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OAG reports Kentucky receives more than $117 Million from Tobacco Master Settlement Agreement

Attorney General Andy Beshear announced this week that Kentucky received $117,586,774.56 in tobacco settlement money last week.

“For two decades the Tobacco Master Settlement Agreement has had a positive impact on the Commonwealth, supporting early childhood education, health programs, cancer research, and helping to aid our farmers and create sustainable farm-based businesses,” Beshear said. “Since the first payment in 1999, Kentucky has received more than $2 billion under the agreement, and is on pace to collect nearly $2.5 billion over the first 25 years of the agreement.”

On behalf of the state, Beshear’s office monitors and enforces the terms of the Master Settlement Agreement (MSA) and the related statutes, in cooperation with other agencies including the Department of Revenue and the Office of State Budget Director.

Each state determines how the MSA funds are distributed and spent.

In Kentucky, the General Assembly has designated that half of the MSA funds be invested in agricultural diversification through grants issued by the Governor’s Office of Agriculture Policy, which administers the Kentucky Agriculture Development Fund.

Under the MSA, the tobacco companies agreed to make annual payments, in perpetuity, worth approximately $208 billion to states and territories that are signatories to the agreement.

Since reaching the agreement in 1998, tobacco companies have had to compensate states for some of the medical costs associated with tobacco-related illnesses and restrict advertising and promotion of cigarettes in the United States. Annual payments are determined by a formula calculated, in part, by the number of cigarettes sold by the companies that agreed to join the settlement.

The three largest cigarette manufacturers – Philip Morris USA, RJ Reynolds and Lorillard (the latter two now merged as Reynolds American) – pay most of the MSA payment.

The Tobacco Settlement Agreement Fund Oversight Committee oversees the determinations on grant applications from the agricultural fund. The remainder of Kentucky’s MSA revenue is used to help improve the health outcomes of Kentucky children and families.

From Office of the Attorney General

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