Ban eyed on some tobacco brands

Gov. Juan N. Babauta disclosed Friday that the CNMI would soon be barring tobacco manufactures that did not participate in the master settlement agreement from exporting their cigarette products in the Commonwealth.

“These brands would be made public in the future and Customs would not allow them to come into the CNMI. They would be considered contrabands and would be confiscated,” said the governor.

In a signing ceremony Friday, Babauta said several tobacco manufacturers have deliberately not chosen to participate in the ongoing settlement but efforts are now being made to make them responsible.

Babauta signed Friday a measure designed to make non-participating manufacturers pay their responsibilities through House Bill 14-3, which would complement Public Law 13-15 or the Tobacco Master Settlement Model Escrow Statute.

The governor said these manufacturers should be responsible for what their products cause and to release funding assistance that would reimburse patients for their medical costs.

House Bill 14-3 is a measure that aims to provide “procedural enhancement to aid the enforcement of the model escrow statute to safeguard the Master Settlement Agreement, the fiscal soundness of the CNMI, and the public health.” Rep. Benjamin Seman introduced the bill.

Under the measure, every tobacco product manufacturer whose cigarettes are sold in the CNMI—either directly or through distributors—shall certify to the director of Revenue and Tax and the Attorney General’s Office no later than April 30 each year if it is a participating manufacturer, or is in full compliance with the model statute.

A participating manufacturer, which is identified as party to the $206-billion tobacco master settlement plan, shall include in the certification the list of its brands or list of products.

In the case of non-participating manufacturers, they will be required to include in the certification a list of all its brand families and the number of units sold for each brand during the preceding year, a list of all brands sold in the CNMI during the current calendar year, and indicating by asterisk, any brand sold during the preceding calendar year that is no longer being sold in the CNMI, and identifying by name and address any other manufacturer of such brand families in the preceding or current year.

The list shall be updated at least 30 days prior to any addition to or modification of its brand by delivering a supplemental certification to the attorney general and the Revenue and Tax director.

Non-participating companies are further required to certify that they are licensed to do business in the CNMI and that they continue to maintain a qualified escrow fund, and have executed a qualified agreement that has been approved by the AGO; that they are in full compliance with the model statute, and the name, address, and contact number of the financial institutions where the companies established a qualified escrow fund.

The measure states that no later than June 1, the AGO and the director shall develop and make a directory of cigarettes for sale.

To be excluded in the directory are the brand families of any non-participating manufacturer that failed to provide the required certification or comply with the qualified escrow agreement.

The bill aims to prohibit any person from selling in the CNMI, or importing for commercial or personal consumption in the CNMI, cigarettes of a tobacco product manufacturer not included in the directory.

Foreign non-participating manufacturers not licensed to do business in the CNMI but want to include their brand name in the directory must appoint the services of an agent in the Commonwealth.

Failure to comply with the requirements would result in the revocation or suspension of license to sell tobacco products in the CNMI.

Wholesale agents are entitled to administrative hearing.

The director of alcoholic beverages at the Department of Commerce may also impose a penalty of not greater than 500 percent of the retail value of the cigarettes.

The Commonwealth would have its share in the $206-billion Tobacco Master Settlement Agreement. The passage allowed the CNMI to continue receiving its $500,000 annual allotment from the settlement agreement.

The CNMI is set to receive $30 million from the settlement spread over the next 25 years.

The measure essentially amends Public Law 12-45, the original law governing the CNMI’s participation in the Master Settlement Agreement, so that it would make the CNMI conform to the model statute being implemented in other states and territories.

As broken down in the Agreement, the CNMI would get at least $500,000 each year from the cigarette manufacturers until the year 2024.

Since Dec. 1999 up to April 2001, the Commonwealth has already received five separate payments, amounting to $815,254.94

Cigarette manufacturers entered into an agreement with the American government on Nov. 23, 1998, which obligates these manufacturers to pay $206 billion to the different states and territories who are signatory to the agreement to offset public costs for the medical care of smoking victims.

The agreement frees up these companies from past, present, and future claims against them.