AWMA recently adopted a position on digital stamping that stated our association would remain neutral on the issue until or unless distributors in a certain state that was considering this topic asked us to weigh in – either pro or con.  AWMA’s task force on digital stamping established four provisions that must be included in any legislator or regulatory initiative on digital stamping.  Those provisions include the following:

Digital Stamping Task Force Recommendations For Provisions To Be Included In Any State Legislative Or Regulatory Initiative On This Issue:

1.    Any encrypted stamping system should be built on open architecture technology, allowing multiple hardware manufacturers to supply the equipment needed to apply encrypted stamps.  (Meyercord and SICPA -- the manufacturers of the system that has prevailed in the marketplace in the only two states that have adopted encrypted stamping (California and Massachusetts) -- have thus far refused to open up their system to allow other hardware manufacturers to supply necessary hardware.)

2.    The adoption of encrypted stamping by a state MUST be accompanied by increased enforcement.   Contrary to popular belief, digital or encrypted stamps can and have been counterfeited at a level where they appear legitimate to the naked eye.   An encrypted stamping system can ONLY be effective when accompanied by an adequate number of trained field inspectors with the equipment to verify the authenticity of the stamps.  And, encrypted stamping system can ONLY be effective when the digital stamp features both overt and covert qualities to ensure it cannot be replicated.

3.    The adoption of encrypted stamping by a state MUST be accompanied by reimbursement by the state for any and all licensed stamping agents (distributors) for the costs to those distributors of implementing encrypted stamping.   Encrypted stamping requires significant capital investment on the part of distributors.   Such reimbursement can either come in the form of an upfront payment for capital expenses by the state to its licensed distributors/stamping agents or by an increase in the state’s stamping allowance adequate to cover the cost of the cost of the necessary equipment.   Or, states could furnish all of the equipment, maintenance and related costs to their licensed stamping agents. Reimbursement should include a onetime payment for all warehouse renovations. The states also need to continue with a stamping discount for other costs like labor, computer lines, electricity, glue etc. Determination of the specific amount of reimbursement needed should be made in consultation and collaboration with the state’s licensed stamping agents.

4.    The adoption of encrypted stamping by a state MUST be accompanied by an adequate amount of time for implementation.  At least three years to implement a change over from conventional stamping to digital stamping.
AWMA was asked to weigh in on a recent survey sent out by the Maryland Comptroller’s office asking for input on a study to be conducted on encrypted cigarette tax stamps for that state.  In response, AWMA sent the Maryland Comptroller’s office a copy of our recently adopted position on this issue along with the above provisions our association believes must be a part of any discussion and legislative initiative related to digital stamping.

AWMA will continue to monitor this issue closely and stands ready to assist distributors in the event this issue arises in their state.