Non-participating tobacco manufacturers in Georgia will soon need to post a surety bond. House Bill 899, passed in April, takes effect on July 1, 2016.
Non-participating tobacco manufacturers are those that do not sign the Master Settlement Agreement. The Agreement regulates how tobacco manufacturers advertise, market and promote their products. It also requires manufacturers to make annual payments to the states that take part in the Agreement for the costs of medical care resulting from tobacco use. Those funds are also used to fund anti-smoking advocacy group Truth Initiative.
Tobacco manufacturers in Georgia that do not sign the Agreement, called non-participating manufacturers, must pay into an escrow account every quarter. The amount manufacturers pay into the account depends on the number of units (individual cigarettes) sold, but the account must maintain a balance of at least $1 billion. The current amount manufacturers must pay quarterly is $0.0188482 per unit sold. The money is used to pay judgments or settlements brought against the company.
The surety bond required must be either $50,000 or the highest amount of escrow owed in Georgia by the nonparticipating manufacturer or its predecessor in the last 12 quarters. The bond is in place to cover delinquent escrow account payments. The state can execute upon the bond 15 days after the escrow payment’s due date.