(a) Except as provided in (b) of this section and in AS 43.50.610, a person may not possess unstamped cigarettes in this state.

(b) A licensee may possess unstamped cigarettes in this state if

(1) the licensee posts a surety bond in an amount satisfactory to the department to ensure performance of its duties under this chapter; and

(2) unstamped cigarettes are necessary for the conduct of the licensee's business in making sales or distributions to

(A) an instrumentality of the federal government or an Indian tribal organization authorized by law to possess cigarettes not taxed under this chapter; or

(B) customers outside the state and the licensee provides proof acceptable to the department that the licensee is properly licensed in the jurisdictions outside the state where the sales or distributions are made.

(c) At the time of shipping or delivering cigarettes to an instrumentality of the federal government or an Indian tribal organization authorized by law to possess cigarettes not taxed under this chapter, a licensee shall make a duplicate invoice showing complete details of the shipment or other distribution and a statement indicating whether stamps were affixed to each cigarette package in accordance with AS 43.50.500 - 43.50.700. The licensee shall transmit the duplicate invoice to the department as an attachment to the monthly report required under AS 43.50.630.

(d) If a licensee who is authorized to possess unstamped cigarettes under (b) of this section fails to comply with the requirements of this section, the licensee is no longer authorized to and may not possess unstamped cigarettes under this section and is subject to the imposition of any applicable penalty under this title or other law.

(e) For purposes of (a) of this section, “person” does not include entities to whom sales or distributions are made as described in (b)(2) of this section.