Bill Summary – FastDemocracy

1133.01000
     Sixty-sixth
     Legislative Assembly                   SENATE BILL NO. 2355
     of North Dakota
     Introduced by
       Senators Bekkedahl, Kannianen, Oehlke
       Representatives Keiser, J. Nelson, Sanford
  A BILL for an Act to amend and reenact subsection 4 of section 51-32-04, sections 57-36-01,
  57-36-02, 57-36-03, 57-36-04, 57-36-05, 57-36-05.1, 57-36-09, 57-36-09.1, 57-36-14, 57-36-24,
  57-36-25, 57-36-26, 57-36-28, 57-36-29, 57-36-31, and 57-36-33 of the North Dakota Century
  Code, relating to tobacco product remote sale disclosure requirements and the excise tax on
  cigarettes and tobacco products; to repeal sections 57-36-06, 57-36-27, and 57-36-32 of the
  North Dakota Century Code, relating to taxation of cigarettes; to provide a penalty; and to
  provide an effective date.
  BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
      SECTION 1. AMENDMENT. Subsection 4 of section 51-32-04 of the North Dakota Century
 Code is amended and reenacted as follows:
     4.   A prominent and clearly legible statement that cigarette sales are subject to tax under
          sections 57-36-06 and 57-36-32section 57-36-25, 57-36-26, or 57-36-28, and an
          explanation of how the tax has been, or is to be, paid with respect to the delivery sale.
     SECTION 2. AMENDMENT. Section 57-36-01 of the North Dakota Century Code is
 amended and reenacted as follows:
     57-36-01. Definitions.
     As used in this chapter, unless the context or subject matter otherwise requires:
     1.   "Chewing tobacco" means any leaf tobacco that is intended to be placed in the mouth.
     2.   "Cigar" means any roll of tobacco wrapped in tobacco.
     3.   "Cigarette" means any roll for smoking made wholly or in part of tobacco or processed
          tobacco and encased in any material except tobacco. "Cigarette"The term also means
          any product of a cigarette-making machine.
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      4.   "Cigarette-making machine" means a machine used for commercial purposes to
           process tobacco into a roll or tube, formed or made from any material other than
           tobacco, at a production rate of more than five rolls or tubes per minute.
      5.   "Consumer" means any person who has title to or possession of cigarettes, cigars,
           pipe tobacco, or other tobacco products in storage, for use or other consumption in
           this state.
      6.   "Dealer" includes any person other than a distributor who is engaged in the business
           of selling cigarettes, cigarette papers, cigars, pipe tobacco, or other tobacco products,
           or any product of a cigarette-making machine.
     7.   "Distributor" includes any person engaged in the business of producing or
          manufacturing cigarettes, cigarette papers, cigars, pipe tobacco, or other tobacco
          products, or importing into this state cigarettes, cigarette papers, cigars, pipe tobacco,
          or other tobacco products, for the purpose of distribution and sale thereof to dealers
          and retailers.
     8.   "Electronic smoking device" means any device that may be used to deliver any
          aerosolized or vaporized substance, regardless of whether the substance contains
          nicotine, to the individual inhaling from the device, and includes an e-cigarette, e-cigar,
          e-pipe, vape pen, and e-hookah. The term includes any component, part, or accessory
          of the device, and any substance that may be aerosolized or vaporized by the device,
          regardless of whether any of these are sold separately. The term does not include:
          a.   A cigarette as defined in section 51-25-01;
          b.   A cigarette as defined in this section;
          c.   A drug, device, or combination product, as those terms are defined in the federal
               Food, Drug and Cosmetic Act [52 Stat. 1040; 21 U.S.C. 301 et seq.], approved
               for sale by the United States food and drug administration; or
          d.   A battery or battery charger if sold separately.
     9.   "Licensed dealer" means a dealer licensed under the provisions of this chapter.
  9.10.   "Licensed distributor" means a distributor licensed under the provisions of this chapter.
    10.   "Other tobacco products" means snuff and chewing tobacco.
    11.   "Outlet" means each place of business from which tobacco products are sold.
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     12.   "Person" means any individual, firm, fiduciary, partnership, corporation, limited liability
           company, trust, or association however formed.
  12.13.   "Pipe tobacco" means any processed tobacco that, because of its appearance, type,
           packaging, or labeling, is suitable for use and likely to be offered to, or purchased by,
           consumers as tobacco to be smoked in a pipe.
  13.14.   "Place of business" means a place where tobacco products are sold or where tobacco
           products are manufactured, fabricated, stored, or kept for the purpose of sale or
           consumption.
     15.   "Sale" or "sell" applies to gifts, exchanges, and barter.
 14.16.   "Snuff" means any finely cut, ground, or powdered tobacco that is intended to be
          placed in the mouth.
 15.17.   "Storage" means any keeping or retention of cigarettes, cigars, pipe tobacco, or other
          tobacco products for use or consumption in this state.
 16.18.   "Tobacco product" means any product that is made from or derived from tobacco, or
          that contains nicotine whether natural or synthetic, and is intended for human
          consumption or is likely to be consumed, whether smoked, heated, chewed, absorbed,
          dissolved, inhaled, or ingested by any other means. The term includes a cigarette,
          cigar, pipe tobacco, chewing tobacco, snuff, snus, an electronic smoking device, and a
          nicotine liquid container as defined in section 12.1-31-03.2. The term does not include
          a drug, device, or combination product, as those terms are defined in the federal Food,
          Drug and Cosmetic Act [52 Stat. 1040; 21 U.S.C. 301 et seq.], approved for sale by
          the United States food and drug administration.
    19.   "Use" means the exercise of any right or power incidental to the ownership or
          possession of cigarettes, cigars, pipe tobacco, or other tobacco products.
    20.   "Wholesale purchase price" means the price at which a distributor purchases tobacco
          products. The term includes the applicable federal excise tax, freight charges, and
          packing costs, regardless of whether those costs were included in the purchase price.
    SECTION 3. AMENDMENT. Section 57-36-02 of the North Dakota Century Code is
 amended and reenacted as follows:
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     57-36-02. Distributors and dealers to be licensed.
      1.   Each person engaged in the business of selling cigarettes, cigarette papers, snuff,
           cigars, or tobacco products in this state, including any distributor or dealer, mustshall
           secure a license from the attorney general before engaging or continuing to engage in
           business.
      2.   A separate application and license is required for each distributor at each outlet or
           place of business operated or maintained by a distributor within the state, and a
           separate dealer's license is required for each retail outlet when a person owns or
           controls more than one place of business dealing in cigarettes, cigarette papers, snuff,
          cigars, or tobacco. No retailer will be granted a distributor's license except a retailer
          who, in the usual course of business, performed a distributor's or wholesaler's function
          for at least one year prior to filing the license application. The application prescribed by
          the attorney general must include the name and address of the applicant, the address
          and place of business, the type of business, and other information as required for the
          proper administration of this chapter.
          a.   A distributor's license does not authorize the distributor to make retail sales.
          b.   A distributor may not be granted a dealer's license unless the distributor has
               possessed a distributor's license issued under this chapter for at least one year
               before filing an application for a dealer's license.
          c.   Notwithstanding subdivision b, a person that can demonstrate to the satisfaction
               of the attorney general that the person has been engaged, in the normal course
               of business, in the sale of electronic smoking devices before July 1, 2018, may
               be granted a dealer's license.
          d.   Each application for a wholesale or distributor's outlet license must be
               accompanied by a fee of twenty-five dollars and a surety bond approved by the
               attorney general.
     3.   A separate application and license is required for each outlet or place of business
          operated or maintained by a dealer in this state.
          a.   A dealer may not sell any tobacco products purchased from a distributor not
               licensed under this chapter.
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           b.    A person issued a dealer's license under this chapter may not be issued a
                 distributor's license.
      4.   Each application for a dealer's outlet or place of business license must be
           accompanied by a fee of fifteen dollars.
      5.   A license application prescribed by the attorney general must include the name and
           address of the applicant, the address and place of business, the type of business, and
           other information as required for the administration of this chapter.
      6.   A reinstatement fee of fifty dollars is required in addition to the annual license fee for
           each license renewal applied for after June thirtieth. The total reinstatement fee may
          not exceed five hundred dollars for any one licensee in any fiscal year. A distributor's
          license does not authorize the holder to make retail sales.
     7.   Each license issued must be prominently displayed on the premisesplace of business
          or outlet covered by the license.
     SECTION 4. AMENDMENT. Section 57-36-03 of the North Dakota Century Code is
 amended and reenacted as follows:
     57-36-03. License.
     Each license issued under the provisions of this chapter is valid until the firstthirtieth day of
 July subsequent toJune after the date of issuance unless sooner revoked by the attorney
 general or unless the business with respect to which suchthe license was issued is transferred,
 in either of which cases the holder of the license shall return it immediately to the attorney
 general. The license issued is annual and runs from July first of each year to June thirtieth of
 the following year.
     SECTION 5. AMENDMENT. Section 57-36-04 of the North Dakota Century Code is
 amended and reenacted as follows:
     57-36-04. Revocation of license - Penalty.
     The attorney general may revoke the license of any dealer or distributor for failure to comply
 with any of the provisions of this chapter, or any of the rules or regulations prescribed by the tax
 commissioner or the attorney general. When a license has been legally revoked, no license
 may be issued again to the licensee for a period of one year thereafter, or any other state or
 federal law applicable to the sale of tobacco products. A person may not sell any cigarettes,
 cigarette papers, snuff, cigars, or tobacco afterproducts while that person's license has beenis
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  revoked as provided in this chapter. A new license may not be issued to a dealer or distributor
  for one year following the revocation of a previous license.
      SECTION 6. AMENDMENT. Section 57-36-05 of the North Dakota Century Code is
  amended and reenacted as follows:
      57-36-05. Unlawful to sell without license.
      1.   A dealer or distributorperson may not sell, offer for sale, or possess with the intent to
           sell, cigarettes, cigarette papers, snuff, cigars, or tobacco products in this state at
           wholesale or at retail unless a licensethe person has been issued to that dealer or
           distributor asa dealer's license as prescribed by this chapter, and a.
     2.   A person may not manufacture, distribute, produce, fabricate, import, sell, offer for sale
          at wholesale, or possess with the intent to sell at wholesale, any cigarettes, cigarette
          papers, snuff, cigars, or tobacco without suchproducts in this state unless the person
          has been issued a distributor's license as prescribed by this chapter.
     SECTION 7. AMENDMENT. Section 57-36-05.1 of the North Dakota Century Code is
 amended and reenacted as follows:
     57-36-05.1. Sale of imported cigarettestobacco products - When prohibited.
     A dealer, distributor, or other person may not sell or distribute in this state any tobacco
 product previously exported from the United States.
     SECTION 8. AMENDMENT. Section 57-36-09 of the North Dakota Century Code is
 amended and reenacted as follows:
     57-36-09. Records to be kept by distributors and reports made - Penalty.
     Distributors
     1.   A distributor shall keep records and make reports relating to purchases and sales of
          cigarettes, cigarette papers, cigars, pipe tobacco, or other tobacco products made by
          them, and must be punished for failure so to do, as follows:
     1.   the distributor. A distributor that does not comply with the requirements in this section
          is subject to the penalties imposed in subsection 5.
     2.   Each distributor who shall dispose of cigarettes, cigarette papers, cigars, pipe tobacco,
          or other tobacco products shall keep and preserve at each licensed place of business
          or outlet complete and accurate records for that place of business or outlet for one
          yearthree years. The records must include all invoices of cigarettes, cigarette papers,
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           cigars, pipe tobacco, or other tobacco products held, purchased, manufactured,
           fabricated, or brought in or caused to be brought in from outside the state by the
           distributor and. The distributor shall permit the state tax commissioner, and assistants,
           authorized agents, or representatives of the state tax commissioner, to inspect and
           examine all taxable merchandise, invoices, receipts, books, papers, and memoranda
           as may be deemedrecords deemed necessary by the state tax commissioner, and
           assistants, authorized agents, or representatives of the state tax commissioner in
           determining the amount of the tax as may be yetremaining due. Each person selling or
           otherwise disposing of cigarettes, cigarette papers, cigars, pipe tobacco, or other
          tobacco products as a distributor shall keep a record of all sales or other disposition of
          tobacco products made within the state showing the name and address of the
          purchaser andor recipient, the date of sale or disposition of the tobacco products, and
          the wholesale purchase price per unit. For sales of other tobacco products, the
          records must also include the net weight in ounces, as listed by the manufacturer.
   2.3.   On or before the fifteenth day of each month, each licensed distributor, on such form
          asforms prescribed by the state tax commissioner shall prescribe, shall report to the
          tax commissioner all purchases and sales of cigarettes, cigarette papers, cigars, pipe
          tobacco, or other tobacco products made from or to any persons either within or
          without this state during the preceding month. For sales of other tobacco products,
          each licensed distributor shall also report to the tax commissioner the net weight in
          ounces, as listed by the manufacturerthe wholesale purchase price and quantity of
          each tobacco product produced, fabricated, or manufactured in this state or brought or
          caused to be brought into this state for sale during the preceding month.
     4.   The tax levied by this chapter is payable monthly and must be remitted to the tax
          commissioner by each licensed distributor on or before the fifteenth day of the month
          following the monthly period.
   3.5.   Any person failing to file any prescribed form or return or to pay any tax within the time
          required or permitted by this section is subject to a penalty of five percent of the
          amount of tax due or five dollars, whichever is greater, plus interest of one percent of
          the tax per month or fraction of a month of delay except the first month after the return
          or the tax became due. The tax commissioner, if satisfied that the delay was