TOBACCO MANUFACTURER ORDERED TO PAY THE STATE $395,196.69

Attorney General J. Joseph Curran, Jr. announced today that the Circuit Court for Baltimore City has ordered Virginia based tobacco manufacturer CigTec Tobacco, LLC (“CigTec”) to immediately deposit $395,196.69 into escrow for its sales of cigarettes in Maryland during 2002. The Court also ordered CigTec to pay the State $395,196.69 in civil penalties for its knowing violation of the Maryland law that requires it to do so.

The Attorney General’s suit against CigTec was brought under a law enacted in 1999 as a result of the national 1998 Master Settlement Agreement (“MSA”) with the major tobacco companies. The law requires companies that are not parties to the MSA to, on April 15 of each year, deposit money into an escrow fund based upon the number of cigarettes sold in the State during the previous year. Escrow funds established under the law ensure that the State will have the ability to recover health care costs should tobacco companies be found responsible for such costs in the future.

The Court held that Maryland’s escrow law does not preempt federal law or violate State and federal constitutional guarantees, as argued by CigTec. The Court found that CigTec’s conduct, which included failing to deposit funds into escrow after being advised by the Attorney General of its obligation to do so, warranted the imposition of civil penalties, which may be awarded under the law.

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