States receive their yearly millions in tobacco money

John O'Brien Apr. 18, 2007, 2:00pm



Tobacco companies recently paid the State of Rhode Island more than $43 million as a result of the 1998 Tobacco Master Settlement Agreement.

Attorney General Andrew Cuomo announced Wednesday that his state will receive the amount as a result of this year's payments made by participating tobacco companies to the 52 Selling States under the MSA. The payments total nearly $6 billion.

Rhode Island Attorney General Patrick Lynch made a similar announcement, publicizing the $43 million his state received

The MSA allows approximately 40 tobacco companies to sell cigarettes in 46 states and six U.S. territories. It was negotiated largely by trial lawyers hired by the states.

The Competitive Enterprise Institute says trial lawyers were paid an estimated $13 billion for their work, which, in some occasions, amounted to tens of thousands of dollars per an hour of work. The settlement was worth $246 billion.

The states alleged that tobacco products caused the state's harm by raising medical costs.

Lynch says the majority of this month's payments came from Philip Morris, Reynolds American and Lorillard, though only Philip Morris made its full payment. The other two each paid approximately 75 percent of what the states feel they are owed, Lynch said.

This is because those companies contend that they are entitled to a downward payment adjustment for cigarette sales lost to tobacco companies that did not sign the MSA and increased their share of the U.S. market at the expense of companies that signed the agreement.

Withholding that 25 percent reduces all companies' payments by $704 million this month.

Since the settlement was enforced, cigarette sales have dropped more than 21 percent. More than $53 billion has been paid to the states. Cuomo said he will continue fighting to receive that 25 percent being withheld.

"The failure of two of the big three tobacco manufacturers - R.J. Reynolds and Lorillard - to pay the full amount owed to the states violates both the letter and the spirit of the tobacco Master Settlement Agreement," Cuomo said.

"Whenever the tobacco companies withhold funds that they are required to pay under the agreement, I am going to use all possible legal avenues to get those funds back for the taxpayers."

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State of Rhode Island
82 Smith St
Providence, RI 02903

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