Press Releases

Reynolds Tobacco Company Ordered to Make Overdue Settlement Payments to Minnesota

Tobacco Prevention Coalition Urges Legislators to Dedicate Portion of Fees to Health

ST. PAUL (9/27/19) – On Tuesday, the Ramsey County District Court ordered R.J. Reynolds Tobacco Company (Reynolds) to pay Minnesota its unpaid tobacco settlement fees. For several years a dispute between tobacco companies has resulted in major cigarette brands not paying their required share of settlement fees to the state. Minnesotans for a Smoke-Free Generation, a coalition of more than 60 organizations that share a common goal of reducing youth smoking and ending tobacco’s harm for good, applauded the decision to recoup these delinquent fees and urged lawmakers to dedicate a portion of those funds to youth tobacco prevention.

In 2015, R.J. Reynolds and Lorillard merged and four of their cigarette brands –  KOOL, Maverick, Salem and Winston – were sold to ITG Brands, LLC (ITG) to avoid antitrust concerns. Since then, neither Reynolds nor ITG has paid their share of annual tobacco settlement fees to Minnesota, which are required in perpetuity as part of the 1998 Minnesota Settlement Agreement. In the ruling, Judge Thomas A. Gilligan, Jr., granted the state’s motion to enforce the Settlement Agreement and ordered Reynolds to pay those fees.

“Big Tobacco must be held accountable for the death and disease their products cause, and this ruling is a win for public health in Minnesota,” said Molly Moilanen, Vice President at ClearWay Minnesota^SM and Co-Chair of Minnesotans for a Smoke-Free Generation. “We again urge the Legislature to dedicate a portion of these settlement fees to health. Minnesota is at a crossroads when it comes to reducing tobacco addiction, because we’re facing a rising teen nicotine addiction epidemic at the same time ClearWay Minnesota is reaching the end of our limited life. Lawmakers must do more to ensure Minnesota has sustainable funding for preventing youth tobacco addiction long after ClearWay Minnesota closes our doors.”

Tobacco use remains a problem in Minnesota and is the state’s leading cause of preventable death and disease. Smoking costs an estimated $7 billion annually and takes the lives of more than 6,300 Minnesotans every year. Unfortunately, Minnesota’s progress to reduce tobacco use has been interrupted by the relentless tactics of the tobacco industry. Adult smoking rates have stalled and in 2017, youth tobacco use increased for the first time in a generation.

The Court’s Order and Memorandum states: “The Minnesota Settlement Agreement provided that the settling cigarette companies abide by restrictions on the sale and marking of cigarettes in Minnesota and make annual payments to Minnesota in perpetuity. The annual payments were intended to compensate Minnesota for health care costs arising from past, ongoing and future cigarette sales.”

ClearWay Minnesota is a nonprofit organization created by Minnesota’s tobacco settlement to address tobacco’s harm in the state throughout its 25-year limited life. The organization currently provides nearly 70 percent of total funding for cessation and prevention efforts around the state, but is set to sunset in 2022. As the sunset date nears, sustainable funding for tobacco prevention is needed. Hardly any tobacco revenue is currently dedicated to preventing youth tobacco use or helping residents quit. In 2018 alone, Minnesota took in more than $750 million in settlement fees and tobacco taxes – yet less than 1 percent of that was used for tobacco prevention or cessation.

Earlier this year, legislators introduced a bill (HF1058/SF1029) stating that if and when the companies pay the delinquent settlement fees, part of those funds will be dedicated to health. Specifically, the bill states that approximately $12 million a year would be used to combat youth tobacco use. The bill passed the House as part of the Health and Human Services omnibus budget bill but was not heard in the Senate and didn’t make it into the final budget agreement.

Minnesotans for a Smoke-Free Generation will continue to combat tobacco addiction by urging lawmakers to raise the tobacco age to 21, restrict or prohibit the sale of flavored tobacco products, raise the price of tobacco products and ensure sustainable funding for tobacco prevention and cessation.

About Minnesotans for a Smoke-Free Generation

Minnesotans for a Smoke-Free Generation is a coalition of more than 60 organizations that share a common goal of saving Minnesota youth from a lifetime of addiction to tobacco. The coalition supports policies that reduce youth smoking and nicotine addiction, including increasing tobacco prices, raising the tobacco sale age to 21, limiting access to candy-, fruit- and menthol-flavored tobacco, and funding tobacco prevention and cessation programs. 

Partners include: A Breath of Hope Lung Foundation, A Healthier Southwest, African American Leadership Forum, Allina Health, American Cancer Society Cancer Action Network, American Heart Association, American Lung Association in Minnesota, Apple Tree Dental, Association for Nonsmokers – Minnesota, Aurora/St. Anthony Neighborhood Corporation, Becker County Energize, Blue Cross and Blue Shield of Minnesota, Cancer Legal Care, CentraCare Health, Children’s Defense Fund-Minnesota, Children’s Hospitals and Clinics of Minnesota, ClearWay Minnesota^SM, Comunidades Latinas Unidas En Servicio – CLUES, Dodge County Public Health, Essentia Health, Gillette Children’s Specialty Healthcare, HealthEast, HealthPartners, Hennepin Healthcare, Hope Dental Clinic, Horizon Public Health, Indigenous Peoples Task Force, ISAIAH, JustUs Health, LAAMPP Alumni, Lake Region Healthcare, Lincoln Park Children and Families Collaborative, Local Public Health Association of Minnesota, March of Dimes, Mayo Clinic, Medica, Meeker McLeod Sibley Community Health Services, Minnesota Academy of Family Physicians, Minnesota Cancer Alliance, Minnesota Council of Health Plans, Minnesota Hospital Association, Minnesota Medical Association, Minnesota Nurses Association, Minnesota Oral Health Coalition, Minnesota Public Health Association, MN Association of Community Health Centers, MN Chapter of the American Academy of Pediatrics, Model Cities of St. Paul, Inc., NAMI Minnesota, North Memorial Health Care, NorthPoint Health and Wellness Center, Olmsted Medical Center, PartnerSHIP 4 Health, Perham Health, Preventing Tobacco Addiction Foundation, SEIU Healthcare Minnesota, Shift MN, St. Paul Area Chamber of Commerce, Steele County Public Health, Tobacco Free Alliance, Twin Cities Medical Society, UCare, Vision In Living Life “Change is Possible”,  WellShare International and Zumbro Valley Medical Society. Find out more at: smokefreegenmn.org.