Arkansas Attorney General Dustin McDaniel, who is co-chair of the National Association of Attorneys General Tobacco Committee, is supporting legislation in that state that would impose significant new requirements for nonparticipating manufacturers to the Master Settlement Agreement. We understand that the legislation may be used as a model in other states.
Arkansas House Bill 1950 sailed through the House of Representatives, passing the House a little over a week after its introduction. HB 1950 is scheduled to be considered by the Arkansas Senate during the week of March 21st.
Among other things, HB 1950 would impose new requirements on nonparticipating manufacturers, including:
- Expanding the requirements for payment of escrow by amending the definition of “units sold” to include all cigarettes that are supposed to be stamped.
- Imposing bond requirements for new entrants and manufacturers that are deemed to be an elevated risk for noncompliance with escrow obligations.
- Imposing joint and several liability for importers of foreign-made cigarettes.
- Potentially prohibiting nonparticipating manufacturers from doing business if they have not complied with escrow requirements to other states’ satisfaction.
- Potentially prohibiting nonparticipating manufacturers from doing business if they have not satisfied their reporting requirements under the federal Jenkins Act, as recently modified by the PACT Act.
- Implementing more onerous reporting requirements for nonparticipating manufacturer sales.
In addition to these new requirements for cigarette manufacturers, HB 1950 would also impose significant new requirements for cigarette distributors.
HB 1950 would also prohibit tobacco licensees from using cigarette rolling machines unless the machines are used to produce cigarettes for personal use and not for resale to others.