Nonparticipating manufacturers, wholesalers, and distributors that do business in Oklahoma will be subject to substantial additional requirements if House Bill 2363 currently pending in the Oklahoma State Legislature is enacted. The bill has passed both houses of the Legislature and appears to be headed toward approval.
The bill would require wholesalers and distributors to file monthly reports with the Attorney General’s office and the Oklahoma Tax Commission in an electronic format by the 20th of each month with the following information:
- The name and address, including city and zip code, of the outlet locations of each retailer or wholesaler that receives delivery from the wholesaler or distributor;
- Sales information for cigarette sales to wholesalers, retailers, and tribes, as well as sales of unstamped cigarettes during the previous month; and
- Sales information for roll-your-own tobacco products during the previous month.
In addition, the bill would impose additional requirements upon nonparticipating manufacturers, particularly those that Oklahoma would deem as presenting “elevated risk,” and importers of the tobacco products of nonparticipating tobacco manufacturers. Specifically, nonparticipating manufacturers would be required to post a bond of $50,000 or 50% of previous escrow (if any), whichever is greater, if any of the following conditions are applicable:
- The NPM was not listed in the tobacco directory for the 4 consecutive quarters before applying to be on the directory;
- The NPM was previously involuntarily removed or denied recertification for noncompliance with the Master Settlement Agreement or the Prevention of Youth Access to Tobacco Act;
- The Attorney General reasonably determines that the NPM poses an “elevated risk” of noncompliance as defined by the statute. The bond would be required for three consecutive years, or longer if the Attorney General determines the manufacturer presents an elevated risk.
The bond must be written in favor of the State of Oklahoma and if the NPM fails to make any escrow deposit due for a quarter within 15 days of the due date for the deposit, the State of Oklahoma may execute on the bond in the amount of any escrow deposit that is due.
In addition, before being included in the Oklahoma tobacco directory, a nonparticipating manufacturer must:
- Undertake joint and several liability with any importer of its products in accordance with law;
- Register to do business in Oklahoma, maintain a registered service agent within Oklahoma, and agree that the Secretary of State may act as service agent if the registered service agent is unavailable;
- Consent to be sued in the Oklahoma courts for the purposes of enforcement of the Prevention of Youth Access to Tobacco Act, MSA Complementary Act, and excise tax statutes.
The bill specifies an effective date of November 1, 2014.