Oregon Non-Participating Tobacco Manufacturer Bond
The Oregon Department of Justice (DOJ) requires non-participating manufacturers (NPM) of tobacco products to hold a bond at minimum $25,000 or up to the highest amount of escrow due for the preceding 12 calendar quarters. The bond ensures that NPMs make escrow, penalty, and interest payments as well as comply with ORS 323.806.
How Much Does a Non-Participating Manufacturer Bond Cost?
The bond can cost as low as $250 annually or $25 monthly. The rate is based on the personal credit of the business owner as well as business financials. Be sure to let us know if the Oregon Department of Justice requires a bond amount above $25,000 as that will affect the bond price as well. Below are examples of our rates for your reference.
| Bond Limit | Monthly | Annual |
|---|---|---|
| $25,000 | $25 | $250 |
| $50,000 | $50 | $500 |
Jet has a no money down, no interest, monthly payment option that is one of a kind in surety bonds in addition to our low annual bond rates. Other brokers or agents offer payment plans with high down payments and APR, often through a third party financier that complicates obtaining the bond.
How Is the Non-Participating Manufacturer Bond Filed?
Jet will send a copy of the original bond to the Oregon Department of Justice Tobacco Enforcement Unit. Below is the address for filing If for whatever reason you must send a copy of the bond directly to the DOJ.
Oregon Department of Justice
Tobacco Enforcement Unit
1162 Court Street NE
Salem, CA 97301
Why Is the Non-Participating Manufacturer Bond Required?
The Oregon Department of Justice requires a bond for tobacco product manufacturers that are not participating in the Master Settlement Agreement (MSA) of 1998. The bond ensures that non-participating manufacturers (NPM) pay into an escrow account at an amount per unit sold required in ORS 323.806. It also ensures that the NPM pays any interest or penalty resulting payment into the escrow account.
The MSA requires all participating tobacco manufacturers to make yearly payments into a general fund that is distributed proportionally to each state. The MSA occurred as a result of four years of legal battle between the four largest domestic manufacturers of 1998 and 46 U.S. states. The States were looking to recover healthcare costs due to smoking-related illnesses from tobacco products. The agreement requires that participating tobacco manufacturers pay a shared percentage of the costs states incur due to tobacco smoking and follow public health provisions.
Who Needs a Non-Participating Manufacturer Bond?
Any non-participating manufacturer of tobacco looking to do business in Oregon is required to hold a Non-Participating Manufacturer Bond.
Non-participating manufacturers (NPM) are tobacco manufacturers that have not joined the Master Settlement Agreement. Most of the tobacco manufacturers in Oregon are participating members and account for 98% of the state's cigarette market share.
How Can I Avoid a Claim On My Non-Participating Manufacturer Bond?
Make the required payment into the escrow account at the amount required per unit sold under ORS 323.806; as well as, complete any penalty or interest payment required as a result of a late payment into the escrow account to avoid a claim on the bond. The bond is in place to ensure that these payments are made as required by Oregon law.
What Happens If I Get a Claim On My Non-Participating Manufacturer Bond?
Contact Jet upon receipt of a claim notice. The Non-Participating Manufacturer Bond is required to ensure that NPMs pay into the required escrow account. While Jet’s claims department works diligently on your behalf to protect you, there is not much room to argue against the state whether or not the required amount was paid into the escrow account.
We will contact you once we hear from the Oregon Department of Justice if they file a claim against the bond. Our team is well equipped and will always do what is in your best interest. Keep in mind that if a Surety pays out on a claim, you are responsible to pay back the Surety for that amount. The bond is not like liability insurance that will cover accidental damages, you are responsible for paying into the escrow account. The bond is simply a letter of credit guaranteeing that payment will be made into the escrow account.
How Is the Non-Participating Manufacturer Bond Renewed?
If you are on monthly payments then you don’t have to worry about renewing your bond. So long as the automatic payment comes through the bond will remain current with the CCB. There is a 30 day grace period where the bond will remain active with the DOJ should a monthly installment be missed for any reason.
NPMs paying the bond on an annual basis need to submit payment before their renewal date. Don’t worry about putting this on your calendar as Jet will get a hold of you in plenty of time for you to make bond renewal payment.
If the DOJ requires a higher bond limit due to an increase in the escrow amount, just let us know; we will file the necessary paperwork to the DOJ Tobacco Enforcement Unit to ensure the bond meets the updated requirement. Increase in the bond amount may also increase premium. We will adjust the renewal rate for those paying annually on the bond and the monthly payments in accordance with the increase in the bond amount.
Can I Cancel the Non-Participating Manufacturer Bond and Get a Refund?
Yes you can with Jet! We can file a cancellation notice to the Tobacco Enforcement Unit of the Oregon Department of Justice and return unearned premium. The bond has a 30 day cancellation provision meaning that the bond will not cancel until 30 days after we request cancellation of the bond. Bond premium returns take into account the cancellation period where the bond is still active as Jet is still providing coverage at that time.
If you miss a monthly payment we will send you notice before a cancellation is filed to the DOJ to provide you with time to make payment. Life and business can be distracting and Jet’s team is understanding of that fact as we work with you if a payment is missed.
