Chapter 995

995.10(1) (1) Definitions. In this section:

995.10(1)(a) (a) “Adjusted for inflation” means increased in accordance with the formula for inflation adjustment set forth in exhibit C of the master settlement agreement.

995.10(1)(b) (b) “Affiliate” means a person who directly or indirectly owns or controls, is owned or controlled by or is under common ownership or control with, another person. Solely for the purposes of this definition, “owns”, “is owned” and “ownership” mean ownership of an equity interest, or the equivalent thereof, of 10 percent or more, and the term “person” means an individual, partnership, committee, association, corporation or any other organization or group of persons.

995.10(1)(c) (c) “Allocable share” means allocable share as that term is defined in the master settlement agreement.

995.10(1)(d) (d)

995.10(1)(d)1. 1. “Cigarette” means any product that contains nicotine, is intended to be burned or heated under ordinary conditions of use, and consists of or contains any of the following:

995.10(1)(d)1.a. a. Any roll of tobacco wrapped in paper or in any substance not containing tobacco.

995.10(1)(d)1.b. b. Tobacco, in any form, that is functional in the product, which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette.

995.10(1)(d)1.c. c. Any roll of tobacco wrapped in any substance containing tobacco which, because of its appearance, the type of tobacco used in the filler, or its packaging and labeling, is likely to be offered to, or purchased by, consumers as a cigarette described in subd. 1. a.

995.10(1)(d)2. 2. The term “cigarette” includes “roll-your-own” tobacco, which is tobacco that, because of its appearance, type, packaging or labeling, is suitable for use and likely to be offered to, or purchased by, consumers as tobacco for making cigarettes.

995.10(1)(d)3. 3. For purposes of this definition of “cigarette”, 0.09 ounces of “roll-your-own” tobacco constitutes one individual “cigarette”.

995.10(1)(e) (e) “Master settlement agreement” means the settlement agreement and related documents entered into on November 23, 1998, by this state and the leading U.S. tobacco product manufacturers.

995.10(1)(f) (f) “Qualified escrow fund” means an escrow arrangement with a federally or state chartered financial institution having no affiliation with any tobacco product manufacturer and having assets of at least $1,000,000,000, which arrangement requires that the financial institution hold the escrowed funds’ principal for the benefit of releasing parties and prohibits the tobacco product manufacturer placing the funds into escrow from using, accessing or directing the use of the funds’ principal except as is consistent with sub. (2) (b) 2.

995.10(1)(g) (g) “Released claims” means released claims as that term is defined in the master settlement agreement.

995.10(1)(h) (h) “Releasing parties” means releasing parties as that term is defined in the master settlement agreement.

995.10(1)(i) (i)

995.10(1)(i)1. 1. “Tobacco product manufacturer” means an entity that after May 23, 2000, directly, and not exclusively through any affiliate:

995.10(1)(i)1.a. a. Manufactures cigarettes anywhere, which the manufacturer intends to be sold in the United States, including cigarettes intended to be sold in the United States through an importer; except that an entity that manufactures cigarettes that it intends to be sold in the United States shall not be considered a tobacco product manufacturer under this paragraph if those cigarettes are sold in the United States exclusively through an importer that is an original participating manufacturer, as defined in the master settlement agreement, that will be responsible for the payments under the master settlement agreement with respect to those cigarettes as a result of the provisions of subsection II (mm) of the master settlement agreement and that pays the taxes specified in subsection II (z) of the master settlement agreement, and the manufacturer of those cigarettes does not market or advertise those cigarettes in the United States;

995.10(1)(i)1.b. b. Is the first purchaser anywhere, for resale in the United States, of cigarettes manufactured anywhere that the manufacturer does not intend to be sold in the United States; or

995.10(1)(i)1.c. c. Becomes a successor of an entity described in subd. 1. a. or b.

995.10(1)(i)1.d. d. Owns an automated roll-your-own machine that is used to make cigarettes, not including an individual who owns a roll-your-own machine and uses the machine in his or her home solely to make cigarettes for his or her personal use or for the use of other individuals who live in his or her home.

995.10(1)(i)2. 2. “Tobacco product manufacturer” does not include an affiliate of a tobacco product manufacturer unless the affiliate itself falls within subd. 1. a., b. or c.

995.10(1)(j) (j) “Units sold” means the number of individual cigarettes sold in this state by the applicable tobacco product manufacturer, whether directly or through a distributor, retailer or similar intermediary, during the year in question, as measured by the excise taxes collected by this state on containers of “roll-your-own” tobacco and on packs of cigarettes bearing the excise tax stamp of this state.

995.10(2) (2) Requirements. Any tobacco product manufacturer selling cigarettes to consumers within this state, whether directly or through a distributor, retailer or similar intermediary, after May 23, 2000, shall do one of the following:

995.10(2)(a) (a) Become a participating manufacturer, as that term is defined in section II (jj) of the master settlement agreement, and generally perform its financial obligations under the master settlement agreement; or

995.10(2)(b) (b)

995.10(2)(b)1. 1. Place into a qualified escrow fund by April 15 of the year following the year in question the following amounts, as those amounts are adjusted for inflation:

995.10(2)(b)1.a. a. For 2000: $.0104712 per unit sold after May 23, 2000.

995.10(2)(b)1.b. b. For each of 2001 and 2002: $.0136125 per unit sold.

995.10(2)(b)1.c. c. For each of 2003 to 2006: $.0167539 per unit sold.

995.10(2)(b)1.d. d. For each year after 2006: $.0188482 per unit sold.

995.10(2)(b)2. 2. A tobacco product manufacturer that places money into escrow under subd. 1. shall receive the interest or other appreciation on that money as earned. The money placed into escrow shall be released from escrow only under the following circumstances:

995.10(2)(b)2.a. a. To pay a judgment or settlement on any released claim brought against that tobacco product manufacturer by this state or any releasing party located or residing in this state. Moneys shall be released from escrow under this paragraph in the order in which they were placed into escrow and only to the extent and at the time necessary to make payments required under the judgment or settlement.

995.10(2)(b)2.b. b. To the extent that a tobacco product manufacturer establishes that the amount it was required to place into escrow on account of the units sold in a particular year was greater than the master settlement agreement payments, as determined under section IX (i) of that agreement including after the final determination of all adjustments, that the manufacturer would have been required to make on account of such units sold had it been a participating manufacturer, the excess shall be released from escrow and revert to that tobacco product manufacturer.

995.10(2)(b)2.c. c. To the extent not released from escrow under subd. 2. a. or b., money shall be released from escrow and revert to the tobacco product manufacturer twenty-five years after the date on which the money was placed into escrow.

995.10(2)(b)3. 3. Each tobacco product manufacturer that elects to place money into escrow under subd. 1. shall annually certify to the attorney general by each April 15 that the tobacco product manufacturer is in compliance with subds. 1. and 2. The attorney general may bring a civil action on behalf of the state against any tobacco product manufacturer that fails to place into escrow the moneys required under this subsection. Any tobacco product manufacturer that fails in any year to place into escrow the money required under subd. 1. shall:

995.10(2)(b)3.a. a. Be required within 15 days to place money into escrow as shall bring the tobacco product manufacturer into compliance with this subsection. The court, upon a finding of violation of this paragraph, may impose a civil penalty in an amount not to exceed 5 percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed 100 percent of the original amount improperly withheld from escrow.

995.10(2)(b)3.b. b. In the case of a knowing violation, be required within 15 days to place such funds into escrow as shall bring it into compliance with this subsection. The court, upon a finding of a knowing violation of this paragraph, may impose a civil penalty in an amount not to exceed 15 percent of the amount improperly withheld from escrow per day of the violation and in a total amount not to exceed 300 percent of the original amount improperly withheld from escrow.

995.10(2)(b)3.c. c. In the case of a second or subsequent knowing violation, be prohibited from selling cigarettes to consumers within this state directly or through a distributor, retailer or similar intermediary for a period not to exceed 2 years.

995.10(2)(b)4. 4. Each failure to make an annual deposit required under this subsection shall constitute a separate violation.

995.10(3) (3) Awards of costs and attorney fees. If the attorney general is the prevailing party in an action under this section, the court shall award the attorney general costs and, notwithstanding s. 814.04 (1), reasonable attorney fees.

995.10(4) (4) Promulgation of rules. The department of revenue shall promulgate the rules necessary to ascertain the amount of Wisconsin excise tax paid on the cigarettes of each tobacco product manufacturer that elects to place funds into escrow under this section for each year.

995.10 History History: 1999 a. 122; 2003 a. 73; 2005 a. 155 s. 30; Stats. 2005 s. 995.10; 2013 a. 20.

995.11 995.11 Payments under the tobacco settlement agreement.

995.11(1) (1) In this section, “tobacco settlement agreement” means the Attorneys General Master Tobacco Settlement Agreement of November 23, 1998.

995.11(2) (2) The state’s participation in the tobacco settlement agreement is affirmed.

995.11(3) (3) All payments received and to be received by the state under the tobacco settlement agreement are the property of the state, to be used as provided by law, including a sale, assignment, or transfer of the right to receive the payments under s. 16.63. No political subdivision of the state, and no officer or agent of any political subdivision of the state, shall have or seek to maintain any claim related to the tobacco settlement agreement or any claim against any party that was released from liability by the state under the tobacco settlement agreement.

995.11 History History: 2001 a. 16; 2005 a. 155 s. 31; Stats. 2005 s. 995.11.

995.12 995.12 Certification under the tobacco settlement agreement.

995.12(1) (1) Definitions. In this section:

995.12(1)(a) (a) “Brand family” means all styles of cigarettes sold under the same trademark and differentiated from one another by means of additional modifiers or descriptors, including “menthol,” “lights,” “kings,” and “100s,” and includes any brand name, alone or in conjunction with any other word; trademark; logo; symbol; motto; selling message; recognizable pattern of colors; or other indicia of product identification identical or similar to, or identifiable with, a previously known brand of cigarettes.

995.12(1)(b) (b) “Cigarette” has the meaning given in s. 995.10 (1) (d).

995.12(1)(c) (c) “Department” means the department of revenue.

995.12(1)(d) (d) “Distributor” means a person that is authorized to affix tax stamps to packages or other containers of cigarettes under subch. II of ch. 139 or any person that is required to pay the tax imposed on tobacco products under subch. III of ch. 139.

995.12(1)(e) (e) “Master settlement agreement” has the meaning given in s. 995.10 (1) (e).

995.12(1)(f) (f) “Nonparticipating manufacturer” means any tobacco product manufacturer that is not a participating manufacturer.

995.12(1)(g) (g) “Participating manufacturer” has the meaning given in section II (jj) of the master settlement agreement.

995.12(1)(h) (h) “Qualified escrow fund” has the meaning given in s. 995.10 (1) (f).

995.12(1)(j) (j) “Tobacco product manufacturer” has the meaning given in s. 995.10 (1) (i).

995.12(1)(k) (k) “Units sold” has the meaning given in s. 995.10 (1) (j).

995.12(2) (2) Certifications; directory; tax stamps.

995.12(2)(a) (a) Certification.

995.12(2)(a)1. 1. Every tobacco product manufacturer whose cigarettes are sold in this state, whether directly or through a distributor, retailer, or similar intermediary or intermediaries, shall execute and deliver in the manner prescribed by the attorney general a certification to the department and attorney general, no later than the 30th day of April each year, certifying that as of that date the tobacco product manufacturer is either a participating manufacturer or is in full compliance with s. 995.10 (2) (b).

995.12(2)(a)2. 2. A participating manufacturer shall include in its certification a list of its brand families. The participating manufacturer shall update that list at least 30 calendar days prior to any addition to or modification of its brand families by executing and delivering a supplemental certification to the department and attorney general.

995.12(2)(a)3. 3. A nonparticipating manufacturer shall include all of the following in its certification:

995.12(2)(a)3.a. a. A list of all of its brand families and the number of units sold for each brand family that were sold in the state during the preceding calendar year.

995.12(2)(a)3.b. b. A list of all of its brand families that have been sold in the state at any time during the current calendar year.

995.12(2)(a)3.c. c. A list of any brand families sold in the state during the preceding calendar year that are no longer being sold in the state as of the date of such certification.

995.12(2)(a)3.d. d. The name and address of any other manufacturer of the brand families in the preceding or current calendar year.

995.12(2)(a)4. 4. The nonparticipating manufacturer shall update the list under subd. 3. at least 30 calendar days before any addition to or modification of its brand families by executing and delivering a supplemental certification to the department and attorney general.

995.12(2)(a)5. 5. The nonparticipating manufacturer shall further certify all of the following:

995.12(2)(a)5.a. a. That the nonparticipating manufacturer is registered to do business in the state or has appointed an agent for service of process and provided notice of that appointment as required by sub. (3).

995.12(2)(a)5.b. b. That the nonparticipating manufacturer has established and continues to maintain a qualified escrow fund and has executed a qualified escrow agreement that has been reviewed and approved by the attorney general and that governs the qualified escrow fund.

995.12(2)(a)5.c. c. That the nonparticipating manufacturer is in full compliance with this section and s. 995.10.

995.12(2)(a)5.d. d. The name, address, and telephone number of the financial institution where the nonparticipating manufacturer has established the qualified escrow fund required under s. 995.10 (2) (b).

995.12(2)(a)5.e. e. The account number of the qualified escrow fund and any subaccount number for the state.

995.12(2)(a)5.f. f. The amount the nonparticipating manufacturer placed into the fund for cigarettes sold in the state during the preceding calendar year, the date and amount of each deposit, and any evidence or verification as required by the attorney general.

995.12(2)(a)5.g. g. The amount and date of any withdrawal or transfer of funds the nonparticipating manufacturer made at any time from the fund or from any other qualified escrow fund into which it ever made escrow payments under s. 995.10 (2) (b).

995.12(2)(a)6. 6. A participating manufacturer may not include a brand family in its certification unless the participating manufacturer affirms that the brand family constitutes its cigarettes for purposes of calculating its payments under the master settlement agreement for the relevant year, in the volume and shares determined under the master settlement agreement.

995.12(2)(a)7. 7. A nonparticipating manufacturer may not include a brand family in its certification unless it affirms that the brand family constitutes its cigarettes for purposes of s. 995.10.

995.12(2)(a)8. 8. Nothing in this section shall be construed as limiting or otherwise affecting the state’s right to maintain that a brand family constitutes cigarettes of a different tobacco product manufacturer for purposes of calculating payments under the master settlement agreement or for purposes of s. 995.10.

995.12(2)(a)9. 9. Tobacco product manufacturers shall maintain all invoices and documentation of sales and other such information relied upon for the certification under subd. 5. for a period of 5 years, unless otherwise required by law to maintain them for a greater period of time.

995.12(2)(b) (b) Directory of cigarettes approved for stamping and sale. Not later than March 1, 2004, the attorney general shall develop and make available for public inspection a directory listing all tobacco product manufacturers that have provided current and accurate certifications conforming to the requirements of par. (a) and all brand families that are listed in the certifications, except as follows:

995.12(2)(b)1. 1. The attorney general shall not include or retain in the directory the name or brand families of any nonparticipating manufacturer that has failed to provide the required certification or whose certification the attorney general determines is not in compliance with par. (a) 3. to 5., unless the attorney general has determined that the violation has been cured.

995.12(2)(b)2. 2. Neither a tobacco product manufacturer nor brand family may be included or retained in the directory if the attorney general concludes, in the case of a nonparticipating manufacturer, that any of the following apply:

995.12(2)(b)2.a. a. An escrow payment required under s. 995.10 (2) (b) for any period for any brand family, whether or not listed by such nonparticipating manufacturer, has not been fully paid into a qualified escrow fund governed by a qualified escrow agreement that has been approved by the attorney general.

995.12(2)(b)2.b. b. Any outstanding final judgment, including interest on that judgment, for a violation of s. 995.10 has not been fully satisfied for the brand family or manufacturer.

995.12(2)(b)3. 3. The attorney general shall update the directory as necessary to correct mistakes and to add or remove a tobacco product manufacturer or brand family to keep the directory in conformity with the requirements under this paragraph.

995.12(2)(b)4. 4. Every distributor shall provide and update as necessary an electronic mail address to the attorney general for the purpose of receiving any notifications as may be required under this section.