US: Montana Reaches $30M Deal With Tobacco Manufacturers

Source from:  Winston-Salem Journal 07/26/2018

Montana has reached a deal with the main U.S. tobacco manufacturers and other industry groups in which the state will get $30.4 million as part of a Master Settlement Agreement resolution.

At dispute was Montana’s enforcement in 2004 for its legal obligations for the landmark 1998 agreement.

The manufacturers, including R.J. Reynolds Tobacco Co., agreed in 1998 to settle lawsuits that 46 state attorneys general — including North Carolina’s — brought over smoking-related health care costs.

The companies agreed to pay the states about $206 billion over 20-plus years. The agreement also sets marketing limits on the companies.

A provision allows manufacturers to pay less — and put that money into an escrow account — if they lose market share to smaller companies that weren’t part of the deal. Some smaller manufacturers have since joined the agreement.

In November, an agreement was reached in the escrow dispute between North Carolina and 25 other states and the nation’s largest tobacco manufacturers.

Montana, meanwhile, opted to pursue a state court path with the manufacturers, and to ply a strategy of not agreeing to settle for less than it was owed, Attorney General Tim Fox said Tuesday.

Montana said 19 tobacco companies were declining to make full annual payments to the state. The manufacturers jointly said Montana was falling short on its obligations.

“The most recent settlement with the state ... ensures the state of Montana is paid in full all funds withheld for calendar year 2004,” Fox said.

“Any businesses operating in Montana must be held accountable for wrongdoing.”

Reynolds said Wednesday it had no comment on the settlement.

The attorney general’s office said Montana recovered $3.37 million in back payments and interest, along with confirmation of retaining the full $27 million MSA payment for 2004.

Fox said there are additional annual MSA escrow amounts disputed that range from $2 million to $5 million a year.

Besides Reynolds and affiliate Santa Fe Natural Tobacco Co., the other settlement participants are: Philip Morris USA; Farmer’s Tobacco Co. of Cynthiana; Commonwealth Brands (now owned by ITG Brands LLC); Compania Industrial de Tabacos Monte Paz; Daughters & Ryan; House of Prince; an affiliate of Japan Tobacco U.S.A.; King Maker Marketing; Kretek International; Scandinavian Tobacco Group Lane; Liggett Group; Peter Stokkebye Tobaksfabrik; P.T. Djarum; Reemstma Cigarettenfabriken Gmbh; and Wind River LLC.

The N.C. attorney general’s office said North Carolina annually receives between $130 million and $140 million in MSA payments. Altogether, North Carolina had received $2.78 billion in payments as of November.

In the 26-state MSA settlement, Reynolds said in 2013 it expected to receive $1 billion in credits toward its MSA payment obligations from 21 states over five years.

In return, the manufacturers agreed to release money from the escrow accounts, including $108 million to North Carolina, according to the N.C. Attorney General’s Office.

Reynolds has spent more than $40 billion on payments since the MSA was reached.

The company, fully owned by British American Tobacco Plc since July 25, 2017, has not disclosed its MSA payment and escrow funding for 2017.

For 2016, it made an MSA payment of $1.9 billion, while placing $655 million of that amount into a disputed payments escrow account.

Since 2006, it has put at least $5.51 billion into escrow.  Enditem