                                 CODE OF VIRGINIA

REQUIREMENTS ON TOBACCO PRODUCT MANUFACTURERS; ESCROW OF FUNDS; CIVIL PENALTIES
FOR VIOLATIONS (§ 3.2-4201)

A. Any tobacco product manufacturer selling cigarettes to consumers within the
Commonwealth, whether directly or through a distributor, retailer or similar
intermediary or intermediaries, after July 1, 1999, shall do one of the
following:

   1. 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

   2. Place into a qualified escrow fund by April 15 of the year following the
   year in question the following amounts (as such amounts are adjusted for
   inflation):
   				Year
   				Amount per unit sold in such year (except for 1999, the amount per unit
   sold after July 1, 1999)
   				1999
   				$.0094241
   				2000
   				$.0104712
   				each of 2001 and 2002
   				$.0136125
   				each of 2003 through 2006
   				$.0167539
   				each of 2007 and each year thereafter
   				$.0188482

B. A tobacco product manufacturer that places funds into escrow pursuant to
subdivision A 2 shall receive the interest or other appreciation on such funds
as earned. Such funds themselves shall be released from escrow only under the
following circumstances:

   1. To pay a judgment or settlement on any released claim brought against such
   tobacco product manufacturer by the Commonwealth or any releasing party
   located or residing in the Commonwealth. Funds shall be released from escrow
   under this subdivision (i) in the order in which they were placed into escrow
   and (ii) only to the extent and at the time necessary to make payments
   required under such judgment or settlement;

   2. To the extent that a tobacco product manufacturer establishes that the
   amount it was required to place into escrow on account of units sold in this
   Commonwealth in a particular year was greater than the Master Settlement
   Agreement payments, as determined pursuant to section IX(i) of that Agreement,
   including after final determination of all adjustments, that such 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 back to such tobacco product manufacturer; or

   3. To the extent not released from escrow under subdivisions 1 or 2, funds
   shall be released from escrow and revert back to such tobacco product
   manufacturer 25 years after the date on which they were placed into escrow.

C. Each tobacco product manufacturer that elects to place funds into escrow
pursuant to subdivision A 2 shall annually certify to the Attorney General that
it is in compliance with that subdivision. The Attorney General may bring a
civil action on behalf of the Commonwealth against any tobacco product
manufacturer that fails to place into escrow the funds required under this
section. Any tobacco product manufacturer that fails in any year to place into
escrow the funds required under this section shall:

   1. Be required within 15 days to place such funds into escrow as shall bring
   it into compliance with this section. The court, upon a finding of a violation
   of this subsection, may impose a civil penalty in an amount not to exceed five
   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;

   2. 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 section.
   The court, upon a finding of a knowing violation of this subsection, 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; and

   3. In the case of a second knowing violation, be prohibited from selling
   cigarettes to consumers within the Commonwealth (whether directly or through a
   distributor, retailer or similar intermediary) for a period not to exceed two
   years.
   				Each failure to make an annual deposit required under this section shall
   constitute a separate violation.

HISTORY: 1999, cc. 714, 754, § 3.1-336.2; 2004, c. 1029; 2005, cc. 4, 870;
2008, c. 860.