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AG Derek Schmidt: State resolves two additional years of disputed tobacco settlement payments

Release Date: Dec 03, 2018

TOPEKA – (December 3, 2018) – The State of Kansas has resolved two additional years of disputed payments made under the 1998 Tobacco Master Settlement Agreement (MSA), Kansas Attorney General Derek Schmidt announced today.

The agreement, which was finalized last week, settles disputes for payments made to the states in 2017 and 2018 by tobacco manufacturers who are part of the MSA. The disputes were related to the states’ compliance with the enforcement provisions of the MSA. The MSA directs states to “diligently enforce” various requirements of the settlement, including a requirement that other tobacco manufacturers that did not participate in the 1998 Master Settlement Agreement pay money into escrow when they make sales in the state. Last week’s settlement of disputed claims involved withheld funds owed to the State for the 2016 and 2017 sales years. Payments received by the State in April 2017 and April 2018 are now safe from any future adjustment or withholding and the State will have its portion of the previously withheld funds released to it in April 2019. The exact amount of that release has not been determined.

 “This agreement will further stabilize the State’s annual payment from the tobacco settlement,” Schmidt said. “While it is the decision of policymakers in the Legislature on how to allocate the funds received each year, our office has been able to bring to a close these two additional years of payment disputes and we will continue to diligently enforce our obligations under the MSA.”

In total, since Schmidt took office, the State has resolved disputed payments dating back to 2003. In recent years, the attorney general's office has worked with the legislature and governor to take major steps to improve the state's compliance with the MSA. In particular, legislation enacted in 2015 altered the accounting for cigarette sales in the state and groundbreaking compacts with the four resident Indian tribes to account for tobacco sales on tribal lands were negotiated and adopted.

Since its inception, the MSA has brought more than $1 billion in payments to Kansas.

A copy of the agreement reached last week is available at http://bit.ly/2BPlNoj.

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