STAND. COM. REP. NO. 2269

Honolulu, Hawaii

RE: S.B. No. 3044

S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Thirty-First State Legislature

Regular Session of 2022

State of Hawaii

Sir:

Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 3044 entitled:

"A BILL FOR AN ACT RELATING TO TOBACCO MANUFACTURER QUALIFIED ESCROW FUNDS,"

begs leave to report as follows:

The purpose and intent of this measure is to:

(1) Provide a mechanism to assign non-participating tobacco manufacturers' qualified escrow account balances to the State; and

(2) Provide a mechanism for the financial institution acting as the escrow agent of the qualified escrow account to petition the courts to authorize transfer of funds to the State when the qualified escrow account is abandoned.

Your Committee received testimony in support of this measure from the Department of the Attorney General. Your Committee received testimony in opposition to this measure from one individual.

Your Committee finds that Hawaii and forty-five other states have entered into a Master Settlement Agreement (MSA) with four of the largest tobacco manufacturers for smoking-related claims, which stipulates that participating tobacco companies provide annual payments to the State. Tobacco product manufacturers that were not among the original four parties to the MSA have the option of making certain payments into a qualified escrow account based on their cigarette sales in the State. However, existing law is silent as to how a tobacco product manufacturer that decides to no longer do business in the State should close the account, or what process is available for financial institutions when an escrow account is abandoned. This measure establishes a mechanism to allow the State to accept an assignment of the interest in the escrow account and allow for financial institutions maintaining a qualified account that has been abandoned to petition a circuit court for an order transferring the funds to the State to reduce unnecessary administrative monitoring.

Your Committee has amended this measure by making technical, nonsubstantive amendments for the purposes of clarity and consistency.

As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3044, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3044, S.D. 1, and be referred to your Committees on Judiciary and Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,

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ROSALYN H. BAKER, Chair