Plain Text Law

Title 02 — Subtitle 07. Tobacco Product Regulations

Chapter 01. Nonparticipating Manufacturer Quarterly Escrow and Certification Obligations

Regulation .01 Purpose.Copy Citation

This chapter is intended to promote nonparticipating manufacturer compliance with the Escrow Act and Business Regulation Article, §16-503, Annotated Code of Maryland.

Regulation .02 Definitions.Copy Citation

A.
In this chapter, the following terms have the meanings indicated.
B.
Terms Defined.
(1)
“Brand family” has the meaning stated in Business Regulation Article, §16-501(b), Annotated Code of Maryland.
(2)
“Cigarette” has the meaning stated in Business Regulation Article, §16-501(c), Annotated Code of Maryland.
(3)
“Escrow Act” means Ch. 169, Acts of 1999, as amended by Ch. 141, Acts of 2001.
(4)
“Nonparticipating manufacturer” has the meaning stated in Business Regulation Article, §16-501(h), Annotated Code of Maryland.
(5)
“Qualified escrow fund” has the meaning stated in Business Regulation Article, §16-501(j), Annotated Code of Maryland.
(6)
“Units sold” has the meaning stated in Business Regulation Article, §16-501(l), Annotated Code of Maryland.

Regulation .03 Quarterly Escrow Payments.Copy Citation

A.
A nonparticipating manufacturer shall make the escrow payments required by the Escrow Act in quarterly installments during the year in which the sales covered by the payments are made, if the nonparticipating manufacturer has:
(1)
Not previously established and funded a qualified escrow fund in Maryland;
(2)
Not made any escrow payments for more than 1 year;
(3)
Failed to make a timely or complete escrow payment for a prior calendar year;
(4)
Failed to pay a judgment or civil penalty in connection with its Maryland sales; or
(5)
Sold more than 1,600,000 cigarettes in Maryland during a calendar quarter.
B.
The Attorney General may require a nonparticipating manufacturer to make quarterly escrow payments if the Attorney General finds reasonable cause to believe the nonparticipating manufacturer will not make its fully required escrow deposit by April 15 of the year following the year in which the cigarettes are sold.
C.
If a quarterly payment obligation is required under §A or B of this regulation, the Attorney General may require the nonparticipating manufacturer to make immediate escrow payments for amounts that would have been due had a quarterly escrow requirement been in effect as of January 1 of the same year.
D.
A nonparticipating manufacturer may request from the Attorney General a waiver from a quarterly payment obligation imposed under §A(3) of this regulation. The Attorney General may waive application of the quarterly payment obligation if the Attorney General finds that:
(1)
The nonparticipating manufacturer has paid in full its escrow obligations; and
(2)
There is reasonable cause to believe that the nonparticipating manufacturer will pay in full its required escrow deposit by April 15 of the year following the year in which the cigarettes are sold.
E.
The quarterly payments shall reflect an inflation rate of 3 percent. Nonparticipating manufacturers subject to a quarterly payment obligation shall make a final reconciliation payment on or before April 15 of the year following the year in which the cigarettes are sold in order to account for the annual adjustment for inflation under the Escrow Act.

Regulation .04 Quarterly Certifications.Copy Citation

A.
A nonparticipating manufacturer that is required to make quarterly escrow payments under Regulation .03 of this chapter shall file a quarterly certification of compliance with the Attorney General. The nonparticipating manufacturer's certification shall be in the form and manner posted on the Attorney General's website and shall provide:
(1)
The identity of the nonparticipating manufacturer reporting and the quarter being reported;
(2)
The number of units sold by brand family for the quarter being reported;
(3)
The applicable escrow rate and payment;
(4)
The name of the financial institution in which the qualified escrow fund is held;
(5)
The amount of the escrow deposit and proof of deposit, such as a counter receipt or statement;
(6)
Any other information necessary to ensure compliance with this regulation.
B.
The quarterly certification required under this regulation does not affect a nonparticipating manufacturer's obligation to file annual certifications under Business Regulation Article, §16-503, Annotated Code of Maryland.

Regulation .05 Quarterly Periods; Deadlines.Copy Citation

A.
For purposes of this chapter, the calendar year is divided into the following quarters:
(1)
January 1 through March 31;
(2)
April 1 through June 30;
(3)
July 1 through September 1; and
(4)
October 1 through December 31.
B.
The nonparticipating manufacturer shall make its quarterly payments under Regulation .03 of this chapter not later than 30 days after the end of the calendar quarter for which the quarterly escrow payment is required.
C.
The nonparticipating manufacturer shall submit its quarterly certification under Regulation .04 of this chapter not later than 40 days after the end of the calendar quarter for which the quarterly escrow payment is required.

Regulation .06 Noncompliance.Copy Citation

A.
If a nonparticipating manufacturer fails to make its required quarterly escrow payment or to provide a complete quarterly certification, the Attorney General may remove the nonparticipating manufacturer and its brand families from the directory of certified manufacturers.
B.
A nonparticipating manufacturer may seek review of the Attorney General's decision to remove a nonparticipating manufacturer or its brand families from the directory of certified manufacturers in accordance with State Government Article, Title 10, Subtitle 2, Annotated Code of Maryland.