Calif. officials target small tobacco companies

By Chris Rizo | Apr 13, 2010

Pedro Nava (D)

Jerry Brown (D)

SACRAMENTO, Calif. (Legal Newsline)-California officials want money from the nation's small tobacco companies that have avoided paying into an escrow account for the states.

The California Department of Justice, led by Attorney General Jerry Brown, is sponsoring legislation this session that would allow the attorney general's office to pursue tobacco companies that are not paying the state for treating smoking-related illnesses.

The legislation, outlined in Assembly Bill 2496, would amend the California Cigarette and Tobacco Products Licensing Act of 2003 to allow the attorney general to pursue tobacco companies that ship their products into the state without being licensed to do so.

Introduced by state Assemblyman Pedro Nava, D-Santa Barbara, the Tobacco Damages Recovery Act is aimed at closing loopholes in the Master Settlement Agreement that major tobacco companies signed in 1998.

As a part of the multistate agreement, non-participating cigarette manufacturers were required to set aside funds to be paid to the states for the public costs of treating smoking-related illnesses.

But Nava said many smaller tobacco companies have avoided paying California and other states.

"My legislation will make smaller tobacco companies pay their fair share and not allow them to continue to break the law," said Nava, a candidate for attorney general. "We will hold them accountable for all sales of cigarettes in California and the corresponding health care costs caused by smoking which are passed on to all of us."

Assembly Bill 2496 on Monday passed the Assembly Governmental Organization Committee with bipartisan support. The bill will next be heard in the Assembly Judiciary Committee on April 20.

The Tobacco Master Settlement Agreement was reached between tobacco companies and 46 states and six U.S. territories to settle lawsuits that states had filed to recover government costs associated with people who became ill from smoking or tobacco-related illnesses.

Through the end of last year, tobacco companies connected to the Master Settlement Agreement have paid more than $66 billion to the states and territories.

The settlement agreement was reached originally by the nation's four largest tobacco companies: Philip Morris USA, R. J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corp., and Lorillard Tobacco Company. More than 40 other tobacco companies later joined the agreement.

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