SB-0930, As Passed Senate, February 22, 2012

SUBSTITUTE FOR

SENATE BILL NO. 930

A bill to amend 1993 PA 327, entitled

"Tobacco products tax act,"

by amending the title and sections 2, 5a, 6a, 7, and 12 (MCL

205.422, 205.425a, 205.426a, 205.427, and 205.432), the title as

amended by 2003 PA 285, section 2 as amended by 2005 PA 238,

sections 5a and 6a as added by 1997 PA 187, section 7 as amended by

2008 PA 458, and section 12 as amended by 2004 PA 164.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

An act to provide for a tax upon the sale and distribution of

tobacco products; to regulate and license manufacturers,

wholesalers, secondary wholesalers, vending machine operators,

unclassified acquirers, transportation companies, transporters, and

retailers of tobacco products; to prescribe the powers and duties

of the revenue division and the department of treasury in regard to

tobacco products; to provide for the administration, collection,

and disposition of the tax; to levy an assessment; to provide for

the administration, collection, defense, and disposition of the

assessment; to provide for the enforcement of this act; to provide

for the appointment of special investigators as peace officers for

the enforcement of this act; to prescribe penalties and provide

remedies for the violation of this act; to make and supplement

appropriations; and to repeal acts and parts of acts.

Sec. 2. As used in this act:

(a) "Cigarette" means a roll for smoking made wholly or in

part of tobacco, irrespective of size or shape and irrespective of

the tobacco being flavored, adulterated, or mixed with any other

ingredient, which roll has a wrapper or cover made of paper or any

other material. Cigarette does not include cigars.

(b) "Cigarette making machine" means any machine or other

mechanical device which meets all of the following criteria:

(i) Is capable of being loaded with loose tobacco, cigarette

tubes or cigarette papers, and any other components related to the

production of cigarettes, including, but not limited to, cigarette

filters.

(ii) Is designed to automatically or mechanically produce,

roll, fill, dispense, or otherwise generate cigarettes.

(iii) Is commercial-grade or otherwise designed or suitable for

commercial use.

(iv) Is designed to be powered or otherwise operated by a main

or primary power source other than human power.

(d) ~~(c)~~ "Counterfeit cigarette" means a cigarette in an

individual package of cigarettes or other container with a false

manufacturing label or a cigarette in an individual package of

cigarettes or other container with a counterfeit stamp.

(e) ~~(d)~~ "Counterfeit cigarette paper" means a cigarette paper

with a false manufacturing label or that has not been printed,

manufactured, or made by authority of the trademark owner.

(f) ~~(e)~~ "Counterfeit stamp" means any stamp, label, or print,

indicium, or character, that evidences, or purports to evidence,

the payment of any tax levied under this act and that has not been

printed, manufactured, or made by authority of the department as

provided in this act and has not been issued, sold, or circulated

by the department.

(g) ~~(f)~~ "Department" means the department of treasury.

(h) ~~(g)~~ "Financially sound" means a determination by the

department that the wholesaler or unclassified acquirer is able to

pay for its stamps in the ordinary course of business based on

criteria including, but not limited to, all of the following:

(i) Past filing and payment history with the department.

(ii) Outstanding liabilities.

(iii) Review of current financial statements including, but not

limited to, balance sheets and income statements.

(iv) Duration that the wholesaler or unclassified acquirer has

been licensed under this act.

(i) ~~(h)~~ "Gray market cigarette" means any cigarette the

package of which bears any statement, label, stamp, sticker, or

notice indicating that the manufacturer did not intend the

cigarettes to be sold, distributed, or used in the United States,

including, but not limited to, a label stating "For Export Only",

"U.S. Tax Exempt", "For Use Outside U.S.", or similar wording.

(j) ~~(i)~~ "Gray market cigarette paper" means any cigarette

paper the package of which bears any statement, label, stamp,

sticker, or notice indicating that the manufacturer did not intend

the cigarette papers to be sold, distributed, or used in the United

States, including, but not limited to, a label stating "For Export

Only", "U.S. Tax Exempt", "For Use Outside U.S.", "For Use in

______________ (another country) Only", or similar wording.

(k) ~~(j)~~ "Individual package" means an individual packet or

pack used to contain or to convey cigarettes to the consumer.

Individual package does not include cartons, cases, or shipping or

storage containers that contain smaller packaging units of

cigarettes.

(l) ~~(k)~~ "Licensee" means a person licensed under this act.

(m) (l) "Manufacturer" means a any of the following:

(i) A person who manufactures or produces a tobacco product.

(ii) A person who operates or who permits any other person to

operate a cigarette making machine in this state for the purpose of

producing, filling, rolling, dispensing, or otherwise generating

cigarettes. A person who is a manufacturer under this subparagraph

shall constitute a nonparticipating manufacturer for purposes of

sections 6c and 6d. A person who operates or otherwise uses a

machine or other mechanical device, other than a cigarette making

machine, to produce, roll, fill, dispense, or otherwise generate

cigarettes shall not be considered a manufacturer as long as the

cigarettes are produced or otherwise generated in that person's

dwelling and for that person's self-consumption. For purposes of

this act, "self-consumption" means production for personal

consumption or use and not for sale, resale, or any other profit-

making endeavor.

(n) ~~(m)~~ "Noncigarette smoking tobacco" means tobacco sold in

loose or bulk form that is intended for consumption by smoking and

includes roll-your-own cigarette tobacco.

(o) ~~(n)~~ "Person" means an individual, partnership, fiduciary,

association, limited liability company, corporation, or other legal

entity.

(p) ~~(o)~~ "Place of business" means a place where a tobacco

product is sold or where a tobacco product is brought or kept for

the purpose of sale or consumption, including a vessel, airplane,

train, or vending machine.

(q) ~~(p)~~ "Retailer" means a person other than a transportation

company who operates a place of business for the purpose of making

sales of a tobacco product at retail.

(r) ~~(q)~~ "Sale" means a transaction by which the ownership of

tangible personal property is transferred for consideration and

applies also to use, gifts, exchanges, barter, and theft.

(s) ~~(r)~~ "Secondary wholesaler" means a person who sells a

tobacco product for resale, who purchases a tobacco product from a

wholesaler or unclassified acquirer licensed under this act, and

who maintains an established place of business in this state where

a substantial portion of the business is the sale of tobacco

products and related merchandise at wholesale, and where at all

times a substantial stock of tobacco products and related

merchandise is available to retailers for resale.

(t) ~~(s)~~ "Smokeless tobacco" means snuff, chewing tobacco, and

any other tobacco that is intended to be consumed by means other

than smoking.

(u) ~~(t)~~ "Stamp" means a distinctive character, indication, or

mark, as determined by the department, attached or affixed to an

individual package of cigarettes by mechanical device or other

means authorized by the department to indicate that the tax imposed

under this act has been paid.

(v) ~~(u)~~ "Stamping agent" means a wholesaler or unclassified

acquirer other than a manufacturer who is licensed and authorized

by the department to affix stamps to individual packages of

cigarettes on behalf of themselves and other wholesalers or

unclassified acquirers other than manufacturers.

(w) ~~(v)~~ "Tobacco product" means cigarettes, cigars,

noncigarette smoking tobacco, or smokeless tobacco.

(x) ~~(w)~~ "Transportation company" means a person operating, or

supplying to common carriers, cars, boats, or other vehicles for

the transportation or accommodation of passengers and engaged in

the sale of a tobacco product at retail.

(y) ~~(x)~~ "Transporter" means a person importing or transporting

into this state, or transporting in this state, a tobacco product

obtained from a source located outside this state, or from any

person not duly licensed under this act. Transporter does not

include an interstate commerce carrier licensed by the interstate

commerce commission to carry commodities in interstate commerce, or

a licensee maintaining a warehouse or place of business outside of

this state if the warehouse or place of business is licensed under

this act.

(z) ~~(y)~~ "Unclassified acquirer" means a person, except a

transportation company or a purchaser at retail from a retailer

licensed under the general sales tax act, 1933 PA 167, MCL 205.51

to 205.78, who imports or acquires a tobacco product from a source

other than a wholesaler or secondary wholesaler licensed under this

act for use, sale, or distribution. Unclassified acquirer also

means a person who receives cigars, noncigarette smoking tobacco,

or smokeless tobacco directly from a manufacturer licensed under

this act or from another source outside this state, which source is

not licensed under this act. An unclassified acquirer does not

include a wholesaler.

(aa) ~~(z)~~ "Vending machine operator" means a person who

operates 1 or more vending machines for the sale of a tobacco

product and who purchases a tobacco product from a manufacturer,

licensed wholesaler, or secondary wholesaler.

(bb) ~~(aa)~~ "Wholesale price" means the actual price paid for a

tobacco product, including any tax, by a wholesaler or unclassified

acquirer to a manufacturer, excluding any discounts or reductions.

(cc) ~~(bb)~~ "Wholesaler" means a person who purchases all or

part of his or her tobacco products from a manufacturer, who sells

75% or more of those tobacco products to others for resale, and who

maintains an established business where substantially all of the

business is the sale of tobacco products or cigarettes and related

merchandise at wholesale and where at all times a substantial stock

of tobacco products and related merchandise is available to

retailers for resale. Wholesaler includes a chain of stores

retailing a tobacco product to the consumer if 75% of its stock of

tobacco products is purchased directly from the manufacturer.

Sec. 5a. (1) The department shall procure stamps as needed in

the various designs, denominations, and forms necessary as

determined by the department. The department shall pay for the

stamps.

(2) Not later than 45 days after the effective date of the

amendatory act that added this subsection, the department shall

issue a request for proposal to acquire and use digital stamps that

contain a unique nonrepeating code that can be read by a device

that identifies the taxed product and also contain other security

and enforcement features as determined by the department. The

request for proposal shall include a provision that requires the

successful bidder on the proposal to share digital stamp technology

so that handheld devices, including, but not limited to,

smartphones, can be readily utilized in furtherance of the

implementation of the use of digital stamps and so that the

technology and equipment used by the stamping agents to affix the

stamp to the product can be supplied, as may be permitted by the

department, by the successful bidder on the proposal or by any

other providers. The request for proposal shall also include a

provision permitting the department to manage or restrict access

rights to all or part of the information contained within, or

accessible from, the stamps and a provision requiring the

successful bidder on the proposal to guarantee that the stamps will

be designed and manufactured to ensure that stamps can be affixed

to individual packages of cigarettes in accordance with the

requirements under section 6a(2).

Sec. 6a. (1) ~~Beginning April 15, 1998, a~~ A wholesaler or

unclassified acquirer other than a manufacturer may apply to the

department for stamps to affix as provided in this act. The

department may prescribe the method of shipment of the stamps. The

department shall keep a record of all stamps disbursed, name of

wholesaler or unclassified acquirer, and date of disbursement. The

department may release the identity of the wholesaler or

unclassified acquirer to whom specific stamps were disbursed to

state or local police agencies.

(2) ~~Beginning May 1, 1998, before~~ Before delivery, sale, or

transfer to any person in this state, a wholesaler or an

unclassified acquirer shall place or cause to be placed on the

bottom of each individual package of cigarettes to be sold within

this state a stamp provided by the department. Stamps shall be

firmly affixed in such a manner that the stamps cannot be removed

without being mutilated or destroyed. A stamp shall be affixed to

each individual package in an aggregate denomination equal to the

amount of the tax upon the contents of the individual package of

cigarettes. A Except as otherwise provided in this subsection, a

stamp is considered affixed if more than 50% of the stamp is

affixed to the individual package, as determined by the department.

Upon implementation of the digital stamps as provided in section

5a(2), a stamp is considered affixed if 90% or more of the stamp is

affixed to the individual package.

(3) ~~Beginning May 1, 1998, a~~ A retailer or person licensed

under this act, other than a wholesaler or unclassified acquirer or

a person acting as a transporter for a wholesaler or unclassified

acquirer, shall not acquire for resale an individual package of

cigarettes or a cigarette from an individual package unless that

individual package of cigarettes has affixed to it a stamp as

provided in this act.

(4) ~~Beginning September 1, 1998, a~~ A retailer or vending

machine operator shall not sell or offer for sale an individual

package of cigarettes to the general public that does not have

affixed the stamp required by this act. ~~Beginning September 1,~~

~~1998, cigarettes~~ Cigarettes without stamps may not be placed or

stored in a vending machine.

(5) The department or its authorized agents may inspect or

conduct an inventory of a wholesaler's or unclassified acquirer's

stock of cigarettes, tobacco products other than cigarettes, and

stamps during regular business hours and inspect the related

statements and other records required in section 6.

(6) The department or its authorized agents may inspect the

operations of a secondary wholesaler, vending machine operator, or

retailer, or the contents of a specific vending machine, during

regular business hours. This inspection shall include inspection of

all statements and other records required by section 6 of this act,

of packages of cigarettes and tobacco products other than

cigarettes, and of the contents of cartons and shipping or storage

containers to ascertain that all individual packages of cigarettes

have an affixed stamp of proper denomination as required by this

act. This inspection may also verify that all the stamps were

produced under the authority of the department.

(7) A person shall not prevent or hinder the department or its

authorized agents from making a full inspection of any place or

vending machine where cigarettes or tobacco products other than

cigarettes subject to the tax under this act are sold or stored, or

prevent or hinder the full inspection of invoices, books, records,

or other papers required to be kept by this act.

(8) The department may require wholesalers and unclassified

acquirers to exchange unaffixed stamps with the department as the

department considers necessary. The department may require

wholesalers, unclassified acquirers, secondary wholesalers, vending

machine operators and retailers to discontinue offering for sale

any unsold individual packages of cigarettes bearing a prior

version of the stamp that the department has withdrawn from

circulation. The department may set a reasonable timeline after

which the prior version of the stamp may no longer be offered for

sale and the new version of the stamp is required. A secondary

wholesaler, retailer, or vending machine operator may return

cigarette packages bearing discontinued stamps to a wholesaler for

credit. A wholesaler or unclassified acquirer may take credit on

its tax returns for individual packages of cigarettes bearing

discontinued stamps that are returned to the manufacturer for

credit less the appropriate discount paid.

(9) Except as provided in subsection (10), a wholesaler or

unclassified acquirer shall not give, sell, or lend any unaffixed

stamps to another person and except as otherwise provided in this

act, a person shall not accept, purchase, or borrow any unaffixed

stamps from another person.

(10) Upon written authorization of the department, a

wholesaler or unclassified acquirer licensed under this act may

appoint a stamping agent to affix stamps to individual packages of

cigarettes.

(11) Stamps may only be affixed to an individual package of

cigarettes if the manufacturer of the cigarettes is identified on

the lists of participating manufacturers or nonparticipating

manufacturers maintained by the department pursuant to section

6c(8).

(12) The department of state police shall initiate inquiries

to or otherwise access data from the department to support or in

furtherance of its enforcement activities under this act.

Sec. 7. (1) Beginning May 1, 1994, a tax is levied on the sale

of tobacco products sold in this state as follows:

(a) Through July 31, 2002, for cigars, noncigarette smoking

tobacco, and smokeless tobacco, 16% of the wholesale price.

(b) For cigarettes, 37.5 mills per cigarette.

the tax levied in subdivision (b), an additional 15 mills per

cigarette.

(d) Beginning August 1, 2002, for cigarettes, in addition to

the tax levied in subdivisions (b) and (c), an additional 10 mills

per cigarette.

(e) Beginning July 1, 2004, for cigarettes, in addition to the

tax levied in subdivisions (b), (c), and (d), an additional 37.5

mills per cigarette.

(f) Beginning August 1, 2002 and through June 30, 2004, for

cigars, noncigarette smoking tobacco, and smokeless tobacco, 20% of

the wholesale price.

(g) Beginning July 1, 2004, for cigars, noncigarette smoking

tobacco, and smokeless tobacco, 32% of the wholesale price.

(2) On or before the twentieth day of each calendar month,

every licensee under section 3 other than a retailer, unclassified

acquirer licensed as a manufacturer, or vending machine operator

shall file a return with the department stating the wholesale price

of each tobacco product other than cigarettes purchased, the

quantity of cigarettes purchased, the wholesale price charged for

all tobacco products other than cigarettes sold, the number of

individual packages of cigarettes and the number of cigarettes in

those individual packages, and the number and denominations of

stamps affixed to individual packages of cigarettes sold by the

licensee for each place of business in the preceding calendar

month. The return shall also include the number and denomination of

unaffixed stamps in the possession of the licensee at the end of

the preceding calendar month. Wholesalers shall also report

accurate inventories of cigarettes, both stamped and unstamped at

the end of the preceding calendar month. Wholesalers and

unclassified acquirers shall also report accurate inventories of

affixed and unaffixed stamps by denomination at the beginning and

end of each calendar month and all stamps acquired during the

preceding calendar month. The return shall be signed under penalty

of perjury. The return shall be on a form prescribed by the

department and shall contain or be accompanied by any further

information the department requires. The department may also

require licensees to report cigarette acquisition, purchase, and

sales information in other formats and frequency.

(3) To cover the cost of expenses incurred in the

administration of this act, at the time of the filing of the

return, the licensee shall pay to the department the tax levied in

subsection (1) for tobacco products sold during the calendar month

covered by the return, less compensation equal to ~~both of~~ the

following:

(a) One percent of the total amount of the tax due on tobacco

products sold other than cigarettes.

(b) Through July 31, 2002, 1.25% of the total amount of the

tax due on cigarettes sold.

tax due on cigarettes sold and, beginning on the effective date of

the amendatory act that added subdivision (e), for sales of untaxed

cigarettes to Indian tribes in this state, an amount equal to 1.5%

of the total amount of the tax due on those cigarettes sold as if

those cigarette sales were taxable sales under this act.

(d) Beginning on the first calendar month following the

implementation of the use of digital stamps as provided in section

5a(2), for licensees who are stamping agents, 0.5% of the total

amount of the tax due on cigarettes sold and, for sales of untaxed

cigarettes to Indian tribes in this state, 0.5% of the total amount

of the tax due on those cigarettes sold as if those cigarette sales

were taxable sales under this act, until the stamping agent is

compensated in an amount equal to the direct cost actually incurred

by the stamping agent for upgrades to technology and equipment,

excluding the equipment reimbursed under subdivision (e), that are

necessary to affix the digital stamp as determined by the

department.

(e) Beginning in the first calendar month following the

implementation of the use of digital stamps as provided in section

5a(2) and continuing for the immediately succeeding 17 months, for

licensees who are stamping agents, reimbursement of direct costs

actually incurred by the stamping agent, as determined by the

department, for the initial purchase of eligible equipment in an

amount equal to 5.55% of the total net purchase price of the

eligible equipment necessary to affix the digital stamp. The

reimbursement provided under this subdivision shall exclude

reimbursement for any costs for installation or for ongoing

maintenance related to eligible equipment. A stamping agent may

only receive reimbursement under this subdivision to the extent

that the eligible equipment purchased by the stamping agent does

not exceed the total number of the stamping agent's existing

equipment as certified by the stamping agent on a form prescribed

by the department.

(4) Every licensee and retailer who, on August 1, 2002, has on

hand for sale any cigarettes upon which a tax has been paid

pursuant to subsection (1)(b) shall file a complete inventory of

those cigarettes before September 1, 2002 and shall pay to the

department at the time of filing this inventory a tax equal to the

difference between the tax imposed in subsection (1)(b), (c), and

(d) and the tax that has been paid under subsection (1)(b). Every

licensee and retailer who, on August 1, 2002, has on hand for sale

any cigars, noncigarette smoking tobacco, or smokeless tobacco upon

which a tax has been paid pursuant to subsection (1)(a) shall file

a complete inventory of those cigars, noncigarette smoking tobacco,

and smokeless tobacco before September 1, 2002 and shall pay to the

department at the time of filing this inventory a tax equal to the

difference between the tax imposed in subsection (1)(f) and the tax

that has been paid under subsection (1)(a).

(5) Every licensee and retailer who, on July 1, 2004, has on

hand for sale any cigarettes upon which a tax has been paid

pursuant to subsection (1)(b), (c), and (d) shall file a complete

inventory of those cigarettes before August 1, 2004 and shall pay

to the department at the time of filing this inventory a tax equal

to the difference between the tax imposed in subsection (1)(b),

(c), (d), and (e) and the tax that has been paid under subsection

(1)(b), (c), and (d). Every licensee and retailer who, on July 1,

2004, has on hand for sale any cigars, noncigarette smoking

tobacco, or smokeless tobacco upon which a tax has been paid

pursuant to subsection (1)(f) shall file a complete inventory of

those cigars, noncigarette smoking tobacco, and smokeless tobacco

before August 1, 2004 and shall pay to the department at the time

of filing this inventory a tax equal to the difference between the

tax imposed in subsection (1)(g) and the tax that has been paid

under subsection (1)(f). The proceeds derived under this subsection

shall be credited to the medicaid benefits trust fund created under

section 5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

(6) The department may require the payment of the tax imposed

by this act upon the importation or acquisition of a tobacco

product. A tobacco product for which the tax under this act has

once been imposed and that has not been refunded if paid is not

subject upon a subsequent sale to the tax imposed by this act.

(7) An abatement or refund of the tax provided by this act may

be made by the department for causes the department considers

expedient. The department shall certify the amount and the state

treasurer shall pay that amount out of the proceeds of the tax.

(8) A person liable for the tax may reimburse itself by adding

to the price of the tobacco products an amount equal to the tax

levied under this act.

(9) A wholesaler, unclassified acquirer, or other person shall

not sell or transfer any unaffixed stamps acquired by the

wholesaler or unclassified acquirer from the department. A

wholesaler or unclassified acquirer who has any unaffixed stamps on

hand at the time its license is revoked or expires, or at the time

it discontinues the business of selling cigarettes, shall return

those stamps to the department. The department shall refund the

value of the stamps, less the appropriate discount paid.

(10) If the wholesaler or unclassified acquirer has unsalable

packs returned from a retailer, secondary wholesaler, vending

machine operator, wholesaler, or unclassified acquirer with stamps

affixed, the department shall refund the amount of the tax less the

appropriate discount paid. If the wholesaler or unclassified

acquirer has unaffixed unsalable stamps, the department shall

exchange with the wholesaler or unclassified acquirer new stamps in

the same quantity as the unaffixed unsalable stamps. An application

for refund of the tax shall be filed on a form prescribed by the

department for that purpose, within 4 years from the date the

stamps were originally acquired from the department. A wholesaler

or unclassified acquirer shall make available for inspection by the

department the unused or spoiled stamps and the stamps affixed to

unsalable individual packages of cigarettes. The department may, at

its own discretion, witness and certify the destruction of the

unused or spoiled stamps and unsalable individual packages of

cigarettes that are not returnable to the manufacturer. The

wholesaler or unclassified acquirer shall provide certification

from the manufacturer for any unsalable individual packages of

cigarettes that are returned to the manufacturer.

(11) On or before the twentieth of each month, each

manufacturer shall file a report with the department listing all

sales of tobacco products to wholesalers and unclassified acquirers

during the preceding calendar month and any other information the

department finds necessary for the administration of this act. This

report shall be in the form and manner specified by the department.

(12) Each wholesaler or unclassified acquirer shall submit to

the department an unstamped cigarette sales report on or before the

twentieth day of each month covering the sale, delivery, or

distribution of unstamped cigarettes during the preceding calendar

month to points outside of Michigan. A separate schedule shall be

filed for each state, country, or province into which shipments are

made. For purposes of the report described in this subsection,

"unstamped cigarettes" means individual packages of cigarettes that

do not bear a Michigan stamp. The department may provide the

information contained in this report to a proper officer of another

state, country, or province reciprocating in this privilege.

(13) As used in subsection (3):

(a) "Eligible equipment" means a cigarette tax stamping

machine that meets all of the following conditions:

(i) Was purchased by a stamping agent who was licensed as a

stamping agent as of December 31, 2011.

(ii) Enables the stamping agent to affix digital stamps to

individual packages of cigarettes in accordance with the

requirements under section 6a(2).

(iii) Was purchased to be used for the primary purpose of

permitting the stamping agent to affix digital stamps to individual

packages of cigarettes to be sold in this state following the

implementation of the use of digital stamps as provided in section

5a(2).

(b) "Existing equipment" means a cigarette tax stamping

machine that meets all of the following conditions:

(i) Was owned by a person who was licensed as a stamping agent

as of December 31, 2011.

(ii) Was a cigarette tax stamping machine used prior to January

1, 2012 by the stamping agent to apply stamps using stamp rolls of

30,000 stamps.

Sec. 12. (1) The proceeds derived from the payment of taxes,

fees, and penalties provided for under this act and the license

fees received by the department shall be deposited with the state

treasurer and disbursed only as provided in this section and

section 7(5). However, before a distribution of funds is made under

this section, subject to appropriation, the funds described in this

section may be used by the department, the attorney general, and

the department of state police for enforcement and administration

of this act.

(2) The tax imposed under section 7(1)(a) shall be disbursed

as follows:

(a) 94% of the proceeds shall be credited to the state school

aid fund established by section 11 of article IX of the state

constitution of 1963.

(b) 6% of the proceeds shall be credited to the healthy

Michigan fund created under section 5953 of the public health code,

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

in this subdivision that are used for smoking prevention programs

shall be used by the department of community health to expand the

free smokers quit kit program to include the nicotine patch or

nicotine gum.

(3) The tax imposed on cigarettes under section 7(1)(b) shall

be disbursed as follows:

(a) Beginning May 1, 1994 and through June 30, 2004, 5.3% of

the proceeds shall be credited to the health and safety fund

created in the health and safety fund act, 1987 PA 264, MCL 141.471

to 141.479.

(b) Beginning July 1, 2004, 6.5% of the proceeds shall be

credited to the health and safety fund created in the health and

safety fund act, 1987 PA 264, MCL 141.471 to 141.479.

credited to the general fund of this state.

(d) Beginning July 1, 2004, 24.1% of the proceeds shall be

credited to the general fund of this state.

(e) 63.4% of the proceeds shall be credited to the state

school aid fund established by section 11 of article IX of the

state constitution of 1963.

(f) 6% of the proceeds shall be credited to the healthy

Michigan fund created under section 5953 of the public health code,

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

in this subdivision that are used for smoking prevention programs

shall be used by the department of community health to expand the

free smokers quit kit program to include the nicotine patch or

nicotine gum.

(4) Beginning August 1, 2002, the tax imposed on cigarettes

under section 7(1)(c) shall be disbursed as follows:

(a) Through June 30, 2004, 74.2%, and beginning July 1, 2004,

9.0% of the proceeds shall be credited to the general fund of this

state.

(b) Through June 30, 2004, 4.6%, and beginning July 1, 2004,

56.3% of the proceeds shall be credited to the state school aid

fund established by section 11 of article IX of the state

constitution of 1963.

Michigan fund created under section 5953 of the public health code,

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

in this subdivision that are used for smoking prevention programs

shall be used by the department of community health to expand the

free smokers quit kit program to include the nicotine patch or

nicotine gum.

(d) Through June 30, 2004, 3.0%, and beginning July 1, 2004,

3.7% of the proceeds shall be paid to counties with a 2000

population of more than 2,000,000, to be used only for indigent

health care.

(e) Through June 30, 2004, 12.2%, and beginning July 1, 2004,

25.0% of the proceeds shall be credited to the medicaid benefits

trust fund created under section 5 of the Michigan trust fund act,

2000 PA 489, MCL 12.255.

(5) Beginning August 1, 2002, the tax imposed under section

7(1)(f) shall be disbursed as follows:

(a) 75.6% of the proceeds shall be credited to the state

school aid fund established by section 11 of article IX of the

state constitution of 1963.

(b) 6.0% of the proceeds shall be credited to the healthy

Michigan fund created under section 5953 of the public health code,

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

in this subdivision that are used for smoking prevention programs

shall be used by the department of community health to expand the

free smokers quit kit program to include the nicotine patch or

nicotine gum.

fund of this state.

(6) Beginning August 1, 2002, the tax imposed on cigarettes

under section 7(1)(d) shall be disbursed as follows:

(a) 94.0% of the proceeds shall be credited to the state

school aid fund established by section 11 of article IX of the

state constitution of 1963.

(b) 6.0% of the proceeds shall be credited to the healthy

Michigan fund created under section 5953 of the public health code,

1978 PA 368, MCL 333.5953. Fifty percent of the proceeds described

in this subdivision that are used for smoking prevention programs

shall be used by the department of community health to expand the

free smokers quit kit program to include the nicotine patch or

nicotine gum.

(7) Beginning July 1, 2004, the tax imposed on cigarettes

under section 7(1)(e) shall be disbursed as follows:

(a) Beginning July 1, 2004 and through September 30, 2005,

100% of the proceeds shall be credited to the Michigan medicaid

benefits trust fund created under section 5 of the Michigan trust

fund act, 2000 PA 489, MCL 12.255.

(b) Beginning October 1, 2005, 75.0% of the proceeds shall be

credited to the medicaid benefits trust fund created under section

5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

credited to the general fund of this state.

(8) Beginning July 1, 2004, the tax imposed under section

7(1)(g) shall be disbursed as follows:

(a) Beginning July 1, 2004 and through September 30, 2005,

100% of the proceeds shall be credited to the Michigan medicaid

benefits trust fund created under section 5 of the Michigan trust

fund act, 2000 PA 489, MCL 12.255.

(b) Beginning October 1, 2005, 75.0% of the proceeds shall be

credited to the medicaid benefits trust fund created under section

5 of the Michigan trust fund act, 2000 PA 489, MCL 12.255.

credited to the general fund of this state.

(9) The proceeds of the fees and penalties provided for in

this act shall be used for the administration of this act.

(10) For fiscal year 2011-2012 only, from the funds described

in subsections (3)(d), (4)(a), (7)(c), and (8)(c), $6,000,000.00 is

appropriated to the following departments in the following amounts

for enforcement and administration of this act:

(a) Department of treasury, $1,500,000.00.

(b) Department of attorney general, $500,000.00.