In 1999, the Maryland General Assembly enacted the Tobacco Product Manufacturers Escrow Act (Escrow Act), Maryland Code Annotated Business Regulations Article Bus. Reg. § 16-401 et seq. Under the Escrow Act, a tobacco product manufacturer must either a) become a "Participating Manufacturer" or "PM" by joining the MSA and generally comply with its financial obligations, or b) establish an escrow account as a "Nonparticipating Manufacturer" or "NPM," and pay into it pursuant to Bus. Reg. § 16-403(a)(2). Under the Escrow Act, NPMs must establish a "qualified escrow account," meeting the requirements of Bus. Reg. § 16-402(g), and obtain approval from the Attorney General of the escrow account's governing agreement. Maryland has a model escrow agreement to assist NPMs with properly establishing their escrow.
All NPMs that sold cigarettes or ‘roll-your-own’ tobacco in Maryland during 2022 are required to deposit the required amount by April 15, 2023. NPMs must also certify that they have complied with the Escrow Act and deposited the appropriate amount into escrow for all sales during the prior year by submitting a 2022 Certificate of Compliance to the Office of the Attorney General.
A tobacco product manufacturer that sells its products in Maryland and fails to either join the MSA or comply with the escrow provisions is subject to litigation and civil penalties. The penalties to which tobacco product manufacturers may be subject are set forth in Bus. Reg. § 16-403(c)(3)-(6) and include a prohibition on the sale of cigarettes and "roll-your-own" tobacco to consumers within Maryland, whether directly or through a distributor, retailer or similar intermediary or intermediaries, for a period of up to two years, as well as fines of up to 300% of the original amount improperly withheld from escrow.
All Nonparticipating Manufacturers that wish their brands to be certified for inclusion on Maryland's Tobacco Directory on or after April 30, 2017- including those manufacturers submitting annual certifications for 2017- will be required to submit a properly executed copy of the new model escrow agreement found here. Effective April 30, 2017, no request for certification or re-certification by any Nonparticipating Manufacturer will be accepted without the new model escrow agreement.