March 6, 1995
TO: All Cigarette Subwholesalers
SUBJECT: Requirements for Renewal of License
Application form COT/ATTU 637 and instructions to renew cigarette subwholesale licenses have been mailed to all accounts for the license year beginning May 1, 1995. The Alcohol and Tobacco Tax Bureau has recently been provided with advice from the Attorney General's Office which may affect some licensees and their continued qualifications to hold a subwholesale license.
The interpretation of the cigarette licensing provisions of the Business Regulation Article of the Annotated Code of Maryland and related provisions of the Maryland Cigarette Sales Below Cost Act (Title 11, Subtitle 5, of the Commercial Law Article) is that a subwholesaler may purchase cigarettes from a wholesaler for sale to retailers which are not owned, affiliated or controlled by the subwholesaler. This is a requirement for holding a subwholesale license. A person qualified to hold a sub-wholesale license under these provisions may also sell cigarettes at retail if the subwholesaler holds a qualifying retail license.
Currently, some subwholesalers may be selling, exclusively or otherwise, to separate entities which are not totally independent and unaffiliated with the subwholesaler. This would include entities with common ownership or stockholders. This would not be a permitted activity of a subwholesaler. If the sub-wholesaler continues to otherwise qualify for a license as outlined above, such sales to affiliated companies must be discontinued in order to comply with the law as interpreted by the Attorney General's Office.
Section 6(C)(a) of the renewal application requires that all applicants attach a separate listing of persons to whom they intend to sell cigarettes. In addition to this list, a statement will be required as part of this year's renewal application affirming that you will not sell or transfer any cigarettes to separate entities which are owned, affiliated or controlled by the applicant.
As a result of the above interpretation, if you determine you no longer qualify for or do not desire to continue holding a subwholesale license please advise this office in writing by April 30, 1995. If you have any questions pertaining to these licensing requirements please contact Assistant Administrator Aaron Stansbury at 410-260-7319.
Charles W. Ehart, DPA