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Ohio Receives More Than $313 Million in Tobacco Payments
COLUMBUS, Ohio -- Ohio has received its second payment under the 1998 tobacco Master Settlement Agreement, reports state Attorney General Jim Petro. The Buckeye State received $11,731,698, making the total 2004 payment for Ohio $313,142,945."There are several reasons why this payment is lower than in previous years, including increased sales by companies that didn't join the settlement and because fewer people are smoking today," Petro notes. "This money will be divided among state agencies per House Bill 434, which is being decided in the General Assembly now."The first payment of $301,411,247 was received April 15. These payments are the state's share of approximately $6.2 billion in payments made by tobacco companies to 52 states and territories under the agreement. The companies are required to make these payments in perpetuity. In addition, the companies that participate in the agreement have agreed to abide by an extensive set of restrictions on their advertising, marketing and promotion of cigarettes. These restrictions are not binding on those companies that have refused to join the agreement.The payments are determined according to a formula that is calculated, in part, by the number of cigarettes sold by companies that have agreed to join the settlement. Payments to Ohio were reduced by approximately $33 million, Petro says, because of increased sales by companies that have refused to join the settlement. At the time of the settlement, these companies had less than 1% of the national market, but today they account for about 8% of sales nationwide.These companies have been able to increase their sales, in part, because of an unintended loophole in statutes passed in connection with the agreement. Ohio and 28 states have passed legislation designed to close the loophole and eliminate the substantial cost advantage enjoyed by companies that have refused to participate in the agreement. The National Association of Attorneys General has adopted a resolution favoring this legislation. Similar legislation is pending in most other states, Petro says."