                                 CODE OF VIRGINIA

BOND REQUIREMENT FOR NEWLY QUALIFIED AND ELEVATED-RISK NONPARTICIPATING
MANUFACTURERS (§ 3.2-4206.1)

A. Notwithstanding any other provision of law, if a newly qualified
nonparticipating manufacturer is to be listed in the Virginia Tobacco Directory
(the Directory), or if the Attorney General reasonably determines that any
nonparticipating manufacturer who has filed a certification pursuant to &#xA7;
3.2-4205 poses an elevated risk for noncompliance with this article or with
Article 1 (&#xA7; 3.2-4200 et seq.), neither such nonparticipating manufacturer
nor any of its brand families shall be included in the Directory unless and
until such nonparticipating manufacturer, or its United States importer that
undertakes joint and several liability for the manufacturer&#8217;s performance
in accordance with &#xA7; 3.2-4208.1, has posted a bond in accordance with this
section.

B. The bond shall be posted by corporate surety located within the United States
in an amount equal to the greater of $50,000 or the amount of escrow the
manufacturer in either its current or predecessor form was required to deposit
as a result of its highest calendar year&#8217;s sales in Virginia. The bond
shall be written in favor of the Commonwealth of Virginia and shall be
conditioned on the performance by the nonparticipating manufacturer, or its
United States importer that undertakes joint and several liability for the
manufacturer&#8217;s performance in accordance with subsection A of &#xA7;
3.2-4201, of all of its duties and obligations under this article and Article 1
(&#xA7; 3.2-4200 et seq.) during the year in which the certification is filed
and the next succeeding calendar year.

C. A nonparticipating manufacturer may be deemed to pose an elevated risk for
noncompliance with this article or Article 1 (§ 3.2-4200 et seq.) if:

   1. The nonparticipating manufacturer or any affiliate thereof has underpaid an
   escrow obligation with respect to any state at any time during the calendar
   year or within the past three calendar years unless (i) the manufacturer did
   not make underpayment knowingly or recklessly and the manufacturer promptly
   cured the underpayment within 180 days of notice of it, or (ii) the
   underpayment or lack of payment is the subject of a good faith dispute as
   documented to the satisfaction of the Attorney General and the underpayment is
   cured within 180 days of entry of a final order establishing the amount of the
   required escrow payment;

   2. Any state has removed the manufacturer or its brands or brand families or
   an affiliate or any of the affiliate&#8217;s brands or brand families from the
   state&#8217;s tobacco directory for noncompliance with the state law at any
   time during the calendar year or within the past three calendar years; or

   3. Any state has litigation pending against, or an unsatisfied judgment
   against, the manufacturer or any affiliate thereof for escrow or for
   penalties, costs, or attorney fees related to noncompliance with state escrow
   laws.

D. As used in this section &#8220;newly qualified nonparticipating
manufacturer&#8221; means a nonparticipating manufacturer that has not
previously been listed in the Virginia Tobacco Directory. Such manufacturers may
be required to post a bond in accordance with this section for the first three
years of their listing, or longer if they have been determined to pose an
elevated risk for noncompliance.

HISTORY: 2008, c. 758, § 3.1-336.5:1; 2011, c. 297.