New Mexico Sues Big Tobacco Companies To Collect Withheld Settlement Payments Of Approximately $84 Million

Smoking cigarette

On November 23, 1998, 46 US states and five territories signed on to a $206 billion tobacco settlement.  The settlement required companies, including Philip Morris, R. J. Reynolds, Brown & Williamson and Lorillard, to make monthly settlement payments in the millions of dollars to the states – among other actions.

Although most of the states have subsequently renegotiated the annual settlement payments, eight states, including New Mexico, have not done so.  One of the primary reasons for renegotiation was an erosion in the tobacco companies’ businesses due to tax-free sales by Native American tobacco merchants which did not participate in the settlement.

KOB News reports that the State of New Mexico is suing more than a dozen tobacco companies, citing conspiracy and breach of contract.  See the KOB News report HERE.

Attorney General Hector Balderas claimed the tobacco companies have withheld portions of required annual payments.  New Mexico’s lawsuit centers on the tobacco companies’ alleged abuse of a specific provision of the 1998 settlement, resulting in New Mexico’s loss of more than $84 million over the last 14 years.

The tobacco companies file disputes every year, withholding a percentage of the payments and triggering arbitration.  For example, the arbitration over 2004 payments wrapped up only last month, with arbitration over 2005-2007 payments just beginning.

The average annual payments to New Mexico range between $30-40 million.  The estimated price tag of smoking-related health care costs in 2021 was more than $980 million.

The irony of this is not lost upon the writer of this article, as New Mexico currently uses taxpayer funds to maintain a program for its residents to obtain permits, grow, manufacture, sell, purchase and smoke (or otherwise consume) marijuana recreationally.  The crux of the 1998 tobacco settlement was to mitigate rising health care costs and detrimental health effects due to smoking, and to undertake changes in advertising to discourage tobacco use by children and young adults.

James 3:17 [NKJV]
“But the wisdom that is from above is first pure, then peaceable, gentle, willing to yield, full of mercy and good fruits, without partiality and without hypocrisy.”

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