1. General. (a) On and after July first, nineteen hundred thirty-nine no person shall be a wholesale dealer unless he has been granted and publicly displays in his place of business a license from the department. Applications for licenses shall be made on forms prescribed by the commissioner.
(b) Applications shall be accompanied by proof of the applicant's financial responsibility, including, but not limited to, satisfactory proof of a minimum net worth of twenty-five thousand dollars if the applicant is an individual, or net worth in the capitalization of the business if the applicant is not an individual equal to a minimum of twenty-five thousand dollars.
(c) Each applicant shall file with the department a bond issued by a surety company approved by the superintendent of financial services as to solvency and responsibility and authorized to transact business in the state, in the face amount of ten thousand dollars, to secure payment of any sums due for any violation of article twenty or article twenty-A of this chapter, or the regulations of the commissioner thereunder.
(d) Each applicant shall file satisfactory proof that it will maintain a secure separate warehousing facility for the purpose of receiving and distributing cigarettes or tobacco products and conducting its wholesale business. Such proof shall consist of a copy of a deed, or a copy of an executed lease for a minimum period of two years, to a separate, secure warehouse. If the applicant carries on another business in conjunction with the warehouse facility, the other business shall also be identified.
(e) Each applicant shall file satisfactory proof that it will provide disability and workers' compensation insurance for its employees.
(f) Each applicant shall submit proof of United States citizenship or eligibility to obtain employment within the United States if not a citizen. If the applicant is not an individual, such proof shall be submitted with respect to each controlling person of the applicant.
(g) The fee for the filing of an application for a license shall be fifteen hundred dollars, unless such fee has been paid during the preceding twelve months, in which case, the fee for a new license shall be one thousand dollars. Each application shall be accompanied by a certified check for the required application fee.
(h) Except as provided in subdivision four of this section, a license shall continue in effect until revoked or suspended for cause or surrendered.
(i) A license shall not be assignable but an applicant who is purchasing the business of a licensee shall file a copy of the contract of sale and any related documents with its application.
(j) The commissioner may for cause refuse to issue, or may suspend or revoke a wholesaler's license, or may forbid a retail dealer to continue selling cigarettes or tobacco products or may forbid a person required to be appointed as a distributor of tobacco products who has not been so appointed from selling cigarettes or tobacco products, after an opportunity for hearing has been afforded. A violation of any provision of this article or of any regulation issued under it shall be cause to forbid a retail dealer to continue selling cigarettes or tobacco products.
(k) No agent shall sell cigarettes and no distributor shall sell tobacco products to an unlicensed wholesale dealer, or to a wholesale dealer whose license has been suspended or revoked, or to a retail dealer who is not registered under section four hundred eighty-a of this article, or whose registration has been suspended or revoked, and no wholesale dealer shall sell cigarettes or tobacco products to a retail dealer who is not registered under section four hundred eighty-a of this article, or whose registration has been suspended or revoked, and no retail dealer shall sell cigarettes or tobacco products unless such dealer is registered under section four hundred eighty-a of this article.
(l) Paragraphs (b), (c) and (g) of this subdivision shall not apply to the filing of an application for a license as a wholesale dealer that is based solely upon the ownership, operation or maintenance of one or more cigarette or tobacco products vending machines in, at or upon premises owned or occupied by another person, or that is based solely upon the sale of tobacco products for resale, or that is based upon both the ownership, operation or maintenance of one or more cigarette or tobacco products vending machines in, at or upon premises owned or occupied by another person and the sale of tobacco products for resale.
2. Refusal to license. The commissioner of taxation and finance may refuse to license an applicant where such applicant files an application under this section and in considering such application the commissioner ascertains that:
(a) Any tax imposed under this chapter or under any related statute as defined in section eighteen hundred of this chapter has been finally determined to be due from such applicant or controlling person and such tax has not been paid in full,
(b) Such applicant or any controlling person has been convicted of a crime provided for in this chapter within the preceding five years,
(c) Such applicant or any controlling person was the controlling person in another wholesale dealer at the time that:
(i) Any tax imposed under this chapter or any related statute as defined in section eighteen hundred of this chapter was finally determined to be due from such other wholesale dealer and such tax has not been paid in full,
(ii) Such other wholesale dealer was convicted of a crime provided for in this chapter within the preceding five years, or
(iii) The license of such other wholesale dealer was cancelled or suspended pursuant to this section within the preceding five years,
(d) The license of such applicant has been cancelled or suspended pursuant to this section within the preceding five years,
(e) Any controlling person of such applicant has committed any of the acts specified in subdivision three of this section within the preceding five years, or
(f) Such applicant or any controlling person has been finally determined to have violated any of the provisions of this article or article twenty-A of this chapter, or any rule or regulation adopted pursuant to this article or article twenty-A of this chapter.
3. Cancellation or suspension of license.
(a) Acts of licensee. The license of any wholesale dealer may be cancelled or suspended by the tax commission upon:
(i) Its failure to file or maintain in full force and effect a bond or other security when required or when the amount thereof is increased,
(ii) Its failure to comply with any of the provisions of this article or article twenty-A of this chapter or any rule or regulation adopted pursuant to this article or article twenty-A of this chapter by the department or the commissioner, provided, however, that any violation of section four hundred seventy-three-b of this article shall result in license cancellation,
(iii) Its knowingly aiding and abetting another person in violating any of the provisions of this article or article twenty-A of this chapter or any rule or regulation adopted pursuant to this article or article twenty-A of this chapter by the department or the commissioner, provided, however, that any violation of section four hundred seventy-three-b of this article shall result in license cancellation.
(b) Acts of licensee or controlling person. A license may be cancelled or suspended if the tax commission determines that a licensee or any controlling person:
(i) Commits fraud or deceit in his or its operations as a wholesale dealer or has committed fraud or deceit in procuring his or its license,
(ii) Has been convicted in a court of competent jurisdiction, either within or without the state, of a felony, bearing on the licensee's duties and obligations under this chapter,
(iii) Has impersonated any person represented to be a wholesale dealer under this article but not in fact licensed under this section, or
(iv) Has knowingly aided and abetted the sale of cigarettes or tobacco products by a person which such licensee or controlling person knows (A) has not been licensed by the commissioner of taxation and finance and (B) is a wholesale dealer pursuant to the terms of subdivision eight of section four hundred seventy of this chapter.
4. If the commissioner of taxation and finance considers it necessary for the proper administration of the cigarette tax or tobacco products tax imposed by this article or the cigarette marketing standards contained in article twenty-A of this chapter he may require every person under this article who holds a license to file a new application for a license in such form and at such time as the commissioner may prescribe and to surrender such license. The commissioner may require such filing and such surrender not more often than once every three years. Upon the filing of such application with the proper fee and the surrender of such license, the commissioner shall issue, within such time as he may prescribe, a new license to each applicant.
5. Hearing procedure. (a) General. A notice of proposed cancellation or suspension of a license or refusal to issue a license shall be given to the wholesale dealer licensed pursuant to this article or to an applicant applying for such license in the manner prescribed for a notice of deficiency of tax and all the provisions applicable to a notice of deficiency under article twenty-seven of this chapter, including, but not limited to, those provisions authorizing the tax commission to abate on its own motion, shall apply to a notice issued pursuant to this subdivision, insofar as such provisions can be made applicable to a notice authorized by this subdivision, with such modifications as may be necessary in order to adapt the language of such provisions to the notice authorized by this subdivision. Such notice of proposed cancellation or suspension or of proposed refusal to license must be given to such person within five years from the date of the act or omission referred to in subdivision two or three of this section, except that in the case of acts involving falsity or fraud, such notice may be issued at any time. All of such notices shall contain a statement advising the person to whom it is issued that the cancellation, suspension or refusal to license may be challenged through a hearing process and that the petition for such challenge must be filed with the tax commission within ninety days after the giving of such notice. Where a license is cancelled or suspended prior to a hearing, the cancellation or suspension may be challenged through the hearing process provided the petition for such challenge is filed within ninety days after the giving of notice of such cancellation or suspension.
(b) Refusal to license. In the case of a person applying to be licensed as a wholesale dealer, a notice of proposed refusal to license shall be issued promptly after application for license is received by the tax commission. Upon timely application therefor, a hearing shall be scheduled, and within three months from such application for hearing (determined with regard to any postponements of any scheduled hearing or conference or other delay made at the request of the applicant) the tax commission shall issue a notice of refusal to license or shall license the applicant. If the tax commission fails to issue a notice of refusal to license within such three month period (or such period as extended pursuant to this paragraph), the tax commission shall license the applicant immediately upon the conclusion of such period so long as the applicant has filed a bond or other security as required by the tax commission.
6. For purposes of this section, the term “controlling person” means any person who is:
(a) An officer, director or partner or, in the case of a limited liability company, a member or a person having with respect to such limited liability company authority analogous to that of an officer or director with respect to a corporation of an applicant for a wholesale dealer's license or of a licensee under this article, or
(b) A shareholder, directly or indirectly owning more than ten percent of the number of shares of stock of such applicant or licensee (where such applicant or licensee is a corporation) entitling the holder thereof to vote for the election of directors or trustees. For purposes of this paragraph, where reference is made to ownership, directly or indirectly, of more than ten percent of the shares of stock of the applicant or another person entitling the holder thereof to vote for the election of directors or trustees, in the case of an applicant or another person which at the relevant time has four or fewer shareholders holding shares entitling the holders thereof to vote for the election of directors or trustees, twenty-five percent or more shall be substituted as the applicable percentage in such references to ownership, directly or indirectly, of voting stock.