Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs, to which was referred H.B. No. 518 entitled:

beg leave to report as follows:

The purpose of this bill is to further restrict the importation of cigarettes that are manufactured outside of the United States that bear the registered United States trademark of a Master Settlement Agreement participant and are not intended for sale in the United States by designating as illegal any package of cigarettes that:

This bill also makes it a criminal offense to affix cigarette stamps to the packages of cigarettes that are illegal or altered.

The Department of the Attorney General's submitted testimony in support of this bill. The Tax Foundation of Hawaii submitted comments on this bill.

Your Committees find that this bill is necessary to assure compliance with and enforcement of the prohibition of "gray market" cigarettes.

Your Committees further find that the importation of "gray market" cigarettes requires a sophisticated criminal enterprise that has developed a distribution system to funnel the contraband into the community under the guise of a legitimate stamped product, and must be punished appropriately as a class B felony.

Your Committees have amended this bill by making technical, nonsubstantive amendments for purposes of style, clarity, and consistency.

As affirmed by the records of votes of the members of your Committees on Consumer Protection and Commerce and Judiciary and Hawaiian Affairs that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 518, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 518, H.D. 1, and be placed on the calendar for Third Reading.