 violation or who would suffer from any threatened violation of AS 43.50.710 - 30 43.50.849 may maintain an action to prevent, restrain, or enjoin the violation or 31 threatened violation. If, in the action, a violation or threatened violation of 01 AS 43.50.710 - 43.50.849 is established, the court may enjoin and restrain or 02 otherwise prohibit the violation or threatened violation, and the court shall assess the 03 costs of reasonable attorney fees against the defendant. In the action, it is not 04 necessary that actual damages to the plaintiff be alleged or proved, but, if actual 05 damages are alleged and proved, the plaintiff, in addition to injunctive relief and costs, 06 including reasonable attorney fees, may recover actual damages. 07 (b) If injunctive relief is not requested or required, a person injured by a 08 violation of AS 43.50.710 - 43.50.849 may maintain an action for damages in the 09 appropriate court. 10 Sec. 43.50.790. Administration of AS 43.50.710 - 43.50.849. (a) The 11 department 12 (1) shall administer AS 43.50.710 - 43.50.849; 13 (2) may adopt regulations relating to the administration and 14 enforcement of AS 43.50.710 - 43.50.849; 15 (3) may determine the basic cost of cigarettes to a wholesaler or 16 retailer from information obtained from a manufacturer; 17 (4) may, after reasonable notice and hearing, revoke or suspend a 18 license issued under AS 43.50.010 or 43.50.035 to a person who refuses or neglects to 19 comply with a provision of AS 43.50.710 - 43.50.849. 20 (b) The Department of Community and Economic Development may, after 21 reasonable notice and hearing, revoke or suspend a license issued under AS 43.70.075 22 to a person who refuses or neglects to comply with a provision of AS 43.50.710 - 23 43.50.849. 24 Sec. 43.50.800. Presumptions applicable to determination of cost. (a) For 25 purposes of AS 43.50.710 - 43.50.849, 26 (1) the basic cost of cigarettes is equal to the lower of the two 27 following amounts: 28 (A) the invoice cost of cigarettes to the wholesaler or retailer 29 less all trade discounts except customary discounts for cash, plus the full face 30 value of any tax that may be required by this chapter if not already included in 31 the invoice cost of the cigarettes to the wholesaler or retailer; or 01 (B) the lowest replacement cost of cigarettes to the wholesaler 02 or retailer, within 30 days before the date of sale, in the quantity last 03 purchased, within or before the 30-day period, less all trade discounts except 04 customary discounts for cash, plus the full face value of any tax that may be 05 required by this chapter if not already included in the invoice cost of the 06 cigarettes to the wholesaler or retailer; 07 (2) the actual cost to the wholesaler is equal to the basic cost of the 08 cigarettes acquired by the wholesaler plus the cost of doing business by the 09 wholesaler, as evidenced by the standards and methods of accounting regularly 10 employed by the wholesaler, and includes labor costs, rent, depreciation, selling costs, 11 maintenance of equipment, delivery costs, all types of licenses, taxes, insurance, and 12 advertising; 13 (3) in the absence of proof of a lesser or higher cost of doing business 14 by the wholesaler making the sale, the cost of doing business by the wholesaler is 15 presumed to be four and one-half percent of the basic cost of the cigarettes to the 16 wholesaler; a fraction of a cent used in computing the cost of doing business shall be 17 rounded off to the next highest cent; 18 (4) the actual cost to the retailer is equal to the basic cost of the 19 cigarettes plus the cost of doing business by the retailer; the cost of doing business 20 may be proven by the standards and methods of accounting regularly employed by the 21 retailer and must include labor costs, rent, depreciation, selling costs, maintenance of 22 equipment, delivery costs, all types of licenses, taxes, insurance, and advertising; 23 (5) in the absence of proof of a lesser or higher cost of doing business 24 by the retailer making the sale, the cost of doing business by the retailer is presumed to 25 be six percent of the basic cost of cigarettes to the retailer; a fraction of a cent used in 26 computing the cost of doing business shall be rounded off to the next highest cent. 27 (b) In the absence of proof of a lesser or higher actual cost to the 28 (1) wholesaler, the actual cost is presumed to be the presumptive 29 wholesale cost as determined by the department; and 30 (2) retailer, the actual cost is presumed to be the presumptive retail 31 cost as determined by the department. 01 (c) In the absence of the manufacturer's list price for a particular brand of 02 cigarettes, the department may determine the presumptive wholesale cost or the 03 presumptive retail cost of the cigarettes from the average price of cigarettes for other 04 similar brands for which the department has the manufacturer's list price. 05 Sec. 43.50.849. Definitions. In AS 43.50.710 - 43.50.849, 06 (1) "basic wholesale cost" means the manufacturer's list price less trade 07 discounts, except discounts for cash, plus the full face value of any tax required by this 08 chapter; 09 (2) "cigarette" has the meaning given in AS 43.50.170; 10 (3) "department" means the Department of Revenue; 11 (4) "direct-buying retailer" has the meaning given in AS 43.50.170; 12 (5) "person" has the meaning given in AS 43.50.170; 13 (6) "presumptive retail cost" means the presumptive wholesale cost 14 plus six percent of the presumptive wholesale cost; 15 (7) "presumptive wholesale cost" means the basic wholesale cost plus 16 four and one-half percent of the basic wholesale cost; 17 (8) "retailer" has the meaning given in AS 43.50.170 and includes a 18 person licensed or required to be licensed as a direct-buying retailer under this chapter 19 and a person who holds or is required to hold a license endorsement under 20 AS 43.70.075; 21 (9) "sale" has the meaning given in AS 43.50.170; 22 (10) "sell at retail," "sale at retail," or "retail sales" means a sale for 23 consumption or use made in the ordinary course of trade or usual conduct of the 24 seller's business; 25 (11) "sell at wholesale," "sale at wholesale," or "wholesale sales" 26 means a sale made in the ordinary course of trade or usual conduct by a wholesaler to 27 a retailer for the purpose of resale; 28 (12) "wholesaler" means a person licensed or required to be licensed 29 under AS 43.50.010 or AS 43.50.035 and who sells cigarettes to a retailer for the 30 purpose of resale. 31 * Sec. 18. AS 43.50.080 is repealed. 01 * Sec. 19. The uncodified law of the State of Alaska is amended by adding a new section to 02 read: 03 TRANSITION: REGULATIONS. Notwithstanding sec. 22 of this Act, the 04 Department of Revenue may immediately proceed to adopt regulations necessary to 05 implement the changes made by this Act. The regulations take effect under AS 44.62 06 (Administrative Procedure Act), but not before the effective date of the respective statutory 07 changes. 08 * Sec. 20. The uncodified law of the State of Alaska is amended by adding a new section to 09 read: 10 TRANSITION: ACTIVITIES INVOLVING UNSTAMPED CIGARETTES 11 THROUGH MARCH 31, 2004. (a) Notwithstanding the requirements of AS 43.50.500 - 12 43.50.700, enacted by sec. 17 of this Act, a person may acquire, hold, own, import, possess, 13 sell, distribute, or consume unstamped cigarettes in this state on or after January 1, 2004, and 14 on or before March 31, 2004, if the cigarettes were in this state before January 1, 2004. 15 (b) In this section, "unstamped cigarettes" has the meaning given in AS 43.50.700, 16 enacted by sec. 17 of this Act. 17 * Sec. 21. Section 19 of this Act takes effect immediately under AS 01.10.070(c). 18 * Sec. 22. Except as provided in sec. 21 of this Act, this Act takes effect January 1, 2004.