SUMMARY OF THE MULTI-STATE TOBACCO SETTLEMENT

The 1998 multi-state settlement agreement with the major U.S. tobacco companies has and will continue to direct a lot of money to the states, but it says nothing about how that money should be spent. Accordingly, the agreement will not, by itself, substantially reduce tobacco use unless the state legislatures invest a significant amount of the state settlement proceeds into new and expanded efforts to reduce smoking and other tobacco use.

For a special report on how state's are using the MSA funds, click here.  For more information about the settlement itself, please continue reading this page.

The agreement requires the tobacco companies to pay approximately $195.9 billion to the states between now and 2025 (in current dollars). These payments are indexed to inflation, but will be reduced if the participating tobacco companies' combined U.S. cigarette sales or their combined percentage share of the total U.S. cigarette market goes down. The agreement places no restrictions on how the states must spend the settlement funds they receive.

This means we will receive about $25 million annually for the next 25 years. But, as mentioned above, there are no restrictions on how the state must spend the money. For this reason, during the 2000 legislative session, the South Dakota Tobacco-Free Kids Network encouraged the Governor and the Legislature to invest in a comprehensive tobacco prevention and reduction program for South Dakota using a portion of the annual tobacco settlement payments. Inroads were made during the session. We will be attempting to build on these efforts by reiterating the need to invest in South Dakota' future prior to and during the 2001 legislative session. Your help is appreciated.

Other important points in the settlement:

1. The Agreement Does Not Address The Following Important Matters
2. The New Tobacco-Marketing Restrictions Are Helpful But More Needs To Be Done
3. The Agreement's New Public Education Program To Reduce Youth Tobacco Use
4. The New National Foundation's Tobacco-Related Research
5. Dissolution Of Tobacco Industry Organizations
6. Optional State Action To Eliminate Payment Reductions From Lost Market Share
7. Possible Federal Right To Some Of The Payments
8. Possible Payment Reductions Based On New Federal Tobacco Taxes Or Charges
9. Limits On Tobacco Company Efforts To Influence State Use of Settlement Funds
10. Tobacco Company Lobbying Restrictions
11. New Procedural Requirements Pertaining to Lobbying
12. Required Tobacco Industry Document Disclosure
13. Legal Claims Against the Tobacco Companies That The Agreement Settles
     

Links to additional resources:

www.ncsl.org/statefed/tmsasumm.htm
National Conference of State Legislators' web site page on the tobacco settlement, which includes a summary and analysis of the multi-state settlement, other related information, and a very useful list of related frequently asked questions with answers.

http://www.tcsg.org/tobacco/settlement/updates.htm
National Center for Tobacco-Free Older Persons of The Center for Social Gerontology site contains regularly updated information on what is happening in states regarding the almost $250 billion the tobacco industry must pay to the states over the next 25 years as a result of the settlements they have signed to resolve Medicaid lawsuits filed by the states. The information included focuses mostly on how the tobacco settlement funds are being directed toward programs for two major purposes: aging programs and tobacco control programs.

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