In this subtitle the following words have the meanings indicated. “Basic cost of cigarettes” means the lesser of the invoice cost or the replacement cost of cigarettes to the retailer or wholesaler; plus any in–freight charge to the wholesaler otherwise not included in the invoice cost or the replacement cost; plus, for the wholesaler, the full face value of any applicable Maryland cigarette tax payable by the wholesaler; minus any trade discount or discount for cash. “Cigarettes” means any size or shaped roll for smoking that is made of tobacco or tobacco mixed with another ingredient and wrapped in paper or in any other material except tobacco. “Cigarettes” does not include cigars. “Cost to the retailer”, subject to the special cost provisions of § 11–503 of this subtitle, means the basic cost of cigarettes to a retailer, which includes the cost to a wholesaler, plus a markup to cover his cost of doing business, which cost of doing business, in the absence of satisfactory proof of a lesser cost, is presumed to be 8 percent of the basic cost of cigarettes to him. As to each carton of 200 cigarettes, a fractional part of a cent equal to one–tenth of a cent or more in the cost to the retailer shall be rounded off to the next higher cent. “Cost to the wholesaler”, subject to the special cost provisions of § 11–503 of this subtitle, means the basic cost of cigarettes to a wholesaler, plus a markup to cover his cost of doing business, which cost of doing business: Includes the cartage cost to a retailer; and In the absence of satisfactory proof of a lesser cost, is presumed to be 5 percent of the basic cost of cigarettes to him. As to each carton of 200 cigarettes, a fractional part of a cent equal to one–tenth of a cent or more in the cost to the wholesaler shall be rounded off to the next higher cent. “Executive Director” means the Executive Director of the Alcohol, Tobacco, and Cannabis Commission. “Executive Director” includes a deputy, an inspector, a clerk, or any other individual authorized to act by the Executive Director. “Person” includes an individual, corporation, business trust, statutory trust, estate, trust, partnership, association, two or more persons having a joint or common interest, or any other legal or commercial entity. “Replacement cost” means the cost per unit for which the cigarettes could have been bought by the wholesaler or retailer at any time within 30 days before the date of sale by him if bought in the same quantity as his last purchase of the cigarettes. “Retail sale of cigarettes” includes any sale whereby cigarettes are sold for a valuable consideration, including an exchange or barter and a sale through a vending machine, made in the ordinary course of trade or the usual conduct of the seller’s business to a purchaser for consumption or use other than resale. “Retailer” includes any person engaged in the business of making retail sales of cigarettes within the State at a store, stand, booth, or concession, through vending machines, or otherwise. If the person is engaged in the business of making both retail sales of cigarettes and wholesale sales of cigarettes, the word only applies to the retail sales of cigarettes portion of the business. “Sell” includes advertise, offer to sell, or offer for sale. “Vending machine operator” means a person who: Makes retail sales of cigarettes or has cigarettes in his possession with the intent to sell them exclusively at retail through the medium of a vending machine or any other mechanical device used for dispensing cigarettes; Owns, operates, and services vending machines or other mechanical devices used to dispense cigarettes on 40 or more premises; and Services the machines or devices by maintaining an established place of business for the purchase of cigarettes, including warehousing facilities for the storage and distribution of cigarettes. “Wholesale sale of cigarettes” includes any sale whereby cigarettes are sold for a valuable consideration, made in the ordinary course of trade or in the usual conduct of the seller’s business to a retailer, other than to a vending machine operator or to a sub–wholesaler described in subsection (n)(2) of this section, for the bona fide purpose of resale. “Wholesale sale of cigarettes” includes any transfer of cigarettes on consignment or otherwise, whereby title is retained by the seller as security for the payment of the purchase price. “Wholesaler” means a person who purchases cigarettes directly from a manufacturer. “Wholesaler” includes a person, who, as a sub–wholesaler: Purchases cigarettes from another wholesaler solely for the purpose of bona fide resale to retailers other than those directly or indirectly owned, affiliated, or controlled by him; and Services the retailers by maintaining an established place of business for the sale of cigarettes, including warehouse facilities, adequate inventory, proper accounting records, and necessary equipment and vehicles for the storage and distribution of cigarettes. If the person is engaged in the business of making both wholesale sales of cigarettes and retail sales of cigarettes, the word only applies to the wholesale sales of cigarettes portion of the business.

This subtitle does not apply to a retail sale of cigarettes or a wholesale sale of cigarettes, if they are sold: At a bona fide clearance sale, are so advertised and marked, and the quantity is accurately, clearly, and conspicuously stated in all advertising of the sale and on signs conspicuously posted where the sale takes place; As imperfect, damaged, or being discontinued, are so advertised and marked, and the quantity is accurately, clearly, and conspicuously stated in all advertising of the sale and on signs conspicuously posted where the sale takes place; On the complete and final liquidation of the business of the seller; Under an order, direction, or supervision of a court; or Subject to subsection (b) of this section, by a retailer or wholesaler at a price set in good faith to meet the competition of another retailer or wholesaler who is rendering the same type of service as the seller, if the price of the competitor which the seller desires to meet is lawful. For purposes of subsection (a)(5) of this section, the price of cigarettes sold under subsection (a)(1) through (4) of this section is not the lawful price of a competitor. In calculating the basic cost of cigarettes purchased at a sale under subsection (a)(1) through (4) of this section or at any other sale outside the ordinary channels of trade, a retailer or wholesaler shall use, instead of invoice costs, the replacement cost of the cigarettes based on the quantity last purchased by him through the ordinary channels of trade.

In a wholesale sale of cigarettes, the presumptive wholesale markup of 5 percent provided for in § 11-501(e) of this subtitle may be reduced by 2 cents for each carton of 200 cigarettes, if: The cigarettes are not delivered unless their full price is received by the wholesaler at or before delivery; and The purchaser performs or pays for the cartage cost of the cigarettes to the place of business of the purchaser. In the absence of satisfactory proof of a lesser aggregate cost of doing business, a vending machine operator or retailer who purchases cigarettes at prices ordinarily invoiced to a wholesaler and who receives the wholesaler’s discounts on them shall: First, add to his basic cost of cigarettes the wholesale markup of 5 percent provided for in § 11-501(e) of this subtitle to cover the cost of doing business as a wholesaler; and Then, on the resultant sum, add the retail markup of 8 percent provided for in § 11-501(d) of this subtitle. If the discount received by the vending machine operator or retailer is less than that ordinarily allowed to wholesalers, the wholesale markup of 5 percent may be reduced by the difference between the discount ordinarily allowed to wholesalers and the discount received by the retailer or vending machine operator. A wholesaler who sells cigarettes to another wholesaler or to a vending machine operator is not required to include in his selling price the cost to the wholesaler. However, in the absence of satisfactory proof of a lesser cost for the service rendered, the wholesaler shall include in the selling price his basic cost of cigarettes, plus a charge of 1 percent of his basic cost of cigarettes. If a wholesaler purchases cigarettes from another wholesaler, then, on resale of the cigarettes to a retailer, he is the wholesaler for the purposes of this subtitle.

A retailer or wholesaler with intent to injure a competitor or to destroy or substantially lessen competition may not make a retail sale of cigarettes or a wholesale sale of cigarettes at less than the cost to the retailer or the cost to the wholesaler, respectively. A retailer may not purchase cigarettes from a wholesaler at a cost which directly or indirectly is less than the cost to the wholesaler by any means, including offering, accepting, inducing, or attempting to induce a rebate in price or a concession of any kind in connection with the sale or purchase of cigarettes.

Except as provided in subsection (b) of this section, a retailer or wholesaler with intent to injure a competitor or to destroy or substantially lessen competition may not: Sell cigarettes in combination with any other item of merchandise if the other item is given free of charge or sold at a price below its cost to the retailer or its cost to the wholesaler, respectively, as defined in Subtitle 4 of this title; Sell cigarettes in combination with any other item of merchandise if the total sale price for the cigarettes and all other items included in the sale is less than the sum of: The cost to the retailer or the cost to the wholesaler, respectively, of the cigarettes; and The cost to the retailer or the cost to the wholesaler, respectively, as defined in Subtitle 4 of this title, of all other items included in the sale, including items given free of charge in connection with the sale; Give cigarettes free of charge, except in the case of specially packaged manufacturers’ samples which are designated on the package as not to be sold; or Make any rebate, advertising allowance, or any other concession by any means or device in connection with the sale of cigarettes whereby the cigarettes are in effect sold below their cost to the retailer or their cost to the wholesaler, respectively. A retailer or wholesaler may pass on to a purchaser any reduction in cost which results from: Payment or compensation given by a manufacturer of cigarettes on a uniform and nondiscriminatory basis for promotional services; or Any coupon issued and ultimately redeemed by a cigarette manufacturer.

In any proceeding under this subtitle, including a proceeding relating to licenses before the Executive Director, proof of a sale by a retailer or a wholesaler of cigarettes or of any other item in combination or in connection with cigarettes at less than their cost to the retailer or their cost to the wholesaler, respectively, is prima facie evidence of intent to injure a competitor or to destroy or substantially lessen competition. In determining cost to the retailer or cost to the wholesaler, the Executive Director or the court shall receive and consider evidence: That the person complained against purchased cigarettes at a fictitious price or on terms, in a manner, or under invoices which conceal the true costs, discounts, or terms of purchase; and Of the normal, customary, and prevailing terms and discounts in connection with other sales of a similar nature in the trade area.

It is the duty of the Executive Director to enforce this subtitle. The Executive Director shall: Employ and determine the duties and compensation of the inspectors and other personnel necessary to enforce this subtitle; and Adopt reasonable rules and regulations necessary to effectuate and enforce the policies of this subtitle.

On complaint of the Executive Director or any person affected, a circuit court has jurisdiction to: Enjoin a retailer or wholesaler from the commission of any act prohibited by this subtitle; and Award damages and costs. In an action for injunctive relief, it is not necessary for the complainant to allege or prove that an adequate remedy at law does not exist or that the complainant has suffered actual damages. If injunctive relief is not sought or required, an injured person may institute an action for damages in any court of competent jurisdiction. On violation of this subtitle, the Executive Director shall suspend or revoke the cigarette license of the offender required by § 16–210 of the Business Regulation Article.

Except as specifically provided by § 11-505 of this subtitle with respect to combination sales and concessions, the Maryland Sales Below Cost Act does not apply to the sale of cigarettes.

This subtitle may be cited as the Maryland Cigarette Sales Below Cost Act.