§ 26-57-201.  Title.

  This subchapter shall be known and may be cited as the "Arkansas Tobacco Products Tax Act of 1977."

HISTORY: Acts 1977, No. 546, § 1; A.S.A. 1947, § 84-4501.

§ 26-57-202.  Legislative findings and purpose.

  (a) It is recognized, found, and determined by the General Assembly that:

   (1) The Surgeon General of the United States has determined that the smoking of cigarettes is detrimental to the health of the smoker;

   (2) The Arkansas General Assembly had already recognized this hazard many years ago when it enacted § 5-27-227 regulating the sale of tobacco to minors, §§ 20-27-701 - 20-27-703 establishing a policy for public smoking, and this subchapter to provide for close supervision and control of the sale of cigarettes and other tobacco products;

   (3) The state has a very valid governmental interest in preserving and promoting the public health and welfare of its citizens; and

   (4) It is the responsibility of the General Assembly to enact legislation to protect and further this essential governmental interest.

(b) It is therefore the intent of this subchapter to:

   (1) Provide for the close supervision and control of the licensing of persons to sell cigarettes and other tobacco products in this state in order to assure that cigarettes and other tobacco products distributed in the state are fresh, not contaminated, and are properly taxed, stamped, stored, and distributed only to persons authorized to receive these products; and

   (2) Impose licenses, fees, taxes, and restrictions on the privilege of dealing in or otherwise doing business in tobacco products in order to promote the public health and welfare of the citizens of this state and to protect the revenue collection procedures incorporated within this subchapter.

HISTORY: Acts 1977, No. 546, § 3; 1979, No. 911, § 5; 1983, No. 255, § 1; 1985, No. 684, § 1; 1985, No. 824, § 1; A.S.A. 1947, § 84-4503.
 

§ 26-57-203.  Definitions.

  As used in this subchapter:

   (1) "Annual" or "annually" means the fiscal year from July 1 through the next June 30;

   (2) "Cigar" means any roll of tobacco wrapped in leaf tobacco or in any substance containing tobacco, other than any roll of tobacco that is a cigarette under subdivision (3) of this section;

   (3) "Cigarette" means any roll of tobacco wrapped in:

      (A) Paper or in any substance not containing tobacco; or

      (B) Any substance containing tobacco that, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling is likely to be offered to or purchased by consumers as a cigarette;

   (4) "Consumer" means a member of the public at large;

   (5) "First sale" means the sale of tobacco products made by a manufacturer to licensed wholesalers and licensed vendors or a licensed retailer only;

   (6)  (A) "General tobacco products vendor" means any person that operates a vending machine or that uses any other mechanical device from which cigarettes or other tobacco products are delivered to the consumer by inserting coins in the machine or device, and that purchases tobacco products only from licensed wholesalers.

      (B) A general tobacco products vendor may operate licensed vending machines on the general tobacco product vendor's own premises and on the premises of others as a principal business;

   (7) "Gross sales" means the amount received for tobacco products sold at retail, including both the federal and state taxes of the tobacco products when purchased by a retailer;

   (8) "Licensed" means that the person has received a license or permit from the Director of the Tobacco Control Board and is otherwise qualified to do business in this state except that "licensed" does not mean that a person is registered as a manufacturer;

   (9) "Manufacturer" means any person who produces any tobacco product for sale and includes, but is not limited to, importers and distributors that deal in tobacco products as manufacturers and that are required under this subchapter to sell only to licensed wholesalers or licensed retailers located in Arkansas;

   (10) "Restricted tobacco products vendor" means a person that is licensed to operate vending machines owned by the person only on the person's own premises, and is otherwise subject to all other restrictions imposed on a general tobacco products vendor;

   (11) "Person" means any individual, retailer, wholesaler, manufacturer, firm, association, company, partnership, limited liability company, corporation, joint-stock company, club, agency, syndicate, the State of Arkansas, county, municipal corporation or other political subdivision of this state, receiver, trustee, fiduciary, or trade association;

   (12) "Place of business" means the place where orders are taken or received or where tobacco products are sold;

   (13) "Retailer" means any person who purchases tobacco products from licensed wholesalers for the purpose of selling them over the counter at retail to consumers;

   (14) "Salesman" means the agent or employee of a wholesaler that sells or offers for sale to licensed wholesalers or licensed retailers or that solicits for sale, takes orders for, or in any manner promotes the sale or use of tobacco products;

   (15) [Repealed.]

   (16)  (A) "Stamps" means the Arkansas cigarette stamps denoting the tax on cigarettes.

      (B) When affixed to a container of cigarettes, the stamps shall indicate that the tax has been paid;

   (17) "Tobacco products" means all products containing tobacco for consumption and includes, but is not limited to, cigarettes, cigars, little cigars, cigarillos, chewing tobacco, smokeless tobacco, snuff, smoking tobacco, including pipe tobacco, and smoking tobacco substitutes;

   (18) "Tobacco products vending machine" means any coin-operated vending machine from which tobacco products are sold;

   (19) "Warehouse" means a place where tobacco products are stored for another person and to or from which place the tobacco products are shipped or delivered upon order by the owner of the tobacco products to the warehouse; and

   (20)  (A) "Wholesaler" means any person, not a manufacturer or owned or operated by a manufacturer, that does business within this state at or from an established place of business that purchases unstamped or untaxed cigarettes or other tobacco products directly from manufacturers that distribute tobacco products in Arkansas, and that sells to properly licensed cigarette vendors or retailers.

      (B) However, where an Arkansas city is separated from a city in another state only by a state line, a person that is a resident of the Arkansas city that maintains a warehouse in the adjoining city in the adjoining state may qualify as a wholesaler under this subchapter if that person is regularly engaged in the sale of tobacco products to licensed retailers within Arkansas as a first sale and is eligible to purchase unstamped cigarettes direct from manufacturers.

HISTORY: Acts 1977, No. 546, § 2; 1979, No. 911, §§ 1-4; 1983, No. 255, § 2; A.S.A. 1947, § 84-4502; Acts 1987, No. 628, § 1; 1995, No. 1160, § 30; 1997, No. 1337, § 1; 2005, No. 1376, § 1; 2007, No. 827, §§ 227-229.

NOTES:
Amendments.

The 1995 amendment inserted "limited liability company" in (10).

The 1997 amendment deleted former (3) and redesignated (4) through (16) as present (3) through (15), and inserted present (16); rewrote present (3); substituted "from the Director of the Tobacco Control Board and" for "from the director and" in present (6); rewrote present (7); and, in (19), substituted "person, not a manufacturer or owned or operated by a manufacturer, who does business within this state at or from" for "person who does business at or from," and deleted "located within this state" following "place of business."

The 2005 amendment inserted present (2), (3)(A) and (3)(B) and redesignated the remaining subdivisions accordingly; and substituted "any roll of tobacco wrapped in" for "all rolled tobacco, or substitutes therefor, for smoking which is wrapped in paper or any substitute other than natural leaf tobacco in its natural state" in (3).

The 2007 amendment deleted "or 'vendor'" following "'General tobacco products vendor'" in (6)(A); in (10), substituted "person that" for "vendor who" and "person only on the person's own" for "vendor on the vendor's"; and deleted (15).
 

§ 26-57-204.  Violations.

  Any person who violates any of the sections of this subchapter for which a specific penalty is not provided is guilty of a violation.

HISTORY: Acts 1977, No. 546, § 30; A.S.A. 1947, § 84-4530.

NOTES:
Cross References.

Violations, §§ 5-1-108, 5-4-201.
 

§ 26-57-205.  Enforcement of subchapter.

  It is the duty of all state, county, and city officers to enforce the provisions of this subchapter.

HISTORY: Acts 1977, No. 546, § 25; A.S.A. 1947, § 84-4525.
 

§  26-57-237. Cigarette stamps -- Sale or delivery

   (a) The Director of the Department of Finance and Administration or his stamp deputy may sell or deliver cigarette stamps only to licensed wholesalers.

(b) No person shall have in his possession any cigarette stamps except such as have been issued in the regular way in the manner provided for in this subchapter.

(c) (1) Any cigarette or tobacco products wholesaler or any other person required by law to affix cigarette tax stamps to cigarettes sold or offered for sale in this state shall have the option to receive the stamps directly from the Director of the Department of Finance and Administration or to request that the stamps be shipped to the person in a manner to be selected by the director.

   (2) When the stamps are shipped to the wholesaler or other person, the shipping and insurance cost shall be borne by the wholesaler. The wholesaler or other person to whom the stamps are shipped shall be liable for payment of the stamps only upon actual receipt thereof.

   (3) The receipt of tax stamps by a cigarette or tobacco products wholesaler or other person to whom the stamps are shipped shall be evidenced by a written receipt signed by the person to whom the stamps are shipped or a person designated by him.

   (4) A wholesaler or other person who chooses a method of shipment other than the method selected by the Director of the Department of Finance and Administration shall pay the director for the stamps prior to shipment. 

HISTORY: Acts 1977, No. 546, §  15; A.S.A. 1947, §  84-4515; Acts 1987, No. 725, §  1; 1997, No. 1337, §  19. 

§  26-57-238. Cigarette stamps -- Refund on unsold, returned cigarettes

   Where cigarettes to which stamps have been affixed are unsold and are returned, by the retailer or the wholesaler who paid tax on them, to the wholesaler or manufacturer from whom they were originally purchased, refund of the tax paid on such cigarettes may be made in the manner prescribed by the Director of the Department of Finance and Administration.

HISTORY: Acts 1977, No. 546, §  16; A.S.A. 1947, §  84-4516; Acts 1997, No. 1337, §  19. 

§  26-57-239. Consumer to require stamps affixed in proper manner

   Every consumer shall require, when he purchases, receives, takes into his possession, or has delivered upon his premises cigarettes in packages, cartons, or other containers, that the proper stamps be affixed in the manner required by this subchapter to show that the tax has been paid thereon. 

HISTORY: Acts 1977, No. 546, §  18; A.S.A. 1947, §  84-4518. 

§  26-57-240. Counterfeiting of stamps unlawful -- Penalty

   Any person who falsely and fraudulently makes, forges, or counterfeits any stamps prescribed for use in the administration of this subchapter or who knowingly and willfully has in his possession or who knowingly or willfully utters, publishes, passes, or tenders as true any false, altered, forged, previously used, or counterfeit stamps prescribed for such use is guilty of a felony and upon conviction shall be punished as is provided by §  5-1-106(c). 

HISTORY: Acts 1977, No. 546, §  29; A.S.A. 1947, §  84-4529. 

§  26-57-241. Reuse of containers unlawful -- Penalty

   Any person who reuses or refills with cigarettes any box, package, or container from which tax paid tobacco products have been removed is guilty of a felony and upon conviction shall be punished as is provided by §  5-1-106(c). 

HISTORY: Acts 1977, No. 546, §  29; A.S.A. 1947, §  84-4529. 

 §  26-57-242. Wholesaler -- Transporting cigarettes with stamps affixed outside state for reentry

    (a) Every wholesaler of tobacco products doing business at or from an established place of business located within this state and authorized to purchase untaxed tobacco products on an open account directly from manufacturers who have general distribution of tobacco products in Arkansas, and who sell to licensed retailers, are prohibited from transporting cigarettes to which stamps have been affixed outside the boundaries of the State of Arkansas for warehousing or reentry into this state, or both, for either sale or resale.

(b) The prohibition contained in this section does not apply to any wholesaler of tobacco products who was actually engaged in and had established distribution practice of transporting cigarettes upon which the Arkansas stamp had been affixed outside the boundaries of the State of Arkansas for warehousing or reentry into the State of Arkansas, or both, for sale or resale on or before January 1, 1972.

(c) Upon violation of this section by a wholesaler, the Director of the Tobacco Control Board shall revoke the wholesaler's permit. 

HISTORY: Acts 1977, No. 546, §  21; A.S.A. 1947, §  84-4521; Acts 1997, No. 1337, §  20. 

§  26-57-243. Unstamped and untaxed products -- Personal possession limits

   The possession limit of tobacco products by any person, upon his person or in his personal luggage for his personal use, not taxed or stamped in accordance with the provisions of this subchapter, is as follows:

   (1) One (1) carton of ten (10) packages plus one (1) package of twenty (20) cigarettes. A person purchasing cigarettes from a United States military base or installation may have in his or her possession three (3) cartons of ten (10) packages;

   (2) One (1) box of fifty (50) cigars, small cigars, or cigarillos; or

   (3) Three pounds (3 lbs.) of smoking tobacco.

HISTORY: Acts 1977, No. 546, §  27; A.S.A. 1947, §  84-4527; Acts 1997, No. 880, §  1. 

§ 26-57-244.  Possession of untaxed, unstamped products - Notice and prima facie evidence.

  (a) It is unlawful for any person to receive or have in his or her possession for sale, consumption, or any other purpose, any untaxed tobacco products or unstamped cigarettes unless the tax prescribed by this subchapter has been paid directly to the Director of the Department of Finance and Administration by the person in possession of the untaxed tobacco products or unstamped cigarettes.

(b) The absence of the stamps from any container of cigarettes is notice to all persons that the tax has not been paid and is prima facie evidence of the nonpayment of the tax.

(c) If tax has been paid to the director on any untaxed tobacco products or unstamped cigarettes, a consumer may establish proof of such payment by providing a receipt or any other documentation that clearly indicates that the tax was paid.

(d) The provisions of this section do not relieve any retail cigarette and tobacco permit holder from the obligations placed on them by § 26-57-228.

(e) No retail cigarette or tobacco permit holder shall have in his or her possession any unstamped cigarettes nor shall he or she have in his or her possession any tobacco products on which the tax prescribed by this subchapter has not been paid.

(f)  (1) An Arkansas consumer who purchases any untaxed tobacco products or unstamped cigarettes shall be liable for reporting and remitting all excise tax due on such tobacco products or cigarettes as levied under the Arkansas Tobacco Products Tax Act, § 26-57-201 et seq.  (2) The tax due shall be reported on forms provided by the director on or before the fifteenth day of the month following the month in which the untaxed purchase was made.

   (3) The report shall provide the information prescribed by the director.

   (4) When a report is filed, the consumer shall remit the full amount of tax due on the untaxed purchase to the director.

(g) The director is authorized to directly assess the excise tax due on any untaxed tobacco products or unstamped cigarettes against a consumer who purchases such items and fails to report and remit the excise tax due in a timely manner.

(h) Subsections (f) and (g) of this section shall be subject to the provisions of the Arkansas Tax Procedure Act, § 26-18-101 et seq.

(i) The provisions of this section shall not apply to wholesalers and common carriers.

HISTORY: Acts 1977, No. 546, § 26; A.S.A. 1947, § 84-4526; Acts 2007, No. 817, § 2.

NOTES:
Amendments.

The 2007 amendment rewrote (a); inserted present (c) through (h); and redesignated former (c) as present (i).
 

§  26-57-245. Unstamped products or products with unpaid taxes -- Purchase, sale, receipt, etc., a criminal offense

   Except as otherwise authorized by this subchapter, any person who purchases, sells, offers for sale, receives, possesses, or transports upon his person, on his premises, or in his vehicle any cigarettes which do not have affixed thereon the stamps required by this subchapter, or any other tobacco products upon which the taxes imposed by this subchapter have not been paid, is guilty of a criminal offense which is:

   (1) A Class C felony if the tax value of the total amount of tobacco products is equal to or exceeds one hundred dollars ($ 100);

   (2) A Class A misdemeanor if the tax value of the total amount of tobacco products is less than one hundred dollars ($ 100). 

HISTORY: Acts 1977, No. 546, §  23; 1979, No. 911, §  12; A.S.A. 1947, §  84-4523. 

§  26-57-246. Possession of improperly handled products as prima facie evidence

   The possession of tobacco products which have not been handled according to this subchapter by any person shall be prima facie evidence that that person intended to evade the tax thereon in order to cheat and defraud the State of Arkansas. 

HISTORY: Acts 1977, No. 546, §  25; A.S.A. 1947, §  84-4525. 

§  26-57-247. Seizure and disposition of improperly handled products

   (a) Any cigarettes to which stamps have not been affixed as provided in this subchapter are subject to seizure and shall be held as evidence for prosecution.

(b) The Director of the Tobacco Control Board may seize and hold for disposition of the courts all tobacco products found in the possession of any person dealing in, or a consumer of, tobacco products which have not been handled according to this subchapter.

HISTORY: Acts 1977, No. 546, §  25; A.S.A. 1947, §  84-4525; Acts 1997, No. 1337, §  21. 

§  26-57-248. Possession or sale of products with unpaid taxes -- Supplemental fines -- Liquidated damages

   (a) Any person who places in his stock or who has in his possession or on his premises, or who sells or offers for sale, any tobacco products on which the tax prescribed by law has not been paid shall, in addition to the other fines and forfeitures, be subject to a fine of twenty-five dollars ($ 25.00) for each package of cigarettes, little cigars, and cigarillos up to twenty (20) packages, and a fine of fifty dollars ($ 50.00) for each package in excess of twenty (20) packages, so held, sold, or offered for sale and a fine of fifty dollars ($ 50.00) for each box of cigars and twenty-five dollars ($ 25.00) for each unit of other tobacco products so held, sold, or offered for sale.

(b) The penalty shall be held to be in the nature of liquidated damages and may be collected by civil action.

HISTORY: Acts 1977, No. 546, §  27; 1985, No. 684, §  2; 1985, No. 824, §  2; A.S.A. 1947, §  84-4527. 

§  26-57-249.  Sale of products upon conviction -- Procedure

   (a) Upon conviction of any defendant charged with the violation of this subchapter, the court shall issue an order to destroy the tobacco products confiscated by the Director of the Arkansas Tobacco Control Board, or by any state, county, or municipal officer in this state, which were possessed or owned by the defendant and which have not been handled according to the provisions of this subchapter.

(b) Every court of record in this state shall notify the director of the disposition made of each case in the court as to whether the defendant was convicted or acquitted. 

HISTORY: Acts 1977, No. 546, §  34; A.S.A. 1947, §  84-4534; Acts 1997, No. 1337, §  22; 2001, No. 966, §  1. 

§  26-57-250. Civil action to recover tax and penalties -- Party defendants

   (a) Where the Director of the Department of Finance and Administration finds from investigation that the state has lost tax revenue because of the evasion of any provision of this subchapter, he may bring suit in the proper court to recover such tax and penalties.

(b) The action shall lie against the person evading the tax and against any person who aided, abetted, or assisted in such evasion. 

HISTORY: Acts 1977, No. 546, §  31; A.S.A. 1947, §  84-4531; Acts 1997, No. 1337, §  22. 

§  26-57-251. Civil and criminal actions brought in name of director -- Prosecution

   (a) All civil actions arising under this subchapter shall be brought by and in the name of the Director of the Department of Finance and Administration or the Director of the Tobacco Control Board, whichever is appropriate under the provisions of this subchapter.

(b) All criminal actions shall be brought and prosecuted by the proper prosecuting attorney. 

HISTORY: Acts 1977, No. 546, §  32; A.S.A. 1947, §  84-4532; Acts 1997, No. 1337, §  22. 

§  26-57-252. No bond for costs required

   No bond for costs shall be required of the Department of Finance and Administration or the Tobacco Control Board in any court in this state for the prosecution of any violation of this subchapter. 

HISTORY: Acts 1977, No. 546, §  33; A.S.A. 1947, §  84-4533; Acts 1997, No. 1337, §  22. 

§  26-57-253. Criminal actions -- Appeals

   (a) In all prosecutions in the municipal, police, and justice courts or other courts of this state, the State of Arkansas shall have the same right of appeal to the circuit courts of this state and upon the same terms as the defendant now has under the law in misdemeanor cases.

(b) When appealed, the cases shall be tried de novo by the circuit court. 

HISTORY: Acts 1977, No. 546, §  33; A.S.A. 1947, §  84-4533. 

§  26-57-254. Health inspections

   In order to assure that the citizens of this state receive only tobacco products which are fresh and not contaminated, the Director of the Department of Health is authorized under this subchapter to make reasonable inspection of any tobacco products in places of storage or distribution authorized under this subchapter and may require any such tobacco products found to be contaminated or not fresh be removed from stock and be returned to the proper wholesaler or manufacturer for disposal according to law. 

HISTORY: Acts 1977, No. 546, §  3; 1979, No. 911, §  5; 1983, No. 255, §  1; 1985, No. 684, §  1; 1985, No. 824, §  1; A.S.A. 1947, §  84-4503. 

§  26-57-255.  Arkansas Tobacco Control Board

   (a) There is hereby created the Arkansas Tobacco Control Board to consist of eight (8) members appointed by the Governor. The board shall be constituted as follows: Two (2) members of the board shall be tobacco products wholesalers; two (2) members of the board shall be tobacco products retailers; and four (4) members of the board shall be members of the public at large who are not public employees or officials, at least one (1) of which shall be an African American, and two (2) of whom shall be selected from a list of at least eight (8) candidates supplied to the Governor by the Arkansas Medical Society.

(b) The Governor shall designate which member of the Tobacco Control Board shall act as chairman, and that person shall serve as chairman for two (2) years unless his membership on the board ceases prior to the end of the two-year period.

(c) All members of the Tobacco Control Board must be residents of the State of Arkansas and confirmed by the Senate. The term of office shall be five (5) years, except that the initial board shall be appointed to staggered terms in that the term of one (1) member expires each year.

(d) The Tobacco Control Board shall have responsibility for the issuance, suspension, and revocation of the licenses and permits enumerated in §  26-57-219. All action by the Tobacco Control Board shall be by a majority vote of the full membership of the board, and the board may take no official action in connection with any matter except at a regular or special meeting. In the event of a tie vote of the members of the board, the Director of the Tobacco Control Board may cast the deciding vote. The Tobacco Control Board shall have no jurisdiction over manufacturers of tobacco products.

(e) No person who is not a citizen of the United States and who has not resided in the State of Arkansas for at least two (2) consecutive years immediately preceding the date of appointment may be appointed to the Tobacco Control Board nor employed by the board.

(f) Each member of the Tobacco Control Board and the Director of the Tobacco Control Board shall take and subscribe to an oath that he will support and enforce the provisions of this subchapter, the tobacco control laws of this state, the Constitution of the State of Arkansas, and the Constitution of the United States of America. 

HISTORY: Acts 1997, No. 1337, §  23. 

§  26-57-256. Powers of the board

   (a) The Arkansas Tobacco Control Board shall:

   (1) Promulgate regulations for the proper enforcement and implementation of the Arkansas Tobacco Products Tax Act of 1977, as amended, §  26-57-201 et seq., and the Unfair Cigarette Sales Act, §  4-75-701 et seq., subject to the restrictions in §  26-57-212(d);

   (2) Receive applications for and issue, refuse, suspend, and revoke licenses and permits listed in §  26-57-219;

   (3) Prescribe forms of applications for permits and licenses under this subchapter;

   (4) (A) Cooperate with the Revenue Division of the Department of Finance and Administration in the enforcement of the tax laws affecting the sale of tobacco products in this state and in the enforcement of all other state and local tax laws.

      (B) To facilitate efforts to cooperate with the division concerning the enforcement of all other state and local tax laws, the board shall immediately require that the following additional information be provided by all applicants for permit issuance or renewal:

         (i) Federal tax identification numbers issued by the Internal Revenue Service;

         (ii) Social Security numbers; and

         (iii) State sales tax account numbers assigned by the Department of Finance and Administration, if applicable.

      (C) Beginning January 1, 2002, and each year thereafter, the board shall provide a list of all applicants for the issuance or renewal of all tobacco permits and licenses to the Director of the Department of Finance and Administration. This list shall contain the identifying information required by subdivision (a)(4)(B) of this section as well as the name of the permittee and the permittee's current business address.

   (5) Conduct public hearings, where appropriate, regarding any permit and license authorized by this subchapter or in violation of this subchapter, the Arkansas Tobacco Products Tax Act of 1977, as amended, §  26-57-201 et seq., the Unfair Cigarette Sales Act, §  4-75-701 et seq., §  5-27-227, or any other federal, state, or local statute, ordinance, rule, or regulation concerning the sale of tobacco products to minors or the rules and regulations promulgated by the board. After a notice and hearing held in accordance with the Arkansas Administrative Procedure Act, §  25-15-201 et seq., if the board finds a violation of this subchapter, the Arkansas Tobacco Products Tax Act of 1977, as amended, §  26-57-201 et seq., the Unfair Cigarette Sales Act, §  4-75-701 et seq., or the rules and regulations promulgated by the board, the board may suspend, revoke, or not renew any or all permits and licenses issued by the board to any person or entity and in addition, the board may levy a civil penalty in an amount not to exceed one thousand dollars ($ 1,000) for each violation against any person or entity found to be in violation. Each day of the violation shall be deemed a separate violation. In that regard, the board is authorized to examine or cause to be examined under oath any witness and the books and records of any licensee, person, or entity; and

   (6) When requested by the written petition of at least three (3) interested parties, conduct public hearings to receive testimony on the facts relevant to the issuance of any license or permit under this subchapter.

(b) Unless the civil penalty assessed under this section is paid within fifteen (15) days following the date for an appeal from the order, the Director of the Arkansas Tobacco Control Board shall have the power to institute a civil action in the Circuit Court of Pulaski County to recover the civil penalties assessed pursuant to the provisions of this subchapter.

(c) The board shall have no authority in criminal prosecutions or the assessment or collection of any taxes or penalties related to the taxing of tobacco products. However, the board shall refuse to issue, suspend, revoke or refuse renewal of any permit or license issued by the board for the failure to pay taxes or fees imposed on tobacco products or any permit or license fees imposed by this subchapter or any other state and local taxes. 

HISTORY: Acts 1997, No. 1337, §  23; 1999, No. 1591, §  4; 2001, No. 1368, § §  3, 4. 

§  26-57-257. Director of Arkansas Tobacco Control Board

   (a) The Governor shall employ a person to serve as Director of the Arkansas Tobacco Control Board. The director shall serve at the pleasure of the Governor.

(b) The director shall present all evidence tending to prove violations of law or regulations at hearings held by the board.

(c) The director may employ such other personnel as he deems necessary, subject to the approval of the board and as authorized by the General Assembly.

(d) Any personnel employed by the director shall serve at his pleasure.

(e) The director and the board each may adopt, keep, and use a common seal. This seal shall be used for authentication of the records, process, and proceedings of the director and the board, respectively. Judicial notice shall be taken of each use of this seal in all of the courts of the state.

(f) Any process, notice, or other paper which the director may be authorized by law to issue shall be deemed sufficient if signed by the director and authenticated by the seal of the director.

(g) Any process, notice, or other paper which the board may be authorized by law to issue shall be deemed sufficient if signed by the chairman of the board and authenticated by the seal of the board.

(h) All acts, orders, proceedings, rules, regulations, entries, minutes, and other records of the director and all reports and documents filed with the director may be proved in any court of this state by a copy thereof certified to by the director with the seal of the director attached.

(i) All acts, orders, proceedings, rules, regulations, entries, minutes, and other records of the board and all reports and documents filed with the board's director may be proved in any court of this state by a copy thereof certified to by the chairman of the board with the seal of the board attached.

(j) The director shall maintain records of all permits and licenses issued, suspended, denied, or revoked by the board. The records shall be in such form as to provide ready information as to the identity of the licensees, including the names of major stockholders and directors of corporations holding licenses or permits and the location of the licensed or permitted premises.

(k) The director shall recognize the Department of Health, Bureau of Alcohol and Drug Abuse Prevention as the agency responsible for ensuring full compliance with Section 1926(b) of the Public Health Service Act and shall call upon administrative departments of the state, county, and city governments, sheriffs, city police departments, or other law enforcement officers for such information and assistance as the director may deem necessary in the performance of the duties imposed upon him by this subchapter.

(l) The director may inspect or cause to be inspected any premises where tobacco products are distributed, stored, or sold.

(m) In the conduct of any hearings, the director may:

   (1) Examine or cause to be examined any person under oath and examine or cause to be examined books and records of any licensee;

   (2) Hear testimony and take proof material to his information and the discharge of his duties hereunder;

   (3) Administer oaths or cause oaths to be administered;

   (4) Issue subpoenas to require the attendance of witnesses and the production of books and records. Any circuit court, by written order, may require the attendance of witnesses or the production of relevant books or other records subpoenaed by the director, and the court may compel obedience to its order by proceedings for contempt.

(n) All hearings and appeals from any hearing shall be conducted in accordance with the Arkansas Administrative Procedure Act, §  25-15-201 et seq.

(o) The director shall exercise other powers, functions, and duties as are or may be imposed or conferred upon him by law or the board.

(p) The director shall have other powers, functions, and duties pertaining to the issuance, suspension, and revocation of the permits and licenses enumerated in §  26-57-219 which previously were granted to the Director of the Department of Finance and Administration, except the authority to regulate manufacturers, and which are specifically delegated to the department by this subchapter.

(q) (1) The power and duty to collect taxes imposed on tobacco and tobacco products is specifically exempted from the powers and duties granted or assigned to the board or the department. However, a permit or license holder's failure to pay taxes or fees imposed on tobacco products or any permit or license fees imposed by this subchapter in a timely manner is grounds for the nonissuance, suspension, revocation, or nonrenewal of any permits or licenses issued by the board. Failure to timely and fully pay any other state and local taxes as reported by the Director of the Department of Finance and Administration shall also constitute grounds for the nonissuance, suspension, revocation, or nonrenewal of any permits or licenses issued by the board.

   (2) Beginning April 1, 2002, and each year thereafter, the Director of the Department of Finance and Administration shall report to the board any and all permit and license holders who are more than ninety (90) days delinquent on any state and local taxes. The board shall not issue or renew any permit or license issued under this section for any permit or license holder more than ninety (90) days delinquent on any privilege fee or tax addressed in this section unless the permittee or licensee demonstrates that he or she is current under a valid repayment agreement for the delinquent tax.

   (3) Beginning May 15, 2002, and each year thereafter, the board shall send notices to all permit and license holders more than ninety (90) days delinquent on any state and local taxes. This notice shall inform the permit or license holder that he or she is delinquent on payment of state and local taxes due the Director of the Department of Finance and Administration and that the permit or license holder will be unable to obtain or renew the permit or license that he or she holds until such time as the person becomes current in the payment of the tax due the Director of the Department of Finance and Administration or until such time as the person enters into a valid repayment agreement with the Department of Finance and Administration for the payment of the delinquent tax.

(r) The board may assess penalties for violation of §  5-27-227(a) according to the following schedule:

   (1) If the alleged violator has received a notice of an alleged violation from the board or other agency or official with the authority to assess penalties containing the information specified in this subchapter, a civil penalty not to exceed two hundred fifty dollars ($ 250) for a first violation within a forty-eight-month period;

   (2) A civil penalty not to exceed five hundred dollars ($ 500) for a second violation within a forty-eight-month period and suspension of the license or permit enumerated in §  26-57-219 for a period not to exceed two (2) days;

   (3) A civil penalty not to exceed one thousand dollars ($ 1,000) for a third violation within a forty-eight-month period and suspension of the license or permit enumerated in §  26-57-219 for a period not to exceed seven (7) days;

   (4) A civil penalty not to exceed two thousand dollars ($ 2,000) for a fourth or subsequent violation within a forty-eight-month period and suspension of the license or permit enumerated in §  26-57-219 for a period not to exceed fourteen (14) days; and

   (5) For a fifth violation within a forty-eight-month period, the license or permit enumerated in §  26-57-219 may be revoked.

(s) A notice of an alleged violation of §  5-27-227 shall be given to the holder of a retail permit or license within ten (10) days of the alleged violation. The notice must contain the date and time of the alleged violation. It shall also include either the name of the person making such alleged sale or information reasonably necessary to determine the location in the store that allegedly made such sale. Such information should include, where appropriate, but not be limited to, the cash register number, physical location of the sale in the store, and, if possible, the lane or aisle number.

(t) Notwithstanding the provisions of subsection (r) of this section, the board shall consider the following factors when reviewing a possible violation:

   (1) The business has adopted and enforced a written policy against selling cigarettes or tobacco products to persons under the age of eighteen (18) years;

   (2) The business has informed its employees of the applicable laws regarding the sale of cigarettes and tobacco products to persons under the age of eighteen (18) years;

   (3) The business required employees to verify the age of cigarette or tobacco product customers by way of photographic identification;

   (4) The business has established and imposed disciplinary sanctions for noncompliance; and

   (5) The appearance of the purchaser of the tobacco in any form or cigarette papers was such that an ordinary prudent person would believe him or her to be of legal age to make the purchase.

(u) Notwithstanding the provisions of subsection (r) of this section, no penalty for a violation of §  5-27-227 shall be imposed upon a retailer or agent or employee of such retailer who can establish an affirmative defense that, prior to the date of the violation, the retailer or agent or employee of the retailer furnishing the tobacco in any form or cigarette papers reasonably relied upon proof of age which identified the person receiving the tobacco in any form or cigarette papers as being eighteen (18) years of age or older.

(v) "Proof of age" means any document issued by a governmental agency containing a description of the person, such person's photograph, or both, and giving such person's date of birth and includes, without being limited to, a passport, military identification card, or driver's license.

(w) Any cigarettes or tobacco products found in the possession of a person under eighteen (18) years of age may be confiscated.

(x) An employee of a permit holder who violates §  5-27-227 shall be subject to a civil penalty not to exceed one hundred dollars ($ 100) per violation.

(y) (1) In the case of a corporation or business with more than one (1) retail location, to determine the number of accumulated violations for purposes of the penalty schedule set forth in subsection (i) of this section, violations of §  5-27-227(a) by one (1) retail location shall not be accumulated against other retail locations of that same corporation or business.

   (2) In the case of a retail location, for purposes of the penalty schedule set forth in subsection (i) of this section, violations accumulated and assessed against a prior owner of the retail location shall not be accumulated against a new owner of the same retail location.

(z) If a penalty has been assessed pursuant to this section against any person, business, or corporation for a single specific violation of §  5-27-227(a) or (b), the person, business, or corporation shall not be prosecuted under §  5-27-227(a) or (b) for a violation based on the same facts or specific incident for which the penalty was assessed under this section.

(aa) If any person, business, or corporation has been prosecuted for a single specific violation of §  5-27-227(a) or (b), the person, business, or corporation shall not be assessed a civil penalty under this section based on the same facts or specific incident upon which the prosecution under §  5-27-227(a) or (b) was based.

(bb) The enforcement of state laws relating to the prohibition of the barter or sale of tobacco in any form or cigarette papers to minors by multiple state agencies shall be coordinated to avoid duplicative inspections of the same retailer by multiple state agencies.

(cc) All penalties collected pursuant to the authority of this section shall be deposited in the State Treasury. 

HISTORY: Acts 1997, No. 1337, §  23; 1999, No. 1591, §  2; 2001, No. 1368, §  5. 

§  26-57-258. Continuation of permits, licenses, regulations, etc., of Department of Finance and Administration

   All permits, licenses, certifications, determinations, regulations, and other actions of the Department of Finance and Administration under this subchapter in effect on June 30, 1997, shall continue in full force and effect until modified by the Tobacco Control Board. 

HISTORY: Acts 1997, No. 1337, §  23. 

§  26-57-259. Nonpreemption

   This act and the rules, regulations and other actions of the Tobacco Control Board shall not be construed or interpreted so as to preempt or in any other manner qualify or limit the enactment and enforcement of any federal, state, county, municipal or other local regulation of the manufacture, sale, storage or distribution of tobacco products that is more restrictive than this act or the rules and regulations promulgated by the Tobacco Control Board. This act and the rules, regulations and other actions of the Tobacco Control Board shall not be construed or interpreted so as to preempt or otherwise limit any legal or equitable claims or causes of action brought under the common law or any federal or state statutes. Nothing in this act, nor any rule or regulation of the Tobacco Control Board, shall be construed or interpreted so as to require any state, county, municipal or other local authority to exhaust any administrative remedies through the Tobacco Control Board including, but not limited to, the right to seize and forward to the Tobacco Control Board the state license of any vendor or retailer found to have illegally sold tobacco products to a person under eighteen (18) years of age; provided the vendor or retailer shall be given a hearing before the Tobacco Control Board within five (5) business days of the seizure. 

HISTORY: Acts 1997, No. 1337, §  26. 

§  26-57-260. Definitions

   (a) As used in this section, unless the context otherwise requires:

   (1) "Adjusted for inflation" means increased in accordance with the formula for inflation adjustment set forth in Exhibit C to the Master Settlement Agreement;

   (2) (A) "Affiliate" means a person who directly or indirectly owns or controls, is owned or controlled by, or is under common ownership or control with another person.

      (B) Solely for the purposes of this definition, the terms "owns", "is owned", and "ownership" mean ownership of an equity interest, or the equivalent thereof, of ten percent (10%) or more and the term "person" means an individual, partnership, committee, association, corporation, or any other organization or group of persons;

   (3) "Allocable share" means the allocable share as that term is defined in the Master Settlement Agreement;

   (4) (A) "Cigarette" means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains:

         (i) Any roll of tobacco wrapped in paper or in any substance not containing tobacco;

         (ii) Tobacco in any form that is functional in the product which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to or purchased by consumers as a cigarette; or

         (iii) Any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to or purchased by consumers as a cigarette described in subdivision (4)(A)(i) of this section.

      (B) The term "cigarette" includes "roll-your-own", that is, any tobacco which, because of its appearance, type, packaging, or labeling is suitable for use and likely to be offered to or purchased by consumers as tobacco for making cigarettes.

      (C) For purposes of this definition of "cigarette", nine hundredths (0.09) of an ounce of roll-your-own tobacco shall constitute one (1) individual cigarette;

   (5) "Master Settlement Agreement" means the settlement agreement and related documents entered into on November 23, 1998, by the State and leading United States tobacco product manufacturers;

   (6) "Qualified escrow fund" means an escrow arrangement with a federally or state-chartered financial institution having no affiliation with any tobacco product manufacturer and having assets of at least one billion dollars ($ 1,000,000,000) where such arrangement requires that such financial institution hold the escrowed funds' principal for the benefit of releasing parties and prohibits the tobacco product manufacturer placing the funds into escrow from using, accessing, or directing the use of the funds' principal except as consistent with §  26-57-261(a)(2)(B);

   (7) "Released claims" means released claims as that term is defined in the Master Settlement Agreement;

   (8) "Releasing parties" means releasing parties as that term is defined in the Master Settlement Agreement;

   (9) "Tobacco product manufacturer" means an entity that, after the date of enactment of this section, directly and not exclusively through any affiliate:

      (A) (i) Manufactures cigarettes anywhere that such manufacturer intends to be sold in the United States, including cigarettes intended to be sold in the United States through an importer, except where the importer is an original participating manufacturer, as that term is defined in the Master Settlement Agreement, who will be responsible for the payments under the Master Settlement Agreement with respect to such cigarettes as a result of the provisions of subsections II(mm) of the Master Settlement Agreement and who pays the taxes specified in subsection II(z) of the Master Settlement Agreement, and provided that the manufacturer of such cigarettes does not market or advertise such cigarettes in the United States;

         (ii) Is the first purchaser anywhere for resale in the United States of cigarettes manufactured anywhere that the manufacturer does not intend to be sold in the United States; or

         (iii) Becomes a successor of an entity described in subdivision (9)(A)(i) or (9)(A)(ii) of this section.

      (B) The term "Tobacco product manufacturer" shall not include an affiliate of a tobacco product manufacturer, unless such affiliate itself falls within any of subdivisions (9)(A)(i) -- (9)(A)(iii) of this section;

   (10) (A) "Units sold" means the number of individual cigarettes sold in the state by the applicable tobacco product manufacturer, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, during the year in question, as measured by excise taxes collected by the state on packs or roll-your-own tobacco containers bearing the excise tax stamp of the State.

      (B) The Department of Finance and Administration shall promulgate such regulations as are necessary to ascertain the amount of State excise tax paid on the cigarettes of such tobacco product manufacturer for each year. 

HISTORY: Acts 1999, No. 1165, §  1. 

§  26-57-261. Requirements

   Any tobacco product manufacturer selling cigarettes to consumers within the state, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, after the date of enactment of this section, shall do one (1) of the following:

   (1) Become a participating manufacturer, as that term is defined in section II(jj) of the Master Settlement Agreement, and generally perform its financial obligations under the Master Settlement Agreement; or

   (2) (A) Place into a qualified escrow fund by April 15 of the year following the year in question the following amounts, as such amounts are adjusted for inflation:

         (i) 1999: $.0094241 per unit sold after the date of enactment of this section;

         (ii) 2000: $.0104712 per unit sold;

         (iii) For each of 2001 and 2002: $.0136125 per unit sold;

         (iv) For each of 2003 through 2006: $.0167539 per unit sold; and

         (v) For each of 2007 and each year thereafter: $.0188482 per unit sold.

      (B) A tobacco product manufacturer that places funds into escrow pursuant to subdivision (a)(2)(A) of this section shall receive the interest or other appreciation on such funds as earned. Such funds themselves shall be released from escrow only under the following circumstances:

         (i) To pay a judgment or settlement on any released claim brought against such tobacco product manufacturer by the state or any releasing party located or residing in the state. Funds shall be released from escrow under subdivision (a)(2)(B)(i) of this section:

            (a) In the order in which they were placed into escrow; and

            (b) Only to the extent and at the time necessary to make payments required under such judgment or settlement;

         (ii) To the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow in a particular year was greater than the state's allocable share of the total payments that such manufacturer would have been required to make in that year under the Master Settlement Agreement, as determined pursuant to section IX(i)(2) of the Master Settlement Agreement and before any of the adjustments or offsets described in section IX(i)(3) of that agreement other than the inflation adjustment, had it been a participating manufacturer, the excess shall be released from escrow and revert back to such tobacco product manufacturer; or

         (iii) To the extent not released from escrow under subdivisions (a)(2)(A)(i) or (a)(2)(A)(ii) of this section, funds shall be released from escrow and revert back to such tobacco product manufacturer twenty-five (25) years after the date on which they were placed into escrow.

      (C) Each tobacco product manufacturer who elects to place funds into escrow pursuant to subdivision (a)(2) of this section shall annually certify to the Attorney General that he or she is in compliance with subdivision (a)(2) of this section. The Attorney General may bring a civil action on behalf of the state against any tobacco product manufacturer who fails to place into escrow the funds required under this section. Any tobacco product manufacturer who fails in any year to place into escrow the funds required under this section shall:

         (i) Be required within fifteen (15) days to place such funds into escrow as shall bring him or her into compliance with this section. The court, upon a finding of a violation of subdivision (a)(2) of this section, may impose a civil penalty to be paid to the general fund of the state in an amount not to exceed five percent (5%) of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed one hundred percent (100%) of the original amount improperly withheld from escrow;

         (ii) In the case of a knowing violation, be required within fifteen (15) days to place such funds into escrow as shall bring him or her into compliance with this section. The court, upon a finding of a knowing violation of subdivision (a)(2) of this section, may impose a civil penalty to be paid to the general fund of the state in an amount not to exceed fifteen percent (15%) of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed three hundred percent (300%) of the original amount improperly withheld from escrow; and

         (iii) In the case of a second knowing violation, be prohibited from selling cigarettes to consumers within the State, whether directly or through a distributor, retailer, or similar intermediary for a period not to exceed two (2) years.

   (b) Each failure to make an annual deposit required under this section shall constitute a separate violation. 

HISTORY: Acts 1999, No. 1165, §  2. 

§  26-57-262.  Sale of export cigarettes

   (a) Findings and Purpose.

   (1) Cigarette smoking presents serious public health concerns to the state and to the citizens of the state. The Surgeon General has determined that smoking causes lung cancer, heart disease, and other serious diseases and that there are hundreds of thousands of tobacco-related deaths in the United States each year. These diseases most often do not appear until many years after the person in question begins smoking.

   (2) It is the policy of the state that consumers be adequately informed about the adverse health effects of cigarette smoking by including warning notices on each package of cigarettes.

   (3) It is the intent of the legislature to align state law with federal laws, regulations and policies relating to the manufacture, importation, and marketing of cigarettes, and in particular, the Federal Cigarette Labeling and Advertising Act, 15 U.S.C. Sec. 1331 et seq. and 26 U.S.C. Sec. 5754.

   (4) The legislature finds that consumers and retailers purchasing cigarettes are entitled to be fully informed about any adverse health effects of cigarette smoking by the inclusion of warning notices on each package of cigarettes and to be assured through appropriate enforcement measures that cigarettes they purchase were manufactured for consumption within the United States.

(b) Definitions. For purposes of this section:

   (1) (A) "Cigarette" means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains:

         (i) Any roll of tobacco wrapped in paper or in any substance not containing tobacco;

         (ii) Tobacco, in any form, that is functional in the product which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling is likely to be offered to or purchased by consumers as a cigarette; or

         (iii) Any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling is likely to be offered to or purchased by consumers as a cigarette described in subdivision (b)(1)(A)(i) of this section.

      (B) "Cigarette" includes "roll your own", which is any tobacco which, because of its appearance, type, packaging, or labeling is suitable for use and likely to be offered to or purchased by consumers as tobacco for making cigarettes.

      (C) For purposes of this definition of "cigarette", nine one-hundredths (0.09) of an ounce of "roll your own" tobacco shall constitute one (1) individual "cigarette"; and

   (2) The term "package" means a pack, carton, or container of any kind in which cigarettes are offered for sale, sold, or otherwise distributed or intended for distribution to consumers.

(c) Tax Stamps. (1) No tax stamp may be affixed to or made upon any package of cigarettes if:

      (A) The package differs in any respect with the requirements of the Federal Cigarette Labeling and Advertising Act, 15 U.S.C. §  1331 et seq., for the placement of labels, warnings, or any other information upon a package of cigarettes that is manufactured, packaged, or imported for sale, distribution, or use within the United States;

      (B) The package is labeled "For Export Only", "U.S. Tax Exempt", "For Use Outside U.S.", or similar wording indicating that the manufacturer did not intend that the product be sold in the United States ;

      (C) The cigarettes in the package do not comply with any other applicable requirements imposed pursuant to federal law and federal implementing regulations;

      (D) The package in any way violates federal trademark or copyright laws;

      (E) The package or a package containing individually stamped packages has been altered by adding or deleting the wording, labels, or warnings described in subdivisions (c)(1)(A)-(F) of this section; or

      (F) With respect to the cigarettes, any person is not in compliance with 15 U.S.C. §  1335a relating to submission of ingredient information to federal authorities, 19 U.S.C. § §  1681-1681b relating to imports of certain cigarettes, 26 U.S.C. §  5754, relating to previously exported tobacco products, or any other federal law or implementing federal regulations.

   (2) Any person who sells or holds for sale cigarette packages to which is affixed a tax stamp in violation of this section shall be subject to the penalties prescribed in subdivision (c)(5) of this section.

   (3) The Arkansas Tobacco Control Board shall revoke a wholesale or retail license of any person who sells or holds for sale cigarette packages to which is affixed a tax stamp in violation of this section.

   (4) The Department of Finance and Administration or the Arkansas Tobacco Control Board may seize and destroy or sell to the manufacturer only for export packages that do not comply with this section.

   (5) A violation of this section is a deceptive act or practice and shall constitute a Class A misdemeanor.

   (6) On or before the <>fifteenth business day of each month, each person licensed to affix the state tax stamp to cigarettes shall file with the Director of the Department of Finance and Administration for all cigarettes imported into the United States to which the person has affixed the tax stamp in the preceding month copies of the customs certificates with respect to the cigarettes required to be submitted by 19 U.S.C. §  1681a(c).

   (7) Any person who sells, distributes, or manufactures cigarettes and sustains direct economic or commercial injury as a result of a violation of this section may bring an action in good faith for appropriate injunctive relief. 

HISTORY: Acts 1999, No. 1285, § §  1-3; 2001, No. 1545, § §  1, 2