Tobacco agreement brings $22.7 million to Arkansas | Arkansas Blog

Thursday, March 14, 2013

Tobacco agreement brings $22.7 million to Arkansas

Posted By on Thu, Mar 14, 2013 at 10:13 AM

An arbitration panel has signed off on a settlement of a dispute between tobacco companies and 17 states, including Arkansas, the District of Columbia and Puerto Rico that will bring $22.7 million to Arkansas in 2013.

Tobacco companies had alleged that Arkansas and the other states had violated terms of the 1998 Master Settlement Agreement that has paid $60 million to Arkansas every year and which supports the state's anti-smoking and other health-related programs.

The settlement allows Arkansas to receive 54 cents on the dollar of the disputed amount. A release from Attorney General Dustin McDaniel's office about the settlement is on the jump. R.J. Reynolds' release is here.

Settlement ends long-running dispute over funds intended for State

LITTLE ROCK — Attorney General Dustin McDaniel announced today that an arbitration panel has issued a ruling that will allow a settlement to proceed between Arkansas and the tobacco companies that signed the Master Settlement Agreement. The settlement ends a long-running dispute and restores certainty to the State’s annual payments from the 1998 Master Settlement Agreement.

In the agreement, Arkansas will receive its share of more than half of the money that has been held in escrow for nearly a decade as the dispute was ongoing.

The tobacco companies argued that Arkansas and certain other states had violated the Master Settlement Agreement by failing to diligently enforce state tobacco laws. The state disagreed with the assertion.

“The tobacco companies’ challenge could have jeopardized the entire annual payments that the state receives, and with them, the important anti-smoking and public health efforts paid for by these funds,” McDaniel said. “This settlement assures that we no longer face that risk. This year, the state’s annual payment will increase to its rightful amount for the first time in nearly a decade. In addition, the state will receive more than half of the disputed funds. This resolution allows us to move forward with certainty in regard to these vital health programs.”

Arkansas will receive the entire amount of settlement money that has been held in escrow, with the 2013 payment to be boosted by approximately $22.7 million. The state receives 54 cents of every dollar of the disputed payment amount, under the agreement. The tobacco companies take the rest as credits on future payments. It is possible that the state’s share will increase if other states join in the agreement.

Under terms of the MSA, Arkansas receives approximately $60 million per year.

McDaniel led the effort to reach the settlement, which was joined by 16 other states, including California, as well as the District of Columbia and Puerto Rico.

McDaniel served as co-chairman of the Tobacco Committee of the National Association of Attorneys General from 2010 to 2012, and he said he sees this settlement as "one of the most significant accomplishments of my entire service as Attorney General."

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