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Tobacco settlement bill rife with interest, debate

JEFFERSON CITY, Mo. – A bill before the Senate Judiciary Committee dealing with Missouri’s role in the Tobacco Master Settlement Agreement (MSA) between tobacco companies and and most states in the country underwent serious debate in a packed Senate Lounge Tuesday afternoon.

Philip Morris Inc., R. J. Reynolds, Brown & Williamson and Lorillard cigarette manufacturers settled with the attorneys general of 46 states in the country to pay $10 billion annually to make up the cost of medical care received by people due to health concerns from smoking cigarettes. It also imposed heavy restrictions on advertising tobacco products, essentially forbidding they be marketed to children.


SB 1096, sponsored by Sen. Bob Dixon, R-Springfield, and co-sponsored by Sen. Joe Keaveny, D-St. Louis, would involve non-participating manufacturers (NPMs) into the settlement as well. In Missouri, smaller cigarette manufacturers, generally those outside the four aforementioned involved in the MSA, are not held to the same requirements imposed by the MSA.

The bill is part of a settlement agreement available for Missouri, which proponents argue would bring tens of millions of new revenue to the state.

Proponents, including large tobacco manufacturers looking to spread the burden of that annual $10 billion, say this bill would close a loophole in the agreement which every state but Missouri has closed, while opponents, namely smaller cigarette manufacturers, argue it infringes upon small business and would force a massive markup of their product.

Beth McCallum, who represents 20 smaller cigarette manufacturers who voluntarily joined the MSA after it was settled, spoke in favor of the legislation, which Attorney General Chris Koster’s office supports.

“In Missouri, you’ve got an opportunity for smaller manufacturers to not play by the rules,” McCallum said. “It penalizes them for stepping up to the plate, joining the MSA and pay for the health risks of their products.”

Sen. Eric Schmitt, R-Glendale, was one of the strongest opponents of the legislation on the committee. He argued that voluntary entry into the MSA was much different than forcing NPMs into the same terms.

“Your folks were under no obligation to sign onto the MSA, chose to do that, but your testimony today is that other companies haven’t made the decision to do what your client did.”

Sen. Kurt Schaefer, R-Columbia, argued that the terms of the MSA dictated that payment was made into the escrow on an annual basis to pay for ongoing medical costs and that the small manufacturers still contributed to that problem. He asked repeatedly how much NPM cigarettes cost compared to name brands like Marlboro. The NPM cigarettes were much cheaper.


“You don’t think that dumping cheap cigarettes on Missouri is a behavior that’s analogous to what the larger manufacturers were doing?” Schaefer asked a representative for a smaller tobacco manufacturer. “You’re using your market advantage because you’re not participating and you’re not following the rules everyone else has to follow. We’re the dumping ground for cheap cigarettes in the United States because of this issue.”

Schmitt disagreed.

“The reason why there was a MSA wasn’t because someone was selling cigs at a certain price,” he said. “It’s because Joe Camel was being marketed to school kids, that pregnant women were being told this was okay. To say folks that didn’t participate in that untoward behavior are not participating by the rules is ridiculous.”

The bill will likely be voted on in executive session next week.