In this subtitle the following words have the meanings indicated. “License” means: a license issued by the Executive Director under § 16–205(a) of this subtitle to: act as a manufacturer; act as a subwholesaler; act as a vending machine operator; act as a wholesaler; or act as a storage warehouse; or a license issued by the clerk under § 16–205(b) of this subtitle to act as a retailer. “Licensed manufacturer” means a person licensed by the Executive Director under § 16–205(a) of this subtitle to act as a manufacturer. “Licensed retailer” means a person licensed by the clerk under § 16–205(b) of this subtitle to act as a retailer. “Licensed storage warehouse” means a facility licensed by the Executive Director under § 16–205(a) of this subtitle to act as a storage warehouse. “Licensed subwholesaler” means a person licensed by the Executive Director under § 16–205(a) of this subtitle to act as a subwholesaler. “Licensed vending machine operator” means a person licensed by the Executive Director under § 16–205(a) of this subtitle to act as a vending machine operator. “Licensed wholesaler” means a person licensed by the Executive Director under § 16–205(a) of this subtitle to act as a wholesaler. “Manufacturer” means a person who: operates one or more cigarette manufacturing plants; or is a participating manufacturer; and sells unstamped cigarettes to a licensed cigarette wholesaler located in Maryland; sells unstamped cigarettes that may lawfully be sold in Maryland to a licensed cigarette wholesaler located outside of Maryland; unless otherwise prohibited or restricted under local law, this article, or the Criminal Law Article, distributes sample cigarettes to consumers located in Maryland; or stores unstamped cigarettes in a cigarette storage warehouse in Maryland for subsequent shipment to licensed wholesalers, federal reservations, or persons out of state. “Participating manufacturer” has the meaning stated in § 16–501 of this title. “Retailer” means a person who: sells cigarettes to consumers through vending machines on fewer than 40 premises; otherwise sells cigarettes to consumers; or holds cigarettes for sale to consumers. “Stamped cigarettes” means a package of cigarettes to which tobacco tax stamps are affixed in the amount and manner required by § 12–304 of the Tax – General Article. “Storage warehouse” means a storage facility in Maryland operated for the purpose of storing unstamped cigarettes on behalf of a licensed cigarette manufacturer. “Subwholesaler” means a person who: holds stamped cigarettes for sale to another person for resale; or sells stamped cigarettes to another person for resale. “Subwholesaler” does not include a person who sells unstamped cigarettes or holds unstamped cigarettes for sale. “Unstamped cigarettes” means a package of cigarettes to which tobacco tax stamps are not affixed in the amount and manner required by § 12–304 of the Tax – General Article. “Vending machine operator” means a person who: holds cigarettes for sale to consumers through vending machines on 40 or more premises; or sells cigarettes to consumers through vending machines on 40 or more premises. “Wholesaler” means a person who: holds cigarettes for sale to another person for resale; or sells cigarettes to another person for resale.

Except as provided in subsection (b) of this section, a person must have an appropriate license whenever the person acts as a manufacturer, retailer, storage warehouse, subwholesaler, vending machine operator, or wholesaler in the State. A person need not get a retailer license to act as a retailer at a vending stand operated under a trader’s license issued to Blind Industries and Services of Maryland. A license to act as a retailer is required for each place of business where a person acts as a retailer. A person licensed as a manufacturer, or person connected with the business of a licensed manufacturer or related by ownership, may not at the same time hold or have any financial interest in a wholesaler license or in any business of a wholesaler. A person licensed as a wholesaler, or person connected with the business of a licensed wholesaler or related by ownership, may not at the same time hold or have any financial interest in a manufacturer license or in any business of a manufacturer.

An applicant for a license to act as a manufacturer shall maintain an established place of business for the manufacture and storage of cigarettes. An applicant for a license to act as a storage warehouse shall maintain an established place of business for the storage of unstamped cigarettes. An applicant for a license to act as a subwholesaler shall maintain: an established place of business, including warehouse facilities, for the sale of cigarettes; and necessary equipment and vehicles for the storage and distribution of cigarettes. An applicant for a license to act as a vending machine operator shall maintain an established place of business, including warehouse facilities, for the purchase, storage, and distribution of cigarettes. An applicant for a license to act as a wholesaler shall maintain: an established place of business, including warehouse facilities, for the sale of cigarettes; and necessary equipment and vehicles for the storage and distribution of cigarettes.

An applicant for a license to act as a manufacturer shall: submit an application to the Executive Director on the form and containing the information that the Executive Director requires; and pay to the Executive Director a fee of $25. An applicant for a license to act as a retailer shall: obtain the county license required under § 16–301 of this title; submit to the clerk an application for each permanent or temporary place of business located in the same enclosure and operated by the same applicant; and pay to the clerk a fee of $30. The application shall: be made on the form that the clerk requires; and contain the information that the Executive Director requires. An applicant for a license to act as a storage warehouse shall: submit an application to the Executive Director on the form and containing the information that the Executive Director requires; and pay to the Executive Director a fee of $25. An applicant for a license to act as a subwholesaler shall: submit an application to the Executive Director on the form and containing the information that the Executive Director requires; and pay to the Executive Director a fee of: $500 for a 1–year term; or the amount that results when $500 is prorated to the nearest month, if the application is for less than a 1–year term. An applicant for a license to act as a vending machine operator shall: obtain the county license required under § 16–301 of this title; submit an application to the Executive Director on the form and containing the information that the Executive Director requires; and pay to the Executive Director a fee of $500. An applicant for a license to act as a wholesaler shall: submit an application to the Executive Director on the form and containing the information that the Executive Director requires; and pay to the Executive Director a fee of $750. If a person has had a license revoked under § 16–210 of this subtitle, the person may not reapply for a license within 1 year after the date when the prior license was revoked. In addition to the license fee otherwise required under this section: an applicant for the initial issuance of a license issued by the Executive Director under this title shall pay to the Executive Director a nonrefundable application fee of $200; and an applicant for renewal of a license issued by the Executive Director under this title shall pay to the Executive Director a renewal fee of $30. The application and renewal fees required under this subsection do not apply to a license that is issued by the clerk or to a storage warehouse license application.

The Executive Director shall issue an appropriate license to each applicant who meets the requirements of this subtitle for a license to act as a manufacturer, storage warehouse, subwholesaler, vending machine operator, or wholesaler. The clerk shall issue to each applicant who meets the requirements of this subtitle a license to act as a retailer. The Executive Director shall provide to the Prevention and Health Promotion Administration each year the name and address of each person licensed under subsection (b) of this section.

A manufacturer license authorizes the licensee to: sell unstamped cigarettes to: a licensed cigarette wholesaler located in Maryland; and a licensed cigarette wholesaler located outside of Maryland if the unstamped cigarettes may lawfully be sold in Maryland; except as otherwise prohibited or restricted under local law, this article, or the Criminal Law Article, distribute sample cigarettes to consumers located in Maryland; store unstamped cigarettes in a licensed cigarette storage warehouse for subsequent shipment to licensed wholesalers, federal reservations, or persons out of state; and upon approval of the Executive Director, act as an agent of a Maryland licensed wholesaler for stamping and distribution of cigarettes. A retailer license authorizes the licensee to: act as a retailer; and buy stamped cigarettes from a subwholesaler or wholesaler. A storage warehouse license authorizes the licensee to operate a storage facility in Maryland for the purpose of storing unstamped cigarettes on behalf of a licensed cigarette manufacturer. If a storage warehouse licensee is a licensed cigarette wholesaler or licensed cigarette subwholesaler, the storage warehouse license authorizes the holder to store stamped cigarettes and cigarettes with another state’s tax stamp. A subwholesaler license authorizes the licensee to: act as a subwholesaler; buy stamped cigarettes from a wholesaler or another subwholesaler; and store stamped cigarettes and cigarettes with another state’s tax stamp at a licensed cigarette storage facility. A vending machine operator license authorizes the licensee to: act as a vending machine operator; and buy stamped cigarettes from a subwholesaler or wholesaler. A wholesaler license authorizes the licensee to: act as a wholesaler; buy unstamped cigarettes directly from a cigarette manufacturer; hold unstamped cigarettes; buy tobacco tax stamps as authorized by § 12–303 of the Tax – General Article; transport unstamped cigarettes in the State; sell unstamped cigarettes to another licensed wholesaler if the Executive Director specifically authorizes; upon approval of the Executive Director, designate a licensed manufacturer to act as its agent for the stamping and distribution of cigarettes; and store stamped cigarettes and cigarettes with another state’s tax stamp at a licensed cigarette storage facility.

Unless a license is renewed for a 1–year term as provided in this section, the license expires on the first April 30 after its effective date. At least 1 month before a license issued under this subtitle expires, the issuing official shall mail to the licensee, at the last known address of the licensee, a renewal notice that states: the date on which the current license expires; the date by which the issuing official must receive the renewal application for the renewal to be issued and mailed before the license expires; and the amount of the renewal fee. Before a license issued under this subtitle expires, the licensee may renew it for an additional 1–year term, if the licensee: otherwise is entitled to be licensed; submits to the issuing official a renewal application on the form that the issuing official requires; and pays to the issuing official: the license fee required under § 16–204 of this subtitle; and if the license is issued by the Executive Director, the renewal fee required under § 16–204(h) of this subtitle. The issuing official shall renew the license of each licensee who meets the requirements of this section.

A licensed retailer or licensed vending machine operator may not assign the license. If a licensed subwholesaler or licensed wholesaler sells the licensee’s cigarette business and pays to the Executive Director a license assignment fee of $10, the licensee may assign the license to the buyer of the business. If the cigarette business of a licensee is transferred because of bankruptcy, death, incompetency, receivership, or otherwise by operation of law, the Executive Director shall transfer the license without charge to the new owner of the licensee’s business. If a licensed subwholesaler or licensed wholesaler surrenders the license to the Executive Director and if no disciplinary proceedings are pending against the licensee, the Executive Director shall refund a pro rata part of the license fee for the unexpired term of the license. A licensed retailer or licensed vending machine operator is not allowed a refund for the unexpired term of the license.

A licensee shall display a license in the way that the Executive Director requires by regulation. A licensee who sells cigarettes through a vending machine: shall place each package of cigarettes in the machine so that when the package is visible the tax stamps required by § 12–304 of the Tax – General Article are also visible; and in the way that the Executive Director requires by regulation, shall: identify each vending machine with a conspicuous label that states the licensee’s name, address, and telephone number; and display on a conspicuous label applicable prohibitions and penalties under § 10–107 of the Criminal Law Article. A licensee shall post a sign in a location that is clearly visible to the consumer that states: “No person under the age of 21 may be sold tobacco products”. The sign required under this subsection shall be written in letters at least one–half inch high.

A licensed retailer may not display cigarettes for sale unless the cigarettes are located behind a counter in an area accessible only to the licensed retailer and employees of the licensed retailer. A licensed retailer may not sell cigarettes to an individual unless the licensed retailer verifies, in accordance with paragraph (2) of this subsection, that the individual is at least 21 years old. Subject to paragraph (3) of this subsection, a licensed retailer may verify an individual’s age only: by means of a government–issued photo identification containing the individual’s date of birth; and in a direct face–to–face exchange without the assistance of any electronic or mechanical device. A licensed retailer is not required to verify the age of an individual at least 30 years old.

Subject to the hearing provisions of § 16–211 of this subtitle, the Executive Director may deny a license to an applicant, reprimand a licensee, or suspend or revoke a license if the applicant or licensee: fraudulently or deceptively obtains or attempts to obtain a license for the applicant or licensee or for another person; fraudulently or deceptively uses a license; fails to comply with the Maryland Cigarette Sales Below Cost Act or regulations adopted under that Act; fails to comply with the provisions of Title 11, Subtitle 5A of the Commercial Law Article; buys cigarettes for resale: in violation of a license; or from a person who is not a licensed cigarette manufacturer, licensed subwholesaler, licensed vending machine operator, or licensed wholesaler; is convicted, under the laws of the United States or of any other state, of: a felony; or a misdemeanor that is a crime of moral turpitude and is directly related to the fitness and qualification of the applicant or licensee; or has not paid a tax due before October 1 of the year after the tax became due. Subject to the hearing provisions of § 16–211 of this subtitle, the Executive Director may suspend or revoke a license if the licensee violates: Title 12 of the Tax – General Article, or regulations adopted under that title; or this title or regulations adopted under this title. Subject to the hearing provisions of § 16–211 of this subtitle, the Executive Director shall deny a license to any applicant who has had a license revoked under this section until: 1 year has passed since the license was revoked; and it satisfactorily appears to the Executive Director that the applicant will comply with this title and any regulations adopted under this title. Prior to the issuance or renewal of any license, the Executive Director shall conduct an investigation with regard to: the applicant; the business to be operated; and the facts set forth in the application.

Except as otherwise provided in § 10–226 of the State Government Article, before the Executive Director takes any final action under § 16–210 of this subtitle, the Executive Director shall give the person against whom the action is contemplated an opportunity for a hearing before the Executive Director. The Executive Director shall give notice and hold the hearing in accordance with Title 10, Subtitle 2 of the State Government Article. The Executive Director may administer oaths in a proceeding under this section. The person against whom the action is contemplated may be represented at the hearing by counsel. If, after due notice, the person against whom the action is contemplated does not appear, nevertheless the Executive Director may hear and determine the matter.

Subject to the notice requirement of subsection (c) of this section, if a licensee engages in an act or omission that is a ground for discipline under § 16–210 of this subtitle, the Executive Director may suspend the license for a consecutive period that: for a first offense, is not less than 5 nor more than 20 business days; or for a subsequent offense, is not less than 20 business days nor more than 6 months. Subject to the notice requirement under subsection (c) of this section, the Executive Director may revoke a license if a licensee: willfully and persistently engages in an act or omission that is a ground for discipline under § 16–210(a) of this subtitle; or violates this title or Title 12 of the Tax – General Article, or regulations adopted under these titles. If a license is suspended or revoked under this section: the Executive Director shall give the licensee notice of the suspension or revocation; and the suspension or revocation may not take effect until at least 5 business days following notice of the suspension or revocation. The transfer, renewal, or expiration of a license will not bar or abate a disciplinary action under this section. Except for a violation of § 10–107 of the Criminal Law Article, whenever any license issued under the provisions of this subtitle is suspended or revoked by the Executive Director, the licensee may, before the effective date of the suspension or revocation, petition the Executive Director for permission to make an offer of compromise consisting of a sum of money in lieu of serving the suspension or revocation. Money paid in lieu of suspension or revocation shall be paid into the General Fund of the State. An offer of compromise shall not exceed $2,000 in the case of retail licensees, and shall not exceed $50,000 for other licensees. The Executive Director may accept the offer of compromise if: the public welfare and morals would not be impaired by allowing the licensee to operate during the period set for the suspension or revocation; and the payment of the sum of money will achieve the desired disciplinary purposes. The Executive Director may promulgate rules and regulations necessary to carry out the purposes of this subsection.

A party to a proceeding before the Executive Director who is aggrieved by a final decision of the Executive Director in a contested case, as defined in § 10–202 of the State Government Article, may take an appeal as allowed in §§ 10–222 and 10–223 of the State Government Article.

Except as otherwise provided in § 16-202(b) of this subtitle, a person may not act, attempt to act, or offer to act as a manufacturer, retailer, storage warehouse, subwholesaler, vending machine operator, or wholesaler in the State unless the person has an appropriate license. A person who violates this section is guilty of a misdemeanor and, on conviction, is subject to a fine of $1,000 or imprisonment not exceeding 30 days or both. Each day that a violation of this section continues is a separate offense.

Unless authorized by a license, a person may not accept delivery of unstamped cigarettes. On receipt of a package of cigarettes, a retailer, subwholesaler, or vending machine operator immediately shall: examine the package to find out whether tobacco tax stamps are affixed properly to the package as required by § 12-304 of the Tax - General Article; and reject any unstamped or improperly stamped cigarettes by: returning them to the seller or consignor; or delivering them to a common carrier for return to the seller or consignor. There is a presumption that any unstamped cigarettes in the possession of a retailer, subwholesaler, vending machine operator, or wholesaler are held in violation of this subtitle. A retailer, subwholesaler, vending machine operator, or wholesaler who holds unstamped cigarettes has the burden to prove that the cigarettes are not held in violation of this subtitle.

Except as provided in subsection (b) of this section, the Executive Director shall pay into the General Fund of the State all license fees collected under this title. The General Assembly intends that these license fees be used to: administer this title; and enforce the Maryland Cigarette Sales Below Cost Act. The Mayor and City Council of Baltimore City shall remit 50% of all licensure authorization request fees collected under § 16–302.1 of this title to the Comptroller. The Comptroller shall distribute the fees to the Family League of Baltimore City, Inc. in a manner that is: consistent with the process established by the Mayor and City Council of Baltimore City under § 16–302.1 of this title; and proportional to the number of licensees operating in each legislative district.

Each subwholesaler and each wholesaler: shall get an invoice for each purchase of cigarettes; shall keep a record of all cigarettes received, to which the subwholesaler and wholesaler shall post each day: the invoice number; the date of receipt; the quantity received; the brand; and the name of the person from whom the cigarettes are received; for cigarette sales to retailers: shall keep a record of the name and address of each retailer to whom a sale is made; and except for a transfer of cigarettes to retail stock by a written memorandum, shall prepare for each sale an invoice that shows the political subdivision where the retailer is located; and shall keep a complete and accurate record of each sale of cigarettes to an out–of–state person for resale to out–of–state consumers. Except as provided in paragraph (2) of this subsection, each subwholesaler and each wholesaler shall make an inventory record each month of all cigarettes on the premises or under the control of the subwholesaler or wholesaler: at the beginning or end of the month; or on another specific day of the month, if the subwholesaler or wholesaler finds it more practical to take inventory on that day and notifies the Executive Director that inventory will be taken on that day. Cigarettes in a vending machine or cigarettes transferred to retail stock by written memorandum need not be included in the inventory record. Each subwholesaler and each wholesaler shall: keep the records required by this section for 6 years or for a shorter time set by the Executive Director; and allow the Executive Director to examine the records.

A person who transports cigarettes by vehicle on a public road shall have in the vehicle a delivery ticket or invoice that states: the name and address of the seller or consignor; the name and address of a buyer or consignee who is: a person in the State authorized by Title 12 of the Tax – General Article to hold unstamped cigarettes on which the tobacco tax has not been paid; or a person in another jurisdiction authorized to hold cigarettes on which the tax imposed by that jurisdiction has not been paid; and the quantity and brands of the cigarettes that are being transported. The Executive Director by regulation may require a common carrier that brings cigarettes into the State to submit to the Executive Director a copy of any freight bill relating to the cigarette shipment.

The Executive Director shall seal a vending machine to prevent the sale or removal of cigarettes from the machine if: a tax stamp is not visible on each visible package of cigarettes in the machine, as required by § 16–209(b)(1) of this subtitle; or the machine is not labeled as required by § 16–209(b)(2) of this subtitle. If the violation for which a vending machine is sealed has been corrected in the presence of the Executive Director or the Executive Director’s designee, the Executive Director shall remove the seal.

Except as otherwise provided in § 16–220 of this subtitle, a person may not remove or tamper with a seal placed on a vending machine by the Executive Director. A person who willfully violates this section is guilty of a misdemeanor and, on conviction, is subject to a fine not exceeding $1,000 or imprisonment not exceeding 1 year or both.

A person may not ship, import, or sell into or within this State any brand of cigarette unless that person: is the owner of the brand; is the United States importer for the brand; or is a designated agent in Maryland of: the owner of the brand; or the United States importer of the brand; and holds any license required by this subtitle. A person who ships, imports, or sells cigarettes into or within this State: shall comply with any federal and State requirements concerning the placement of warning labels or other information on the containers or individual packages of cigarettes; and shall ensure that the containers or individual packages of cigarettes do not contain any information or markings that are false, misleading, or contrary to: federal trademark or tax laws; the trademark law of this State under Title 1, Subtitle 4 of this article; or the tax laws of this State under Title 12 of the Tax – General Article. A person who ships, imports, or sells cigarettes into or within this State in violation of this section is subject to disciplinary action by the Executive Director under § 16–210 of this subtitle and to the penalty specified in § 13–1015 of the Tax – General Article.

This section applies to a person who is engaged in the business of selling or distributing cigarettes. Except as provided in paragraph (2) of this subsection, a person covered under this section may not: sell or ship cigarettes, ordered or purchased by mail or through a computer network, telephonic network, or other electronic network by a consumer or other unlicensed recipient, directly to a consumer or other unlicensed recipient in this State; or cause cigarettes, ordered or purchased by mail or through a computer network, telephonic network, or other electronic network by a consumer or other unlicensed recipient, to be shipped directly to a consumer or other unlicensed recipient in this State. A licensed retailer may deliver no more than two cartons of cigarettes directly to a consumer if the delivery is made by the licensed retailer or an employee of the licensed retailer. A licensee who sells or ships cigarettes in violation of this section or causes cigarettes to be shipped in violation of this section is: subject to discipline by the Executive Director under § 16–210 of this subtitle; and guilty of a felony and, on conviction, is subject to a fine not exceeding $50 for each carton of cigarettes transported or imprisonment not exceeding 2 years or both. A person other than a licensee who sells or ships cigarettes in violation of this section or causes cigarettes to be shipped in violation of this section is guilty of a felony and, on conviction, is subject to a fine not exceeding $50 for each carton of cigarettes transported or imprisonment not exceeding 2 years or both.