1999, the Maryland General Assembly enacted the Tobacco Product
Manufacturers Escrow Act (Escrow Act), Maryland Code Annotated Business
Regulations Article Bus.
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.
must also certify to the Attorney General by April 15 of each year that they
have complied with the Escrow Act by depositing the appropriate amount into
escrow for all sales during the prior year. NPMs that sold cigarettes or
"roll-your-own" tobacco in Maryland during 2016 are required to submit a 2016 Certificate of Compliance to
the Attorney General by April 15, 2016.
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
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.
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