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| SPONSOR: | Taylor, J.P. | DATE TYPED: | 3/4/99 | HB | 611/aHJC | ||
| SHORT TITLE: | Tobacco Product Manufacturers | SB | |||||
| ANALYST: | Dunbar | ||||||
| Recurring
or Non-Rec |
Fund
Affected | ||||
| FY99 | FY2000 | FY99 | FY2000 | ||
| $ 0.0 | $ 0.0 | ||||
(Parenthesis ( ) Indicate Expenditure Decreases)
| Subsequent
Years Impact |
Recurring
or Non-Rec |
Fund
Affected | ||
| FY99 | FY2000 | |||
| (Undetermined) | (Undetermined) | |||
(Parenthesis ( ) Indicate Revenue Decreases)
Duplicates/Conflicts with/Companion to/Relates to
SOURCES OF INFORMATION
LFC Files
Department of Health (DOH)
SUMMARY
Synopsis of HJC Amendment
The amendments to the bill add Subsection B of Section 2 in ascertaining compliance issues. Prior to the amendment the bill only included Subsection A in referencing compliance issues.
Synopsis of Bill
The bill proposes the adoption of model statute that was included in the Master Settlement Agreement (MSA) reached by the Attorney General Office and the tobacco industry. The smaller companies that were not participants in the MSA would be required to become a member of the MSA or make payment into an escrow fund. For more in-depth information, see attached analysis from DOH.
Significant Issues
The bill is designed to protect the market share of the major tobacco companies that were members of the MSA against competition from the smaller tobacco companies. Enactment of the statute would prevent the smaller tobacco companies from underpricing there products since they would not have to raise prices to cover settlement costs.
FISCAL IMPLICATIONS
Tobacco payments to the state could be reduced if the aggregate market share of the major tobacco companies declines by over two percent as a result of participating in the MSA.
ADMINISTRATIVE IMPLICATIONS
Attorney General Office is charged with overseeing and administering the escrow account. The AG would be responsible for bringing legal action in the event that a tobacco company fails to make the required payment.
TECHNICAL ISSUES
HB 611 omits the "Findings and Purpose" section of the model statute contained in the MSA.
OTHER SUBSTANTIVE ISSUES
The amount that the smaller companies would be required to contribute to the escrow account would be based on the on sales and gradually increase over time. The money will be held for 25 years and returned to the company if the funds were not used to pay a judgement or settle a legal claim.
The legislation also ensures that the smaller tobacco companies (not parties to the MSA) have funds available to cover legal claims assessed against them.
According to the Health Department, increasing the price of tobacco products reduces consumption especially among underage smokers.
BD/gm:njw
Attachment