Maryland House Bill HB870

Maryland 2025 Regular Session

• Introduced: 1/30/25
• Refer: 1/30/25

Caption

Tobacco Product Manufacturers - Escrow Act - Alterations

Summary

HB870 revises Maryland’s Tobacco Product Manufacturers Escrow Act by replacing, for certain nonparticipating tobacco product manufacturers, the existing annual escrow deposit requirement with an annual “equity fee” beginning in 2026. Under the bill, manufacturers that sell cigarettes in Maryland would still have to either participate in the Master Settlement Agreement or comply with the state’s alternative payment regime, but instead of placing specified amounts into a qualified escrow fund for sales after 2025, they would pay the Attorney General a per-unit fee adjusted for inflation. The bill also preserves the existing escrow framework for sales through 2025. The bill further updates the annual certification requirements for tobacco product manufacturers. Manufacturers must certify to the Attorney General by April 30 each year whether they are participating manufacturers or are in compliance with the Equity Act, and nonparticipating manufacturers must disclose either their escrow compliance for pre-2026 sales or their equity fee payments for later sales. The Attorney General is authorized to enforce the new requirements through civil actions, recover attorney’s fees and costs, deposit recovered funds into the Cigarette Restitution Fund, and adopt regulations to implement the subtitle.

Impact

HB870 would amend Title 16 of the Business Regulation Article by renaming the Escrow Act as the Tobacco Product Manufacturers Equity Act and changing the compliance mechanism for nonparticipating manufacturers beginning in 2026 from escrow deposits to direct equity fee payments. It would also revise directory, certification, enforcement, and penalty provisions to account for either escrow deposits or equity fee payments, while keeping the state’s existing authority to bar noncompliant manufacturers and brand families from the directory and from cigarette sales in Maryland. The bill directs equity fee revenue and certain enforcement recoveries to the Cigarette Restitution Fund, affecting how tobacco-related payments are collected and used under state law.

Sentiment

Based on the bill text, the measure is framed as a public-health and fiscal policy update intended to ensure tobacco manufacturers bear the costs associated with smoking-related harms. The findings emphasize that cigarette smoking imposes serious health and financial burdens on the state and that the new fee structure is meant to internalize those costs and discourage smoking, especially among youth. No committee transcripts or recorded votes were provided, so there is no documented public debate or vote history to indicate broader legislative sentiment beyond the bill’s stated policy rationale.

Contention

The main policy issue embedded in the bill is the shift from escrow deposits to an equity fee for nonparticipating manufacturers after 2025. That change could be contentious because it alters the financial and legal structure governing tobacco manufacturers, including how funds are held, when they are paid, and how they are challenged or recovered. The bill also includes a nonseverability clause tied to the Master Settlement Agreement’s status as a qualifying statute, suggesting concern that the new fee structure could affect the state’s settlement framework. Potentially affected parties include tobacco product manufacturers, wholesalers, the Attorney General, and the Cigarette Restitution Fund.