On August 2, 2013, the Smuggled Tobacco Prevention Act (“STOP Act”) was reintroduced in the 113th Congress in the form of H.R. 2990 by United States Congressman Lloyd Doggett of Texas. H.R. 2990 has been referred to and currently awaiting review by the House Committee on Ways and Means.
The STOP Act has been introduced in various forms since 2004, and the legislation is designed to enhance law enforcement’s ability to combat illegal tobacco trafficking. The most recent previous version of the STOP Act, H.R. 3186, was introduced in 2011 during the 112th Congress. Referred to the House Committee on Ways and Means, neither chamber of Congress took action on the 2011 version of the bill after it was introduced.
In an effort to curb illegal tobacco trafficking, H.R. 2990 would make it nearly impossible for an unlicensed tobacco product manufacturer to continue to operate. The bill discourages suppliers of manufacturers, including machinery and raw material supplies, from selling to unlicensed manufacturers because doing so would subject them to criminal penalties. Likewise, customers receiving tobacco products from unlicensed manufacturers would also be subject to the same penalties.
Below is a summary of the pertinent provisions of H.R. 2990:
- The STOP Act would make it harder to obtain a TTB permit.
- A TTB permit may not be granted unless the applicant is in compliance with the Contraband Cigarette Trafficking Act, the Jenkins Act, the Tobacco Buyout statute and the Family Smoking Prevention and Tobacco Control Act
- Wholesalers would be required to obtain TTB permits.
Tracking and Tracing:
- The Treasury Secretary would be required to promulgate regulations requiring manufacturers and importers to attach “a unique identification marking” to all tobacco product packaging, which probably would include cigarette packs, cartons and cases.
- The “unique identification marking” would include a unique tracking number, the name of the manufacturer, the date the marking was purchased and affixed and the name of the purchaser. The information must be encrypted and readable by a portable scanning device.
- The Secretary’s regulations would be effective within three years of the STOP Act’s passage.
- Tobacco products that do not have the unique markings could not be delivered for sale.
- Distributors would be required to maintain the same records as manufacturers.
- Manufacturers and distributors would be required to maintain records regarding the chain of custody of tobacco products.
- Retailers would be required to maintain records regarding their receipt and regarding any non-retail sale or delivery of tobacco products.
- The Act would prohibit any tobacco production machine from being sold, leased or delivered to any person engaged in the unlicensed manufacture of tobacco products, or engaged in the sale of contraband tobacco products.
- Tobacco production machinery sellers would be required to keep records regarding their sales. They also would be required to have a TTB permit.
- Violations of these provisions would be subject to fines and/or up to five years in prison.
- The STOP Act would impose criminal penalties for the sale of tobacco products to, or the receipt of tobacco products from, any person that has not received a required permit.
- The STOP Act would impose criminal penalties for the sale of processed tobacco to anyone other than a licensed manufacturer or processor.
- The STOP Act would prohibit the sale of more than 3,000 cigarettes (15 cartons) in a single transaction or series of related transactions.
- The foregoing offenses would be subject to fines and up to five years in prison.