SCS SB 1266 -- TOBACCO SALES

SPONSOR:  Kenney (Hoppe)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Local
Government and Related Matters by a vote of 10 to 3.

This substitute bans the sale and distribution of "gray market
cigarettes."  Gray market cigarettes are cigarettes that are
packaged for sale outside the United States and may not contain
required health warnings and ingredient lists.  Persons in
violation of this law are guilty of a class D felony.  These
cigarettes may also be distributed under names and packages
similar to cigarettes manufactured for sale in the United States.
Persons are prohibited from affixing any stamp or meter
impressions to gray market cigarettes.  The substitute allows the
Director of the Department of Revenue to revoke or suspend the
license of a wholesaler who violates this law.  In addition, the
director may impose a civil penalty not greater than 500% of the
retail value of the cigarettes involved or $5,000.  Gray market
cigarettes sold or distributed in violation of this law are
considered contraband and subject to seizure and forfeiture.  In
addition, violations are subject to remedies or penalties
available for a violation of unlawful trade practices.  This law
is to be enforced by the director through the State Highway
Patrol and all local police authorities.  The Attorney General
has concurrent power with the prosecuting attorneys of the state
to enforce this law.

The substitute contains an emergency clause.

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that the state needs an enforcement
tool to keep gray market tobacco from coming into the state.
Federal laws don't address violation of gray market laws.
Forty-five other states have passed a similar law.  The
substitute will protect the Master Settlement Agreement because
gray market cigarettes don't pay into the fund.  Gray market
cigarettes compete unfairly with domestic cigarettes.

Testifying for the bill were Senator Kenney; R. J. Reynolds
Tobacco; Quick Trip Corporation; and Missouri Retailers
Association.

OPPONENTS:  Those who oppose the substitute say that gray market
cigarettes meet federal standards, and they should be able to
sell them.  Companies that sell gray market tobacco put money in
escrow for the tobacco settlement.  Only cigarettes manufactured
outside the United States are brought in and sold.  Big tobacco
companies want to limit what can be sold and to control the
market and retail prices.  Businesses sometimes lose money on
gray market tobacco and only use it as a promotion.  Some
businesses need to sell gray market cigarettes to stay in
business.  The substitute will hurt competition.

Testifying against the bill were Dirt Cheap Corporation; and Tom
McCarthy.

Steve Bauer, Legislative Analyst

Missouri House of Representatives
Last Updated October 11, 2002 at 9:04 am