Important Message for All Tobacco Product Manufacturers, Wholesalers, and RetailersEffective August 31, 2009, all Participating Manufacturers, Subsequent Participating Manufacturers and Non-Participating Manufacturers that sell cigarettes in Louisiana must be in compliance with the Fire Safety Standard and Firefighter Protection Act. For more information about new compliance standards, please click Louisiana Fire Safety Standards for Cigarettes found under More Resources to the right of this page.
The PursuitOn March 13, 1996, the Louisiana Attorney General’s office filed one of the initial lawsuits against the tobacco industry seeking: a) to prohibit big tobacco from targeting youth; and, b) the reimbursement for monies paid by the State of Louisiana for the treatment of smoking related illnesses.
The DocumentsThe result of this lawsuit was a settlement with a major tobacco manufacturer, Liggett Group, Inc., that disclosed secret tobacco documents revealing the tobacco industry’s active participation in a conspiracy to addict kids to its product, and a complex web of deception regarding the risk of cigarette smoking. These industry documents formed the evidentiary foundation upon which the tobacco manufacturers were sued by fifty states.
The Award: $206 BillionOn November 23, 1998, Attorneys General from forty-six states signed the historic $206 Billion Master Settlement Agreement, of which Louisiana would receive approximately $4.6 Billion over the first twenty-five years. Shortly thereafter, the State of Louisiana received an initial payment of $233 Million. Payments from the participants to the Master Settlement Agreement will continue as long as tobacco products are sold in the state of Louisiana.
The Louisiana Attorney General’s office has consistently advocated that the proceeds of the settlement be dedicated to education, enforcement, youth substance abuse, tobacco cessation programs and research of tobacco-related diseases. In October of 1999, the citizens of Louisiana passed an amendment to the Louisiana Constitutional which created the Millennium Trust and the Louisiana Fund.
The Millennium Trust Fund is a constitutionally-protected, permanent fund composed of three separate trust funds dedicated to: Health, Education, and the TOPS program. Only the interest earned on the Millennium Trust fund is spent every year, allowing the principal to grow over time. This fund currently holds over $1.2 Billion for Health, Education, and TOPS. The Louisiana Fund is a non-permanent trust fund established for the same three purposes. Money from it is appropriated by the Legislature every year.
In November, 2001, as a measure to mitigate the risk that tobacco companies would be unable to pay their obligations under the Master Settlement Agreement, the State of Louisiana “securitized” 60% of the income stream due under the settlement with a bond issue. In other words, the State used the tobacco settlement income stream as collateral and borrowed money against the collateral. The people who bought the bonds assumed the risk that tobacco companies would not be able to make payments. The state received approximately $1.1 Billion for the bonds. The state continues to receive the payments due on the remaining 40% of the settlement payments, 75% of which flows into the three permanent funds comprising the Millennium Trust Fund.
The ProvisionsThe Master Settlement Agreement places numerous restrictions and prohibitions upon the tobacco manufacturers. These include:
- Prohibits advertising and marketing of tobacco products to youth
- Bans the use of cartoons in advertising
- Restricts outdoor advertising to smaller than 14 square feet
- Prohibits outdoor advertising on billboards, arenas, stadiums, shopping malls, videogames arcades and transit advertising
- Restricts brand name sponsorship to one brand name sponsorship per year
- Prohibits tobacco brand name merchandise
- Prohibits free samples to youth and bans gifts without proof of age
- Restricts minimum pack size to 20 cigarettes per pack
- Disbands tobacco-related organizations
- Prohibits the tobacco manufacturers from opposing legislation intended to limit youth access to and consumption of tobacco products
- Requires the tobacco manufacturers to pay $25 million each year for ten years to fund a charitable foundation which will support the study of programs to reduce teen smoking and substance abuse, and the prevention of diseases associated with tobacco use
EnforcementEnforcement of the Master Settlement Agreement (MSA) has been delegated to the National Association of Attorneys General and the Attorneys General of the individual states. The Louisiana Department of Justice has created the Tobacco Settlement Enforcement Unit within the agency to enforce the provisions of the Master Settlement Agreement. The unit works close with the National Association of Attorneys General and Attorney General’s offices from other states.
The Tobacco Settlement Enforcement Unit’s duties include:
- Handling litigation arising from or relating to the MSA;
- Monitoring compliance with the MSA;
- Monitoring the payment stream from the MSA;
- Monitoring the statutory compliance of non-participating manufacturers.
Additionally, the Tobacco Settlement Enforcement Unit serves the public by offering educational presentations on the MSA and other tobacco-related issues. For information and scheduling a presentation, please contact Carolyn Bajoie at BajoieC@ag.state.la.us.
If you should have any questions concerning the Master Settlement Agreement, if you would like to notify the Unit of any possible violations of the MSA or other Louisiana laws, or you would like to schedule a tobacco-related presentation, please contact us at our toll free number—1-800-241-9311.