Maryland Receives $12 Million in Cigarette Restitution Funds

BALTIMORE, MD (March 4, 2009) - Attorney General Gansler today announced that Maryland has received $12.2 million from tobacco companies in a supplemental payment as the result of a settlement related to the Master Tobacco Settlement Agreement (MSA.) The payment represents Maryland’s share of $540 million that was initially withheld in April 2008 by the tobacco industry from its annual payment to states who participate in the MSA. The payment has been deposited into the Cigarette Restitution Fund.

“We are thrilled with the receipt of these funds,” said Attorney Douglas F. Gansler. “The funds are particularly helpful as the State wrestles with a budget deficit and declining revenues. The $12.2 million payment is available immediately to benefit Maryland citizens and will provide critical support to health-related programs across the State.”

The $540 million initially withheld by the tobacco industry related to a dispute of its 2005 payments to the states. In April 2008, tobacco companies placed the funds into a disputed payments account. As part of ongoing arbitration related to past year payments, tobacco manufacturers recently agreed to release the funds to the states.

Under the MSA, participating tobacco manufacturers make substantial payments to states that have reached settlements with the industry. Since the agreement was executed in 1998, Maryland has received more than $1.3 billion in payments. In addition to making payments, the cigarette manufacturers who are parties to the settlement are bound by a wide array of restrictions on the advertising, promotion and marketing of cigarettes, including outright bans on targeting youth and distribution of merchandise advertising a cigarette brand. Studies show that the vast majority of current adult smokers began smoking before the age of 18, and since the MSA took effect, youth smoking rates nationally have dropped nationwide.

The Office of the Attorney General administers the State’s participation in the MSA.