NRS: CHAPTER 370A - MANUFACTURERS OF TOBACCO PRODUCTS

[Rev. 6/29/2024 3:48:41 PM--2023]

CHAPTER 370A - MANUFACTURERS OF TOBACCO PRODUCTS

NRS 370A.010 Definitions.

NRS 370A.020 “Adjusted for inflation” defined.

NRS 370A.030 “Affiliate” defined.

NRS 370A.040 “Allocable share” defined.

NRS 370A.050 “Cigarette” defined.

NRS 370A.060 “Manufacturer of tobacco products” defined.

NRS 370A.070 “Master Settlement Agreement” defined.

NRS 370A.080 “Participating manufacturer” defined.

NRS 370A.090 “Qualified escrow fund” defined.

NRS 370A.095 “Qualified tribal land” defined.

NRS 370A.100 “Released claims” defined.

NRS 370A.110 “Releasing parties” defined.

NRS 370A.120 “Units sold” defined.

NRS 370A.130 Adoption of regulations to ascertain amount of excise tax collected from each manufacturer.

NRS 370A.140 Participation in Master Settlement Agreement or deposits into qualified escrow fund required.

NRS 370A.153 Assignment of money deposited into escrow; use of money assigned to this State.

NRS 370A.157 Release of money deposited into escrow to Indian tribes.

NRS 370A.160 Compliance by manufacturer: Annual certification; enforcement; penalties for violations.

NRS 370A.170 Provisions void under certain circumstances.

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NRS 370A.010 Definitions. As used in this chapter, the words and terms defined in NRS 370A.020 to 370A.120, inclusive, have the meanings ascribed to them in those sections.

(Added to NRS by 1999, 1106; A 2013, 2666)

NRS 370A.020 “Adjusted for inflation” defined. “Adjusted for inflation” means increased in accordance with the formula for inflation adjustment set forth in Exhibit C to the Master Settlement Agreement.

(Added to NRS by 1999, 1106)

NRS 370A.030 “Affiliate” defined. “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. 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 or more, and the term “person” means an individual, partnership, committee, association, corporation or any other organization or group of persons.

(Added to NRS by 1999, 1106)

NRS 370A.040 “Allocable share” defined. “Allocable share” has the meaning ascribed to it in section II(f) of the Master Settlement Agreement.

(Added to NRS by 1999, 1106)

NRS 370A.050 “Cigarette” defined. “Cigarette” means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains:

1. Any roll of tobacco wrapped in paper or in any other substance not containing tobacco;

2. 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

3. 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 subsection 1.

Ê The term includes “roll-your-own” tobacco, 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. For the purposes of this section, 0.09 ounces of “roll-your-own” tobacco constitutes one individual cigarette.

(Added to NRS by 1999, 1106)

NRS 370A.060 “Manufacturer of tobacco products” defined. “Manufacturer of tobacco products” means an entity that, after May 24, 1999, directly, and not exclusively through an affiliate:

1. 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 such importer is an original participating manufacturer, as that term is defined in the Master Settlement Agreement, that will be responsible for the payments under the Master Settlement Agreement with respect to such cigarettes as a result of the provisions of subsection II(mm) of the Master Settlement Agreement and that 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);

2. 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

3. Becomes a successor of an entity described in subsection 1 or 2.

Ê The term does not include an affiliate of a manufacturer of tobacco products unless the affiliate itself is an entity described in subsection 1, 2 or 3.

(Added to NRS by 1999, 1107)

NRS 370A.070 “Master Settlement Agreement” defined. “Master Settlement Agreement” means the settlement agreement, and related documents, entered into on November 23, 1998, by this state and leading United States manufacturers of tobacco products.

(Added to NRS by 1999, 1107)

NRS 370A.080 “Participating manufacturer” defined. “Participating manufacturer” has the meaning ascribed to it in section II(jj) of the Master Settlement Agreement.

(Added to NRS by 1999, 1107)

NRS 370A.090 “Qualified escrow fund” defined. “Qualified escrow fund” means an escrow arrangement with a federally or state-chartered financial institution, that has no affiliation with any manufacturer of tobacco products and has assets of at least $1 billion where the arrangement requires the financial institution to hold the principal of the amount deposited in escrow for the benefit of releasing parties and prohibits the manufacturer of tobacco products which deposits the money from using, having access to or directing the use of the principal of the amount deposited except as permitted under NRS 370A.150.

(Added to NRS by 1999, 1107)

NRS 370A.095 “Qualified tribal land” defined. “Qualified tribal land” has the meaning ascribed to it in NRS 370.0325.

(Added to NRS by 2013, 2664)

NRS 370A.100 “Released claims” defined. “Released claims” has the meaning ascribed to it in section II(nn) of the Master Settlement Agreement.

(Added to NRS by 1999, 1107)

NRS 370A.110 “Releasing parties” defined. “Releasing parties” has the meaning ascribed to it in section II(pp) of the Master Settlement Agreement.

(Added to NRS by 1999, 1107)

NRS 370A.120 “Units sold” defined. “Units sold” means, with respect to a particular manufacturer of tobacco products for a particular year, the number of individual cigarettes sold in this state, including, without limitation, any cigarettes sold on any qualified tribal land within the State, by the manufacturer directly or through a distributor, retailer or similar intermediary or intermediaries during that year, for which the State has the authority under federal law to impose excise or a similar tax or to collect escrow deposits. The term does not include any cigarettes sold:

1. On a federal installation in a transaction that is exempt from state taxation under federal law; or

2. On the qualified tribal land of an Indian tribe to a consumer who is an adult enrolled member of that tribe in a transaction that is exempt from state taxation under federal law.

(Added to NRS by 1999, 1107; A 2013, 2666)

NRS 370A.130 Adoption of regulations to ascertain amount of excise tax collected from each manufacturer. The Department of Taxation shall adopt such regulations as are necessary to ascertain the amount of excise tax collected by the State on the cigarettes of each manufacturer of tobacco products for each year.

(Added to NRS by 1999, 1107)

NRS 370A.140 Participation in Master Settlement Agreement or deposits into qualified escrow fund required. A manufacturer of tobacco products that sells cigarettes to consumers in this state, directly or through a distributor, retailer or similar intermediary or intermediaries, after May 24, 1999, shall do one of the following:

1. Become a participating manufacturer and generally perform its financial obligations under the Master Settlement Agreement; or

2. Deposit into a qualified escrow fund, on or before April 15 of the year following the year in question, the following amounts as such amounts are adjusted for inflation:

(a) For the year 1999, $0.0094241 for each unit sold after May 24, 1999;

(b) For the year 2000, $0.0104712 for each unit sold;

(d) For each of the years 2003 through 2006, $0.0167539 for each unit sold; and

(e) For each of the year 2007 and each year thereafter, $0.0188482 for each unit sold.

(Added to NRS by 1999, 1108)

NRS 370A.150 Deposits into escrow: Disposition of interest; release of principal. [Effective until the date upon which a court of competent jurisdiction enters a judgment determining that subsection 2 of this section is unconstitutional.] A manufacturer of tobacco products that deposits money into escrow pursuant to subsection 2 of NRS 370A.140 shall receive the interest or other appreciation on the deposit as earned. The principal of the deposit may be released from escrow only under the following circumstances:

1. To pay a judgment or settlement on a released claim brought against that manufacturer by this State or by a releasing party located or residing in this State. Money may be released from escrow under this subsection only in the order in which it was deposited into escrow and only to the extent and at the time necessary to make payments required under the judgment or settlement.

2. To the extent that the manufacturer establishes that the amount it was required to deposit into escrow on account of units sold in the State in a particular year was greater than the Master Settlement Agreement payments, as determined pursuant to section IX(i) of that Agreement including after final determination of all adjustments, that such manufacturer would have been required to make on account of such units sold if the manufacturer had been a participating manufacturer, the excess must be released from escrow and revert to the manufacturer.

3. In accordance with the provisions of NRS 370A.157.

4. To the extent not released from escrow under subsection 1, 2 or 3, deposits must be released from escrow and revert to the manufacturer 25 years after the date on which they were deposited.

(Added to NRS by 1999, 1108; A 2005, 379; 2013, 2666)

NRS 370A.150 Deposits into escrow: Disposition of interest; release of principal. [Effective from the date a court of competent jurisdiction enters a judgment determining that former subsection 2 of this section is unconstitutional until the date such a court enters a judgment determining that the repeal of former subsection 2 of this section is unconstitutional.] A manufacturer of tobacco products that deposits money into escrow pursuant to subsection 2 of NRS 370A.140 shall receive the interest or other appreciation on the deposit as earned. The principal of the deposit may be released from escrow only under the following circumstances:

2. In accordance with the provisions of NRS 370A.157.

3. To the extent not released from escrow under subsection 1 or 2, deposits must be released from escrow and revert to the manufacturer 25 years after the date on which they were deposited.

(Added to NRS by 1999, 1108; A 2005, 379, 380; 2013, 2666, effective from the date a court of competent jurisdiction enters a judgment determining that former subsection 2 of this section is unconstitutional until the date such a court enters a judgment determining that the repeal of former subsection 2 of this section is unconstitutional)

NRS 370A.150 Deposits into escrow: Disposition of interest; release of principal. [Effective from the date a court of competent jurisdiction enters a judgment determining that the repeal of former subsection 2 of this section is unconstitutional.] A manufacturer of tobacco products that deposits money into escrow pursuant to subsection 2 of NRS 370A.140 shall receive the interest or other appreciation on the deposit as earned. The principal of the deposit may be released from escrow only under the following circumstances:

2. To the extent that the manufacturer establishes that the amount it was required to deposit into escrow in a particular year was greater than this State’s allocable share of the total payments that the manufacturer would have been required to make in that year under the Master Settlement Agreement if the manufacturer had been a participating manufacturer, as such payments are determined pursuant to section IX(i)(2) of that Agreement and before any of the adjustments or offsets described in section IX(i)(3) of that Agreement other than the inflation adjustment, the excess must be released from escrow and revert to the manufacturer.

3. In accordance with the provisions of NRS 370A.157.

4. To the extent not released from escrow under subsection 1 or 2, deposits must be released from escrow and revert to the manufacturer 25 years after the date on which they were deposited.

(Added to NRS by 1999, 1108; A 2005, 379, 380; 2013, 2666, effective from the date a court of competent jurisdiction enters a judgment determining that the repeal of former subsection 2 of this section is unconstitutional)

NRS 370A.153 Assignment of money deposited into escrow; use of money assigned to this State.

1. Notwithstanding the provisions of NRS 370A.150, a manufacturer that elects to deposit money into a qualified escrow fund pursuant to NRS 370A.140 may assign to the State the interest of the manufacturer in any money in the qualified escrow fund.

2. An assignment executed pursuant to subsection 1 is permanent, irrevocable and applies to all money in the qualified escrow fund, including all money deposited into the qualified escrow fund before the manufacturer executes the assignment, all money deposited into the qualified escrow fund after the manufacturer executes the assignment and any interest or other appreciation earned on any money in the qualified escrow fund.

3. The parties to a qualified escrow agreement may amend the agreement for the purposes of executing an assignment pursuant to subsection 1.

4. An assignment executed pursuant to subsection 1 must be in writing and be signed by the assignee and the assignor or by an authorized agent or representative of the assignor. An assignment in writing which is duly executed becomes enforceable after a copy of the assignment is delivered to the Attorney General and the financial institution where the qualified escrow fund is maintained.

5. Notwithstanding the provisions of NRS 370A.150, money assigned to the State pursuant to an assignment executed pursuant to subsection 1:

(a) Must be deposited in the State General Fund; and

(b) Must be credited on a dollar-for-dollar basis against any judgment or settlement described in NRS 370A.150 which may be obtained against the manufacturer who executes the assignment.

6. Nothing in this section operates to relieve a manufacturer from any obligation or duty imposed pursuant to this chapter or chapter 370 of NRS.

(Added to NRS by 2013, 2664; A 2017, 1006)

NRS 370A.157 Release of money deposited into escrow to Indian tribes.

1. The State may release to an Indian tribe, pursuant to a compact with that tribe, not more than 50 percent of the amounts deposited into a qualified escrow fund pursuant to NRS 370A.140 for cigarettes sold on or after January 1, 2015, in a retail transaction to a consumer on the qualified tribal land of the tribe, if:

(a) The tribe is a federally recognized tribe or a tribe that was recognized by the State on or before January 1, 2012, and, in each case, has a reservation or colony in the State;

(b) The money to be released was timely deposited into escrow in compliance with NRS 370A.140;

(d) The release occurs not earlier than 1 year after the money is deposited into escrow;

(e) The money released is provided to the tribe itself and used only for the purpose of public safety on the qualified tribal land of the tribe or for social services for tribal members, including, without limitation, health care or education, and not used for any function that could directly or indirectly promote or reduce the costs of cigarette production, marketing or sales;

(f) The money released is not used in any way for the benefit of any manufacturer of tobacco products that is not a participating manufacturer under the Master Settlement Agreement or to facilitate cigarette sales by any such manufacturer of tobacco products; and

(g) The compact with the tribe provides that the taxing and stamping requirements and policies for cigarettes sold on the qualified tribal land of the tribe, including the applicability, amount, collection and refund of taxes, will not be different for any cigarettes of participating manufacturers than for any cigarettes of manufacturers of tobacco products that are not participating manufacturers, and the tribe is in compliance with these provisions of the compact.

2. The total amount released to all Indian tribes from escrow pursuant to this section in any 1 year must not exceed $1 million in the aggregate.

3. This section applies only to:

(a) The cigarettes of a manufacturer of tobacco products that existed in the United States market on or before June 1, 2012; and

(b) A manufacturer of tobacco products involved in the production, distribution or sale of the cigarettes for which money would be released that is not a manufacturer, or an affiliate or successor of such manufacturer, affiliated with the Indian tribe or any member of the tribe to which the money would be released.

4. For the purposes of this section, an Indian tribe with qualified tribal land located in more than one state or territory of the United States is considered to have a reservation or colony in, and to be eligible for the release of money pursuant to this section from, this State only if the largest portion of the qualified tribal land of the tribe is located within this State.

5. The Attorney General may withdraw from a qualified escrow fund the money released pursuant to this section. The manufacturers of tobacco products that elect to deposit money into a qualified escrow fund pursuant to NRS 370A.140 and the financial institutions in which such qualified escrow funds are maintained shall make such amendments to their qualified escrow agreements as may be necessary to effectuate a withdrawal of money from the qualified escrow funds pursuant to this section.

6. Notwithstanding the provisions of NRS 370A.150, a manufacturer of tobacco products does not have any right to reversion of the money, including, without limitation, the interest or other appreciation earned on the money, released from escrow pursuant to this section.

7. If a court of competent jurisdiction invalidates the provisions of subsection 5, the money authorized to be released to Indian tribes pursuant to this section may be paid to the appropriate tribes out of the State General Fund, subject to all conditions and limits provided in this section.

8. The Attorney General is authorized to enter into compacts on behalf of the State as provided in this section. Any compact so entered into must require the Indian tribe to verify that the conditions set forth in paragraphs (e), (f) and (g) of subsection 1 are met.

(Added to NRS by 2013, 2664)

NRS 370A.160 Compliance by manufacturer: Annual certification; enforcement; penalties for violations.

1. A manufacturer of tobacco products that elects to deposit money into escrow pursuant to subsection 2 of NRS 370A.140 shall annually certify to the Attorney General that it is in compliance with that subsection and with NRS 370A.150. If the Attorney General does not receive the annual certification, he or she shall mail a notice to the manufacturer. The Attorney General may maintain a civil action on behalf of this state against any manufacturer of tobacco products which fails to deposit into escrow the amount required by NRS 370A.140.

2. A manufacturer of tobacco products that fails in any year to place into escrow the money required under NRS 370A.140 shall:

(a) Be required within 15 days to place such money into escrow as shall bring it into compliance with NRS 370A.140. The court, upon a finding of a violation of subsection 2 of NRS 370A.140 or NRS 370A.150, may impose a civil penalty to be paid to the State General Fund in an amount not to exceed 5 percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed 100 percent of the original amount improperly withheld from escrow.

(b) In the case of a knowing violation, be required within 15 days to place such money into escrow as shall bring it into compliance with this section. The court, upon a finding of a knowing violation of subsection 2 of NRS 370A.140 or NRS 370A.150, may impose a civil penalty to be paid to the State General Fund in an amount not to exceed 15 percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed 300 percent of the original amount improperly withheld from escrow.

(c) In the case of a second knowing violation, shall be prohibited from selling cigarettes to consumers in this state, directly or through a distributor, retailer or similar intermediary, for a period to be fixed by the court not to exceed 2 years.

3. Each failure to make an annual deposit required by NRS 370A.140 constitutes a separate violation.

(Added to NRS by 1999, 1108)

NRS 370A.170 Provisions void under certain circumstances. Any provision of this chapter or chapter 370 of NRS, or any amendment thereto, that causes any provision of this chapter or chapter 370 of NRS to fail to operate as a qualifying statute pursuant to the Master Settlement Agreement is void.

(Added to NRS by 2013, 2664)