Tennessee’s Escrow Fund Act – Tenn. Code Ann. § 47-31-101 et seq.

Who is required to file a Certificate of Escrow Compliance?

Any Tobacco Product Manufacturer that: (1) sold cigarettes (including roll-your-own and little cigars if they meet the statutory definition of cigarette) to consumers within the State of Tennessee (whether directly or through any distributor, retailer, or similar intermediary or intermediaries during the preceding calendar year); and (2) has not become a Participating Manufacturer to the tobacco Master Settlement Agreement executed on November 23, 1998. Please note this Certificate of Escrow Compliance form is in addition to any Certification application required pursuant to Tenn. Code Ann. §§ 67-4-2601, et seq. and any rules and regulations promulgated thereunder.

Who is a Tobacco Product Manufacturer?

A Tobacco Product Manufacturer is the entity that fabricates or assembles the cigarettes.

What is a Qualified Escrow Fund?

Tobacco Product Manufacturers are required to establish a “Qualified Escrow Fund” as defined by Tenn. Code Ann. § 47-31-102(6). This means an escrow arrangement with a federally or state chartered financial institution having no affiliation with any Tobacco Product Manufacturer having assets of at least one billion dollars ($1,000,000,000). The escrow arrangement must: (1) require the financial institution hold the escrowed funds’ principal for the benefit of the State of Tennessee (and other “Releasing Parties” as defined in the Master Settlement Agreement); and (2) prohibit the Tobacco Product Manufacturer placing the funds into escrow from using, accessing or directing the funds’ principal except as consistent with Tenn. Code Ann. § 47-31-103(a)(2)(B).

Where do I find the model Tennessee Escrow Agreement?

You can find the agreement on the Escrow Fund Act page of this website or request a copy by calling the Tobacco Enforcement Division at (615) 741-8721. You are required to use the model escrow agreement unless any changes are approved in advance in writing by the Attorney General. If you propose to alter or change the model Escrow Agreement in any way, you must submit a redline copy of the escrow agreement readily and clearly marking any changes or additions made to the State form. In the redline copy of your proposed escrow agreement, any proposed additions to the model should be double underlined in the redline copy and any deletions should be marked using the strike out markings. You must also submit an executed non-redlined escrow agreement.

Where can I find the official Certificate of Escrow Compliance forms?

You can find the Certificate of Escrow Compliance forms on the Escrow Fund Act page of this website or request a copy by calling the Tobacco Enforcement Division at (615) 741-8721.

When is the escrow deposit due?

Deposits into the Qualified Escrow Fund must be made on or before the last calendar day of the month following the sales quarter (e.g., the deposit for the first quarter sales is due by April 30).

When is the Certificate of Escrow Compliance due?

Every Tobacco Manufacturer currently selling in Tennessee should execute and file on or before the last calendar day of the month following the sales quarter (e.g., the Certificate for the first quarter sales is due by April 30).

What happens if a Tobacco Product Manufacturer fails to certify in time?

The Tobacco Product Manufacturer may be removed from the State’s Directory without further notice. The Tobacco Product Manufacturer may also be subject to legal action pursuant to state and federal law, regulation and rule.

Where must the Certificate of Escrow Compliance be filed?

An original and copy must be filed with the Tennessee Attorney General’s Office, Tobacco Enforcement Division, at the addresses listed below in the instructions. Amended Certificates are also due no more than ten (10) calendar days after discovery of inaccurate, incomplete or misleading information in a Certificate of Escrow Compliance.

What is the applicable law relating to this Certificate of Escrow Compliance?

Tennessee’s Tobacco Manufacturer’s Escrow Fund Act of 1999, Tenn. Code Ann. §§ 47-31-101, et seq. and any rules and regulations promulgated thereunder.

When does a Tobacco Product Manufacturer need to file an Amended Certificate of Escrow Compliance?

A Tobacco Product Manufacturer must file an Amended Certification whenever information provided on the Certificate becomes inaccurate, incomplete or misleading. Such Amended Certificate must be filed within ten (10) days after the information becomes inaccurate, incomplete or misleading.

Quarterly Escrow Deposits - Rules and Regulations Governing Tobacco Product Manufacturers and Wholesalers - Tenn. Comp. R. & Regs. Chapter 1320-9, et seq.

Where can I find the Rules and Regulations governing quarterly escrow deposits?

A copy of the rules and regulations governing quarterly escrow deposits is available from the Tennessee Secretary of State’s website.

Where can I find the official Certification of Quarterly Escrow Compliance forms?

You can find the Certificate of Escrow Compliance forms on the Escrow Fund Act page of this website or request a copy by calling the Tobacco Enforcement Division at (615) 741-8721.

When is the quarterly escrow deposit due?

Deposits into the Qualified Escrow Fund must be made on or before the last calendar day of the month following the sales quarter (e.g., the deposit for the first quarter sales is due by April 30). The first quarter is January 1 through March 31; the second quarter is April 1 through June 30; the third quarter is July 1 through September 30; the fourth quarter is October 1 through December 31.

When is the Certification of Quarterly Escrow Compliance due?

Every Tobacco Manufacturer currently selling in Tennessee should execute and file on or before the fifteenth day of the month following the date of deposit (e.g., the Certificate for the first quarter sales is due by May 15).

What happens if a Tobacco Product Manufacturer fails to properly certify on time?

The Tobacco Product Manufacturer may be removed from the State’s Directory without further notice. The Tobacco Product Manufacturer may also be subject to legal action pursuant to state and federal law, regulation and rule.

Where must the Certification of Quarterly Escrow Compliance be filed?

An original and copy must be filed with the Tennessee Attorney General’s Office, Tobacco Enforcement Division, at the following address:

For postal service delivery:
Tennessee Attorney General’s Office
Tobacco Enforcement Division
Post Office Box 20207
Nashville, TN 37202-0207

For overnight courier delivery:
Tennessee Attorney General’s Office
Tobacco Enforcement Division
425 Fifth Avenue North
Cordell Hull Building
Nashville, TN 37243-3400

Amended Certificates are also due no more than ten (10) calendar days after discovery of inaccurate, incomplete or misleading information in a Certificate of Escrow Compliance.

What is the applicable law relating to the Certificate of Quarterly Escrow Compliance?

Tennessee’s Tobacco Manufacturer’s Escrow Fund Act of 1999, Tenn. Code Ann. §§ 47-31-101, et seq. and the rules and regulations promulgated thereunder.

Fire Safety Standard and Firefighter Protection Act, Tenn. Code Ann. §§ 68-102-501, et seq.

What are the requirements established under the Act?

The Act requires that cigarettes sold in Tennessee be manufactured with fire-safe cigarette paper. Subject to the exceptions provided by Tenn. Code Ann. § 68-102-503(g), beginning January 1, 2010, cigarette brands may not be sold or offered for sale in Tennessee unless the cigarette brand has been tested and meets the performance standards of Tenn. Code Ann. § 68-102-503, and are marked in accordance with Tenn. Code Ann. § 68-102-505.

How often must cigarette brands be certified?

Each cigarette brand must be certified by the State Fire Marshall’s Office and recertified every three (3) years.

Where can I find the forms required for certification?

The application to certify cigarette brands consistent with Tenn. Code Ann. § 68-102-504 can be accessed at the Department of Commerce and Insurance, Division of Fire Prevention's website.

What are the penalties for noncompliance?

Among the penalties for Tennessee retailers and wholesalers is a $100 civil penalty, per pack, against any wholesaler, distributor or retailer that sells cigarettes in violation of the Act, not to exceed $100,000.00 for wholesalers or $25,000.00 for retailers (during any thirty-day period).