State of New Mexico Receives Additional Tobacco Money

(SANTA FE, NM) -- New Mexico Attorney General King says New Mexico is $ 2.8-million richer today thanks to a supplemental payment under the 1998 tobacco Master Settlement Agreement (MSA). This payment is in addition to the state’s allocable share, in the amount of $ 35.9 million, received in 2007. The new money follows the distribution of the annual payment of $6-billion that was made in April to the 52 states and territories that are part of the MSA.

“These monies can be put to good use to help improve the health of New Mexico citizens,” says AG King. “We are pleased to receive this supplemental payment on behalf of the State.”

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The bulk of today’s distribution came from R.J. Reynolds Tobacco Company and Lorillard Tobacco Company. These companies have placed funds into a disputed payments account because of a dispute over the application of the “Non-Participating Manufacturer Adjustment” to the annual payments based on sales years 2003 and 2004. The companies released the funds because PricewaterhouseCoopers, the Independent Auditor to the MSA, has reduced the maximum potential amounts of these “Non-Participating Manufacturer Adjustments.” There was no similar release of funds from Philip Morris because, unlike R.J. Reynolds and Lorillard, it has not placed funds into the disputed payments account.

Today’s distribution also includes late payments, primarily from General Tobacco Company of Miami, and a smaller amount from the estate of a tobacco company that is being liquidated after filing for bankruptcy.

The MSA requires all the tobacco companies that are signatories to the agreement to make annual payments to the states in perpetuity. The payments are based on each company’s market share and were valued at $206 billion over the first 25 years of the agreement. In addition, the companies that participate in the agreement have agreed to abide by an extensive set of restrictions on their advertising, marketing and promotion of cigarettes, especially to youth. Thus far, the states have received over $53.7 billion in payments under the settlement.

Source: New Mexico Attorney General