MI SB0472

Tobacco product manufacturers selling cigarettes in Michigan must either become participating manufacturers under the Master Settlement Agreement or place funds into a qualified escrow account.

Non-participating manufacturers must deposit specified amounts per cigarette unit sold, ranging from $0.0094241 per unit in 1999 to $0.0188482 per unit from 2007 onward, adjusted annually for inflation.

Escrow deposits are made quarterly with certifications filed to the Department of Treasury, and an annual reconciliation deposit is due by April 15 of the following year.

Escrowed funds may be released to pay judgments or settlements on tobacco-related claims, or may revert to the manufacturer 25 years after deposit; manufacturers may also assign their interest in escrow funds to the state.

Manufacturers failing to make required deposits face civil penalties up to 5% per day of the withheld amount (capped at 100% of original amount), or up to 15% per day for knowing violations (capped at 300%), and may be prohibited from selling cigarettes in Michigan for up to 2 years for a second knowing violation.