For immediate release - Thursday, June 19, 2003.
Contact Bob Brammer - 515-281-6699.
Tobacco Companies to Pay Iowa
Disputes Resolved on Companies' Payments to States
DES MOINES. Iowa will receive another $726,171.95 from tobacco companies by June 30 as a result of a national settlement resolving
several disputes over payments to the states under the 1998 "Master Settlement Agreement," according to Iowa Attorney
General Tom Miller.
Under the landmark 1998 "MSA" the major tobacco companies agreed to pay 46 states $206 billion over 25 years, but
several issues arose since then about payment obligations. States and the companies have resolved those disputes, and the
companies agreed to pay $160 million by June 30.
Most of the money will come from Brown & Williamson, the nation's third-largest cigarette maker, which will pay $150
million to states nationwide. A key issue in dispute concerned cigarettes manufactured by Brown & Williamson but sold by
another company, Star Tobacco Company, which was not a party to the Master Settlement Agreement. Tobacco company
payments due each year under the MSA are adjusted for various factors, including inflation and how many cigarettes each
company sells. Brown & Williamson had argued it was not responsible for billions of cigarettes sold by Star Tobacco under
a contract manufacturing arrangement.
Under the new settlement, Brown & Williamson and all the major tobacco manufacturers agreed to be responsible for
cigarettes they make for other companies. The settlement also resolves other complex issues including whether the MSA
was a "significant factor" in causing cigarette market share of the major companies to decline during the first four years of
the MSA. The new agreement resolves those disputes, which could have reduced payments to the states by hundreds of
millions of dollars.
Iowa's share of tobacco industry payments received from 1998 to 2003 is over $250 million.
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