Sec. 80.2. Definitions

Tax Law, § 483(a)

Any term which is defined by section 470 of the Tax Law and/or Article 1 of this Subchapter relating to the cigarette tax shall have the same meaning when used with respect to the cigarette marketing standards, except that for such purposes the following terms have the meanings hereinafter indicated.

(a)

(1) Basic cost of cigarettes shall mean:

(i) the lower of:

(a) the invoice cost of cigarettes to the agent who purchases from the manufacturer; or

(b) the replacement cost of cigarettes to the agent, in the quantity last purchased; less

(ii) all trade discounts, except discounts for cash; plus

(iii) the full face value of any stamps which may be required by law to be affixed to packages of such cigarettes.

(2) For purposes of this subdivision:

(i) Invoice cost is the list price of cigarettes to the agent from the manufacturer prior to any trade discounts including discounts for cash. Replacement cost is the current list price to the agent from the manufacturer to replace such cigarettes, in the quantity last purchased, prior to any trade discounts including discounts for cash.

(ii) Manufacturer means any person who or which manufactures or otherwise produces cigarettes, or causes cigarettes to be manufactured or produced.

(iii) Trade discount means the difference between a manufacturer's list price and the price at which the manufacturer actually sells cigarettes. A trade discount is a discount given by the manufacturer of cigarettes to the agent at the time of sale and shall be separately stated as such on the invoice or other document of sale. Trade discount does not include a rebate.

(iv) Discount for cash means any deduction from the list price of cigarettes which the manufacturer allows for payment within a certain period of time.

(v) The full face value of any stamps which may be required by law shall, in addition to the tax imposed pursuant to article 20 of the Tax Law, include any New York City tax imposed pursuant to chapter 13 of title 11 of the Administrative Code of the City of New York and means the value of the stamps before the deduction of any commission.

(3) For ease of the administration of, and compliance with, the cigarette marketing standards, the Department of Taxation and Finance will periodically compile and publish average basic costs of cigarettes for standard brands. Such costs shall be effective on the dates prescribed by the department and may be used for purposes of complying with this Article with respect to such brands.

(4) "Illustration." This illustration is fundamental to this Article and will be referred to throughout in further explanation of the cigarette marketing standards. For illustration purposes only, the basic cost of cigarettes is assumed to be $86 per carton, computed as follows:

Invoice cost (per carton), less all trade
discounts except discounts for cash	$ 27.50
New York State cigarette tax	43.50
New York City cigarette tax	+ 15.00
Basic cost of cigarettes	$ 86.00

(b)

(1) Wholesale dealer, for purposes of Article 2 of this Subchapter, means any person, other than an agent, who sells cigarettes in New York State to retail dealers or to other persons for purposes of resale and who maintains a separate warehousing facility for the purpose of receiving and distributing cigarettes and conducting its wholesale business. If a wholesale dealer is also a retail dealer, such dealer must maintain separate premises for such retail business. A wholesale dealer shall not include a vending machine operator. The term wholesale dealer is also defined in article 20 of the Tax Law with respect to the cigarette tax and the tobacco products tax (see Articles 1 and 3 of this Subchapter). Hereinafter, cigarette marketing standards wholesale dealer or CMSA wholesale dealer shall denote wholesale dealers for purposes of the Cigarette Marketing Standards Act.

(2)

(i) A separate warehousing facility for the purpose of receiving and distributing cigarettes and conducting wholesale business shall mean a warehouse, storehouse or other commercial building, or a group of such buildings, wherein cigarettes are received, stored and distributed and the dealer's day-to-day wholesale business activities are conducted. Such a warehousing facility must be separate and distinct from any other person's facilities. A warehousing facility shall not include a mere enclosure within a larger facility, nor a means of transportation (i.e., a truck or van).

(ii) Separate premises for retail business shall mean any building or portion of a building where cigarettes are stored and sold or offered for sale to consumers and where the day-to-day retail business of the dealer is conducted. Such premises must be separate from any space where the wholesale business activities, if any, of the dealer are performed. Hence, if the retail premises are part of a common building where both wholesale and retail businesses are carried out, the retail premises must have a separate entrance/exit for use by consumers and such consumers must be precluded from entering areas used for other than retail purposes.

(3) Every person who qualifies as a CMSA wholesale dealer pursuant to this subdivision is also a wholesale dealer for purposes of the cigarette tax and as such must procure a license pursuant to section 480 of the Tax Law (see Part 72 of this Title).

(c)

(1) Chain store includes certain:

(i) persons who own or maintain 15 or more retail outlets;

(ii) vending machine operators;

(iii) cooperative members;

(iv) franchisees; and

(v) large volume outlet operators, as all such persons are described in this subdivision. No person shall be considered to be a chain store, unless such person has been registered with the Department of Taxation and Finance as provided for in section 489 of the Tax Law (see Part 81 of this Title).

(2) 15 or more retail outlets. Any person or persons who own or maintain 15 or more retail outlets through which cigarettes are sold at retail shall be considered to be a chain store, provided such retail outlets are located in New York State and have a 100 percent common ownership. For purposes of this paragraph, a 100 percent common ownership shall mean that, in addition to being owned by the same person or persons, if such retail outlets are owned by more than one person, each person's proportionate ownership interest in any one retail outlet of the group must be the same as its proportionate ownership interest in every other retail outlet of the group. Accordingly, should for example, two persons each have a common ownership interest in 14 retail outlets of 50 percent of each outlet, but have ownership interests in a fifteenth retail outlet of 60 percent and 40 percent respectively, such persons would not be considered to be a chain store.

(3) Vending machine operators. A vending machine operator who sells cigarettes through vending machines at 15 or more separate outlets which are located in New York State shall be considered to be a chain store. A separate outlet means a single marketing location. Generally, and unless a vending machine operator or the department can establish otherwise, a building shall constitute a single marketing location. Thus, vending machines located in different sections of the same building or on different floors of the same building will be deemed to be located at a single marketing location and, therefore, are considered located at one separate outlet. (See also, Part 73 of this Title for vending machine registrations.)

(4)

(i) Cooperative members. Chain store includes cooperative members. A cooperative member means any member of a cooperative as defined in subdivision (c) of section three of the Cooperative Corporation Law, that operates a distribution center from which members purchase general merchandise intended for resale and whose members sell cigarettes at retail through 15 or more separate establishments which are located in New York State. The Cooperative Corporations Law defines a cooperative, in pertinent part, as a corporation organized under such law or under any former special or general law of the State, for the cooperative rendering of mutual help and service to its members. In order to qualify as a cooperative member for purposes of this Title, a dealer must share in the profits and losses of the cooperative and must have purchased at least 25 percent of the merchandise it purchased for resale during the preceding calendar year from such cooperative, excluding cigarettes and petroleum products. Such volume of purchases will be measured by the amount paid for such merchandise, prior to any patronage dividends or refunds based on patronage.

(ii) The registrations of those cooperative members registered as chain stores prior to July 22, 1990 (the effective date of chapter 744 of the Laws of 1990) will not be revoked by reason of their failure to belong to a cooperative that operates a distribution center, or to share in the profits and losses of the cooperative, or to meet the 25 percent purchase requirement. Upon each successive registration pursuant to Part 81 of this Title, such cooperative members will not be subject to such requirements, but shall be subject to all other requirements of article 20-A of the Tax Law. Since a chain store's registration is not assignable, the provisions of this subparagraph do not apply where there has been a change in ownership of a cooperative member on or after such effective date (see section 81.1[a] of this Title).

(5) Franchisees. Chain store includes franchisees. A franchisee for such purpose means any person or persons engaged in the sale of cigarettes as a retail dealer who is a franchisee as defined in article 33 of the General Business Law, and whose franchisor franchises 15 or more separate retail establishments located in New York State through which cigarettes are sold at retail. The General Business Law defines a franchisee as a person to whom a franchise is granted. As defined, in pertinent part, in article 33 of such law, a franchise means a contract or agreement by which a franchisee, in return for a franchise fee, is granted the right to engage in the business of offering, selling or distributing:

(i) goods or services under a marketing plan or system prescribed in substantial part by a franchisor; or

(ii) goods or services substantially associated with the franchisor's trademark, service mark, trade name, logotype, advertising or other commercial symbol of the franchisor or its affiliates. A franchise for purposes of article 33 of the General Business Law does not include any agreement, contract or franchise subject to the provisions of article 11-B of such law, with respect to franchises for the sale of motor fuels, or any agreement or contract for the sale of motor fuels. Where the existence of a franchise or a franchisor-franchisee relationship is in question, the department may defer to the judgment of the New York State Department of Law, which is charged with the administration of article 33 of the General Business Law.

(6) Large volume outlet operators. Chain store shall also include large volume outlet operators. A large volume outlet operator means any person or persons who sell cigarettes at one or more retail outlets, located in New York State, each of which had annual gross sales in this State in the previous calendar year of more than two million dollars. Gross sales for purposes of this paragraph shall mean an individual retail outlet' s total receipts for the sale of tangible personal property (as defined in section 526.8 of this Title) other than petroleum products, exclusive of any deduction whatsoever. Gross sales in any portion of the previous calendar year shall not be annualized in computing the more than two-million dollar threshold.

(d) Retail dealer for purposes of this Article means any person engaged in selling cigarettes at retail. The term retail dealer is also defined in article 20 of the Tax Law with respect to the cigarette tax and the tobacco products tax (see Articles 1 and 3 of this Subchapter). Hereinafter, cigarette marketing standards retail dealer or CMSA retail dealer shall denote retail dealers for purposes of the Cigarette Marketing Standards Act. A CMSA retail dealer shall include a licensed cigarette agent, a licensed CMSA wholesale dealer, a registered chain store or any other person with respect to their sales of cigarettes to consumers. (See also, Part 73 of this Title for retail dealer and vending machine registrations.)

(e) For definitions of cost of the agent, cost of the CMSA wholesale dealer and cost of the CMSA retail dealer, see sections 82.2(b), 82.3(b) and 82.5(b), respectively, of this Title.