SCS SB 1266 -- TOBACCO SALES SPONSOR: Kenney (Hoppe) COMMITTEE ACTION: Voted "do pass" by the Committee on Local Government and Related Matters by a vote of 10 to 3. This substitute bans the sale and distribution of "gray market cigarettes." Gray market cigarettes are cigarettes that are packaged for sale outside the United States and may not contain required health warnings and ingredient lists. Persons in violation of this law are guilty of a class D felony. These cigarettes may also be distributed under names and packages similar to cigarettes manufactured for sale in the United States. Persons are prohibited from affixing any stamp or meter impressions to gray market cigarettes. The substitute allows the Director of the Department of Revenue to revoke or suspend the license of a wholesaler who violates this law. In addition, the director may impose a civil penalty not greater than 500% of the retail value of the cigarettes involved or $5,000. Gray market cigarettes sold or distributed in violation of this law are considered contraband and subject to seizure and forfeiture. In addition, violations are subject to remedies or penalties available for a violation of unlawful trade practices. This law is to be enforced by the director through the State Highway Patrol and all local police authorities. The Attorney General has concurrent power with the prosecuting attorneys of the state to enforce this law. The substitute contains an emergency clause. FISCAL NOTE: No impact on state funds. PROPONENTS: Supporters say that the state needs an enforcement tool to keep gray market tobacco from coming into the state. Federal laws don't address violation of gray market laws. Forty-five other states have passed a similar law. The substitute will protect the Master Settlement Agreement because gray market cigarettes don't pay into the fund. Gray market cigarettes compete unfairly with domestic cigarettes. Testifying for the bill were Senator Kenney; R. J. Reynolds Tobacco; Quick Trip Corporation; and Missouri Retailers Association. OPPONENTS: Those who oppose the substitute say that gray market cigarettes meet federal standards, and they should be able to sell them. Companies that sell gray market tobacco put money in escrow for the tobacco settlement. Only cigarettes manufactured outside the United States are brought in and sold. Big tobacco companies want to limit what can be sold and to control the market and retail prices. Businesses sometimes lose money on gray market tobacco and only use it as a promotion. Some businesses need to sell gray market cigarettes to stay in business. The substitute will hurt competition. Testifying against the bill were Dirt Cheap Corporation; and Tom McCarthy. Steve Bauer, Legislative Analyst