The state attorney general's office says Kentucky received its annual payment of more than $101.7 million in tobacco settlement money this week.
Under the Master Settlement Agreement, the tobacco companies agreed to make annual payments in perpetuity to the settling states, to fund a national foundation dedicated to significantly reducing the use of tobacco products by youth and to abide by certain restrictions on promotional and lobbying activity. Kentucky’s share of the settlement is approximately $3.45 billion over the first 25 years. Payments are determined according to a formula that is calculated, in part, by the number of cigarettes sold by companies that have agreed to join the settlement. This year’s payment totals $101.7 million.
The total received by Kentucky since the initial MSA payment in 1999 is $1.4 billion for “Phase I.” An additional $600 million was received by Kentucky tobacco growers under “Phase II,” the Tobacco Growers Trust Agreement, which was created as a result of an MSA provision to address affected tobacco-growing communities in 14 states.
Most of the MSA payment was to be paid by the three largest cigarette manufacturers - Philip Morris USA, RJ Reynolds, and Lorillard. Philip Morris USA, RJ Reynolds and Lorillard put into a disputed payment account more than $750 million based upon their claim to reduced payments under a provision in the MSA called the Non-Participating Manufacturer (NPM) Adjustment. The Office of Attorney General is currently participating in an ongoing proceeding to obtain Kentucky’s full share of the disputed payment amounts going back several years.