TOPEKA – (August 31, 2018) – Kansas Attorney General Derek Schmidt last week filed a lawsuit against a Florida-based tobacco manufacturer for failing to comply with Kansas law when selling tobacco products in the state.
Schmidt filed the case in Shawnee County District Court alleging that RG Logistics, Inc., of Medley, Florida, violated provisions of Kansas law that place certain obligations on tobacco manufacturers selling products in the state. In particular, the company is accused of failing to make adequate payments to a qualified escrow fund for its 2017 sales.
Kansas Department of Revenue records indicated that the company sold at least 287,000 cigarettes in the State in the third quarter of 2017, which would have required the company to make a $9,704.08 payment to a qualified escrow fund. Because the company failed to do so, the attorney general’s office has also taken administrative action to remove the company from its directory of manufacturers that are allowed to sell tobacco products in Kansas. The lawsuit filed last week demands payment of the improperly withheld escrow funds, as well as a civil penalty.
Under the Requirements for the Sale of Cigarettes Act, K.S.A. 50-6a01, tobacco manufacturers that did not participate in the Master Settlement Agreement, which provides annual settlement payments to the State of Kansas, are known as “non-participating manufacturers.” The act requires non-participating manufacturers to make payments into an escrow fund to pay judgments or settlement of claims that may be brought against the manufacturer. The amount of the escrow payment is based on the number of units sold in the state by the manufacturer.
The terms of the Master Settlement Agreement are enforced by the attorney general’s Tobacco Enforcement Unit. A copy of the lawsuit is available at http://bit.ly/2NBCl6u.