Arkansas Administrative Code
Agency 175 - Arkansas Tobacco Control Board
Rule 175.00.05-001 - Proposed Amendments to its Rules and Regulations

1.1 Meeting of Board The Board shall meet at least two (2) times each year, time and place to be designated by the Chairman of the Board in his official call of such meetings. However, additional regular, special or emergency meetings may be held at the discretion of the Chairman of the Board, or at the written request of two (2) members of the Board.

1.2 Quorum A majority of the members of the Board shall constitute a quorum, and if a quorum is not present at the time of such called meeting, same may be adjourned to a later date to be designated by the Chairman.

2.1 Permit Necessary for sale of Cigarettes or Tobacco Products No wholesaler, retailer, vendor or other individual, partnership, corporation or other entity shall sell, barter, give away or otherwise distribute tobacco products or cigarettes in the State of Arkansas without first obtaining the appropriate permit or permits in accordance with A.C.A. & 26-57-201 et seq. and these rules and regulations.

2.2 Permit Needed for Each Capacity Any individual, partnership, corporation or other entity operating in more than one capacity shall obtain a permit for each capacity.

2.3 Current Address It shall be the obligation of all permit holders to keep on file with the Board the current address or the current address of an agent for service of process. All correspondence and/or notices from the Board shall be sent to the address on file with the Board. All permit holders are to notify the Board of any change in address and/or agent for service of process within 30 days of said change.

2.4 Forms for Applications All applications for permits, new or renewal, shall be completed on forms provided by the Arkansas Tobacco Control Board (the "Board.")

2.5 Application to be Complete No application, new or renewal, will be accepted or acted upon by the Board unless it is complete and accompanied by the appropriate privilege tax as established by A.C.A. & 26-57-219.

2.6 Posting of Permits Each and every permit holder shall be required, before doing any business under any permit issued pursuant to any tobacco laws in the State of Arkansas, to post his/her permit in a conspicuous place in the primary office or room where the business is carried on and shall at all times keep his/her permit displayed so that all persons visiting the premises may readily see the permit. Vending machine permit holders are required to post their cigarette vending machine permit conspicuously on the front of the vending machine.

2.7 Records to be Provided All records relating to the purchase or sale of any tobacco product, including, but not limited to all invoices and/or receipts relating to the sale or purchase of any tobacco products, of any permit holder shall be open to inspection by the Director of the Board and any investigator/agent of the Board. Upon request by the Board, any and all records of any permit holder shall be provided to the Board at any meeting of the Board. All such records shall be maintained by the permit holder for a period of at least three (3) years.

2.8 The term "invoice" as used in Ark. Code Ann. & 26-57-213 is defined as being documentation, contemporaneously made with the sale or purchase, sufficient to show an itemized list of the merchandise shipped, purchased or sold, with the quantity and prices charged. For wholesale sales, the invoice must contain the name or other identifying information of the seller and the purchaser. For purchases by a retailer, the invoice and/or sales receipt must contain the name or other identifying information of the seller. For sales by a retailer to consumers, the invoice need not contain the name or other identifying information of the purchaser.

3.1 Detailed Information to be Provided Any application for a wholesaler permit must be accompanied by a sworn affidavit showing whether the business is owned by an individual, partnership, or corporation or other entity. The application shall state the name, age and address of the applicant, if an individual; the name, age and address of each partner, if the applicant is a partnership; and the name, age and address of each member of the Board of Directors or other governing body and each officer and the managing agent, if the applicant is a partnership, corporation or an association. In addition, the application shall state the name and address of each person financially interested in the permitted business for which application is made, together with the nature of such interests, but if such applicant is a corporation, the applicant shall set forth only the name(s) and address(es) of all stockholders holding more than five percent (5%) interest in the permitted business. In addition, the same information may be required by the director of any manager, director, officer, or member retained by or having interests in the business. The application shall further provide a telephone number which must be listed in the name of the business seeking the application.

3.2 Wholesaler in Fact Each applicant shall attest that the permitee shall be a wholesaler in fact, proof of which shall consist of an established place of business, the length of time for which said office and/or warehouse has been and/or is rented, leased or owned and the Federal Employer's Business Identification Number of each business.

3.3 Business Location Each applicant must attach copies of the lease, rental or ownership of all offices and/or warehouses and a photo of all buildings to be used for the storage of inventory or files. No building may be used to store inventory or files which contains personal living quarters which is accessible from the area proposed to be used as a building location.

3.4 Price List to be Kept Each applicant must agree to maintain a list of prices for all tobacco products which will be sold, such price lists to be kept in the business office and made available to each customer, the Board, the Director of the Board, or an investigator for the Board.

3.5 Character of Applicant The applicant shall be of good moral character.

An individual owner shall submit three letters as to his moral character; a partnership shall submit two letters of moral character for each partner; a corporation or other entity shall submit two letters of moral character for each of the stockholders or owners holding more than five percent (5%) interest in the permitted business. No form letters will be accepted to satisfy this requirement.

3.6 Proof of Financial Responsibility Each applicant shall furnish proof of financial responsibility in the form of a Dunn & Bradstreet Report or such other financial statement(s) acceptable to the Director. The Director may require a financial statement made by a certified public accountant.

3.7 Change in Ownership In the event there is a change in ownership of twenty five percent (25%) or more, the permit holder must resubmit the information required by Section 3.1, 3.3, 3.6 and 3.7. Said amended information shall be submitted to the Director of the Board within 30 days of said change in ownership. If after review of the amended information, the Board determines that a permit would not have originally been granted to the legal entity had the original ownership and information been as reflected in the amended information, the Board shall have the authority to revoke any permit, after a hearing. This provision shall not apply to publicly traded corporations.

3.8 Publication of Application - New Application Upon tentative approval of a new wholesale application by the Board staff, the applicant shall advertise its intentions to seek a permit in a newspaper of state-wide circulation. Said notice shall be placed on two (2) occasions, seven (7) days apart, using the form supplied by the Board. The date of the first publication shall be at least thirty (30) days prior to the meeting at which the Board shall consider the application. The Director of the Board shall establish the date of the Board meeting at which the application shall be considered and the deadline for the filing of objections to the issuance of the permits. The applicant shall provide copies of said notices, along with proof of publication, to the Director fifteen (15) days prior to the scheduled meeting.

3.9 Sales by Wholesalers No wholesaler shall sell cigarettes or tobacco products to any individual, partnership, corporation or other entity unless said individual, partnership, corporation or other entity is duly licensed to resell said cigarettes or tobacco products.

3.10 Purchases by Wholesalers Wholesalers shall purchase cigarettes and tobacco products only from other wholesalers or manufacturers who are registered pursuant to A.C.A. & 26-57-215(1)

4.1 Server Awareness Forms It shall be the obligation of each retail permit holder to obtain from every employee, permittee or owner who may or does sell cigarettes and tobacco products, upon commencement of such employment, a signed acknowledgement that he or she has read and understands the content of a form entitled "Tobacco Server Awareness Form", such Form being provided at the time of issuance of any permit, by the Director of the Tobacco Control Board. The Tobacco Server Awareness Form shall set forth pertinent rules and regulations and laws governing the sale of tobacco products and other related information as determined appropriate by the Director. Executed server awareness forms or copies thereof shall be maintained at each permitted retail location and shall be available for inspection upon request by any agent of the Arkansas Tobacco Control Board during normal business hours. Failure to have executed server awareness forms available for inspection shall be deemed a violation of this rule.

4.2 Prohibition on Loose Cigarette Sales The sale of individual cigarettes or "loosies" is prohibited. Individual cigarettes or "loosies" are defined as any cigarette not contained in its original, unopened pack.

5.1 Written Objections to be Made Pursuant to A.C.A. & 26-57-256(a)(6), the Director of the Board shall receive written objections to the issuance of new permits. All objections must be received by the director on or prior to the deadline established by the Director and published by the applicant pursuant to Section 3.1 of these Rules.

5.2 Public Hearing to be Held After Receipt of Three Objections If the Director receives the petition of three interested parties alleging that facts relevant to the issuance of the permit exists and objecting to the issuance of the permit, the Board shall conduct a public hearing to receive and consider such relevant testimony and evidence.

5.3 Objections Must State Relevant Facts All petitions and objections must state the nature of the relevant facts that are alleged.

5.4 Applicant to Publish Notice of Hearing In the event that a public hearing is conducted by the Board, the Director shall establish the time and date of the hearing and notify the applicant. The applicant shall then publish notice of the hearing in a newspaper of state-wide circulation. Said notice shall be placed on two occasions, seven days apart, using the form supplied by the Board. The date of the first publication shall be at least 15 days prior to the public meeting. The applicant shall provide copies of said notices, along with proof of publication, to the director prior to the scheduled meeting.

6.1 Permits to Expire on June 30 All permits and licenses shall expire on June 30 of each year. Only those applications received by this deadline shall be considered timely. The responsibility of timely renewal is placed entirely upon the permit holder, and shall not be transferred to any employee, firm, agent, or other third party, including the postal service. All permit holders who desire to retain their permits must apply for renewal on the forms provided by the Board.

6.2 Expired Permit Each permit not renewed on or before June 30 shall expire. The holder of an expired permit must, after sixty (60) days (September 1), submit a new application and pay all late fees before receiving a new permit. The holder of the expired permit shall not be permitted to purchase, sell, barter, give away or otherwise distribute tobacco products or cigarettes in the State of Arkansas during the time he is not the holder of a valid, unexpired permit. However, this provision shall not bar the holder of an expired permit to return tobacco products or cigarettes to the wholesaler.

7.1 Cash Not Accepted for Payment of Fees or Permits Payments for all fees or permits are to be made by check, draft or money order. No cash money will be accepted by the employees or members of the Tobacco Control Board for any purpose.

7.2 No Payments Accepted by Agents No agent of the Tobacco Control Board will take any payments in the field for new or renewal permits, fines or any other matter. All payments are to be mailed or delivered to the Tobacco Control Board as set out in Section 7.1.

7.3 Permit Fee Schedule The following is the Schedule for all Permit Fees:

RETAIL CIGARETTE & TOBACCO PERMITS:

WHOLESALE CIGARETTE, TOBACCO & SALES REPRESENTATIVES PERMITS:

VENDING MACHINE PERMITS:

MANUFACTURERS SALES REPRESENTATIVE PERMIT:

VENDING MACHINE DEALER'S LICENSE:

SPECIAL EVENT ONE TIME PERMIT:

DUPLICATE PERMIT:

8.1 Location of Vending Machines New or renewal applications for General Tobacco Products Vending Permit (vendor) license shall file with the Board a notification listing the number of vending machines operated and the physical location of each machine. In the event the location of a machine is changed, the vendor shall file with the Board, within 30 days of the change in location, a notification of the change in location, stating the former location of the machine and the new location. In the event of the addition of a machine not previously listed on the filing of the vendor, the vendor shall file a notification listing the location of such machine(s) within 30 days of the addition.

8.2 List of Locations of Vending Machines Upon Issuance or Renewal Upon the issuance or renewal of a cigarette vending machine permit, the permitee shall furnish the Director of the Tobacco Control Board a complete list of vending machine locations which list shall include the name of the business where the machine is operating and along with the physical address where the machine is located.

8.3 Proof of Bond Before a permitee may renew a cigarette vending machine permit, he/she shall provide the Director of the Tobacco Control Board with proof that the bond is still in force and effect with either a reinstatement notice or letter from the bond company or insurance company providing such coverage and stating the date of termination.

9.1 Definitions The following definitions shall apply to the following terms as used in Ark. Code Ann. & 4-75-708 of the Unfair Cigarette Sales Act (as may be amended):

9.2 Penalties For Failure To Comply Any permit holder who violates the provisions of this Regulation shall be subjected to all sanctions set forth in A.C.A. § 26-57-201, (the Arkansas Tobacco Products Tax Act) and these Regulations, which may include the suspension or revocation of any Wholesaler's or Retailer's permit or license.

10.1 Determination of Need for Hearing If upon a complaint filed or upon its own motion, the Board determines that a hearing is necessary, the Board shall instruct the Director and/or the Board's legal counsel to issue a Notice of Hearing.

10.2 Administrative Procedures Act All hearings shall be held in accordance with the Administrative Procedures Act.

10.3 Notice of Hearing The Notice of Hearing shall be served upon the respondent by mailing the same to the respondent at the address on file at the Board's office, if any. Service shall be by any means allowable by the Arkansas Rules of Civil Procedure as well as by First Class mail. The failure of a permit holder to receive the Notice of Hearing, if sent to the last address on file at the Board, shall not constitute a failure to serve the permit holder. The Notice of Hearing shall be mailed to the respondent at least 20 days prior to the hearing. This 20 day requirement may be waived by the permit holder.

11.1 Grounds for Board Action The following acts on the part of any permit holder shall be deemed by the Board to be grounds for Revocation, Suspension, Non-renewal or Issuance of a Civil Penalty.

12.1 Offenses by Non-Licensees If a complaint alleging the violation of Ark. Code Ann. § 5-27-227, by a non-licensee of the Board, is received by the Board, and the Board, at its discretion, determines that there are reasonable grounds to believe that a violation has occurred, the Board may direct that a Notice of Hearing be issued to the respondent for the appropriate allegation.

12.2 Information to be Given to the Board - Timeliness of Information In order for the Board to comply with notice requirements of Arkansas law, alleged violations of Ark. Code Ann. § 5-27-227 reported to the Board must contain, at a minimum, the following: the date and time of the alleged violation, either the name of the person making such alleged sale or information reasonably necessary to determine the location in the store of the person allegedly making the sale. Such information should include, where appropriate, the cash register number, physical location of the sale in the store, and if possible the lane or aisle number. If a cash register receipt was given for the sale, it should be included with the information.

12.3 Training of Individuals or Groups Conducting Compliance Checks Use of Board Approved Forms

12.4 Mitigating Factors In determining the culpability of a retail permit holder for a violation of Ark. Code Ann.& 5-27-227(a) resulting from the actions of an employee or agent of the retail permit holder, the Board is required by law to consider certain factors set forth in Ark. Code Ann.& 26-57-257(t). While each permit holder appearing before the Board shall be presumed innocent, the retail permit holder may submit the following to the Board to establish an affirmative defense to any charge that the retail permit holder has violated Ark. Code Ann. & 5-27-227(a):

12.5 Affirmative Defenses

13.1 Maintaining Adequate Funding In order to maintain adequate funding within the Tobacco Control Board to provide all necessary copying and miscellaneous legal costs, and to ensure the maintenance of Regulation Books in sufficient quantities within existing budgetary constraints, it is necessary that a fee be charged for Regulation Books. Further, it is necessary that a Tobacco Control Board Fund be established into which the fees charged for the books will be deposited. These revenues may be used for the purpose of printing additional books, official publications, documents, pleadings, or postage costs, as well as for paying any necessary filing fees or costs on any court appeals filed by the Tobacco Control Board.

13.2 Charge for Rules & Regulations Book A fee of ten dollars ($10.00) shall be charged for each Regulation Book, and such revenues shall be deposited in the Special Tobacco Control Board Fund, to be established pursuant to this Regulation, and shall be used for the purposes stated in Section 13.1, as such payment is deemed necessary and proper by the Director.

13.3 Charge for Copies Made - The Tobacco Control Board shall be entitled to recover forty cents ($.40) per page for each copy of any files, records, or transcripts. Any copies of Tobacco Control Board files, records, or transcripts shall be paid for at the rates noted above. All monies received by the Tobacco Control Board pursuant to the above provisions shall be deposited to the special Tobacco Control Board Fund.

14.1 Due Date for Payment of Fines (Accepted Offers of Settlement) Fines issued to and accepted by a permit holder or other person or entity shall be paid no later than forty-five (45) days from the date the Board approves said acceptance unless other written arrangements are made and approved by the Director.

14.2 Due Date for Payment of Fines (Hearings or Defaults) Fines issued to a permit holder or other person or entity after a full hearing or a finding that said permit holder or other person or entity is in default shall be paid no later than fifteen (15) days after said permit holder's or other person or entity's time for filing an appeal has run.

14.3 Penalty for Non-Payment (Permit Holders) If a permit holder fails to pay their fine when due and has failed to file a timely appeal to Circuit Court, the Director may immediately and without further notice temporarily suspend the permit holder's retail, vending or wholesale cigarette and tobacco permit until a hearing is held to show cause why the permit holder should not be found in contempt of the Board's Orders and their suspension continued for a period of time determined by the board, be fined up to $1000.00, have their permit suspended or revoked or any combination thereof.

14.4 Penalty for Non-Payment (Non-Permit Holders) If a person or entity other than a permit holder fails to pay their fine when due and has failed to file a timely appeal to Circuit Court, the Director may immediately and without further notice confiscate or seal any and all cigarettes and other tobacco products on said person or entity's business premises until a hearing is held to show cause why the person or entity should not be found in contempt of the Board's Orders and their confiscated inventory be destroyed, be fined up to $1000.00 or any combination thereof.

15.1 Sales Below Cost Prohibited; Exceptions; Purpose of Regulations.

The Arkansas Tobacco Control Board has been charged with the enforcement of the Unfair Cigarette Sales Act. & 4-75-701, et seq. This amendment to Regulation 15 is adopted to reconcile language of the current rule with changes brought about in the 2003 legislative session by Act 627 of 2003 and recent court decisions with respect to the Unfair Cigarette Sales Act. This rule establishes the methodology by which the Board will review applications to sell cigarettes at less than the presumptive cost of doing business set by the legislature in Act 627 of 2003. An additional purpose of the rule is to correct typographical errors and repeal the current cost-survey rules.

15.2 Definitions. In this regulation:

15.3 Procedure for Establishing Proof of a Lower Cost of Doing Business.

15.4 Coupons and Manufacturer Promotional Allowances.

15.5 Sales to Meet Lawful Competition. A wholesaler or retailer who has not been approved for a lower cost of doing business may sell at a lower cost by meeting lawful competition pursuant to Ark. Code. Ann. & 4-75-704.

16.1 Issuance of Advisory Opinions. To the extent any Wholesaler or Retailer has questions concerning the price at which the Wholesaler or Retailer may legally sell cigarettes under Ark. Code Ann. && 4-75-701 et seq. or whether an act constitutes a Rebate or Concession, the Wholesaler or Retailer may submit a written request to the Director for an advisory opinion. The written request should include a recitation of all facts relevant to the subject matter of the inquiry. The Director shall present the written request to the Board within forty-five (45) days of receipt thereof, unless good cause requires a longer period, along with the Director's proposed response to the request. The Board shall approve, modify or reject the Director's proposed response within thirty (30) days of receipt thereof from the Director, unless good cause requires a longer period. The Board may also issue advisory opinions on its own initiative if it determines that the subject of the opinion is of such public concern that an advisory opinion would benefit the public. Neither the Director nor the staff of the Board shall provide oral or written advisory opinions concerning the price at which the Wholesaler or Retailer may legally sell cigarettes under Ark. Code Ann. && 4-75-701 et seq. or whether an act constitutes a Rebate or Concession in any manner other than that authorized by these Rules.

16.2 Advisory Opinions Approved by the Board. No advisory opinion prepared under this Rule by the Director, the Board's staff or counsel, whether in draft or final form, shall be valid, official or of any effect unless and until it has been approved by a vote of a majority of a quorum of the Board. The Director's response to a request for an advisory opinion shall be prepared by the Director in consultation with the Board's legal counsel, as appropriate, and presented by the Director to the Board for consideration.

16.3 Form of Advisory Opinions. Advisory opinions shall set forth the facts upon which the opinion is based, and shall address only whether an intended, future course of conduct violates any law or rule within the jurisdiction of the Board. The opinion shall interpret the applicable law or rule as applied to the facts presented, and shall not address the legality of any past or present conduct. The identity of the requesting person shall be disclosed in the opinion. If the individual facts and circumstances provided are insufficient in detail to enable the Board to render an advisory opinion, the Board shall request supplementary information from the requesting individual to enable the Board to render such opinion. If such supplementary information is still insufficient or is not provided, the Board shall so state and shall not render an advisory opinion based upon what it considers to be insufficient detail.

16.4 Records. The Director shall provide a copy of each advisory opinion to the requesting party and to each member of the Board. The Director shall keep the original opinion in a permanent file maintained for that purpose, along with a copy of the original request for the advisory opinion and any information or documents provided to the Board by the requesting party. Copies of all documents considered by the Board, the staff or counsel in the drafting or rendering of an advisory opinion shall be retained by the Director and kept in the file for that particular advisory opinion. All files maintained for advisory opinions issued by the Board shall be made available for public inspection upon request, subject to the protections provided by the Arkansas Freedom of Information Act, Ark. Code Ann. & 25-19-105(b)(9)(A).

16.5 Effect of Opinions. The Board may reconsider, withdraw, or amend prior opinions upon request of a citizen, or on its own motion, by a majority vote of a quorum of the Board. In such event, written notice of the change shall be mailed to the original requesting party at the last address for that party provided to the Board.

17.1 Savings Clause. If any provision of these regulations should be held invalid for any reason, the remaining provisions of these regulations shall not be affected thereby and shall remain in full force and effect.

18.1 Effective Date. These Rules and Regulations of the Tobacco Control Board shall become effective _______________________, 2005.

19.1 Modification of These Rules. These Rules and Regulations may be modified or changed from time to time in accordance with the Administrative Procedures Act.