What is the Master Settlement Agreement?

What is the Master Settlement Agreement?

The vaping craze took off in the mid-2000s and has continued to this day. However, various regulations and criticisms have kept vaping from reaching its potential. Some of these regulations include the premarket tobacco application (PMTA) deadline coming in May 2020. Currently, there are flavor bans and proposed flavor bans that are present in many U.S. states, as well as negative media coverage around vaping. The industry is under increased scrutiny from both the media and regulators such as the FDA. Where did this all begin? One should look back to the Master Settlement Agreement (MSA) for clues.



The Master Settlement Agreement: A History

Tobacco companies were being sued as early as the 1950s, according to the origins of the MSA. Between the 1950s and 1994, at least 800 private claims were filed against various tobacco companies in state courts. These claims included allegations of negligent manufacture, negligent advertising, fraud, and violation of various states’ consumer protection statutes. Initially, it looked like the tobacco industry had the upper hand, but state attorney generals were taking note of the tobacco industry’s effects on society, along with new research. By 1994, then-Mississippi Attorney General Mike Moore sent a clear warning to the tobacco companies when he filed a lawsuit against the tobacco industry, the first to do so. Other states quickly followed suit. Moore said, “The lawsuit is premised on a simple notion: you caused the health crisis, you pay for it.”

The MSA came about in 1998 when 46 states, the District of Columbia, Puerto Rico, four American territories, and tobacco companies such as RJ Reynolds, Philip Morris, and other tobacco manufacturers came to an agreement regarding cigarette smoking, marketing, and advertising. Four other states (Florida, Mississippi, Texas, and Minnesota) did not join the agreement and settled with the tobacco companies on their own. 

The goals of the MSA, aside from reducing cigarette smoking, included permanently restricting the advertising, promotion, and marketing of cigarettes. The tobacco companies under the MSA also agreed to pay the states annually and in perpetuity billions of dollars. The American Legacy Foundation (ALF) was founded with $1.5 billion in MSA settlement money to counter-advertise and educate the public about what cigarette smoking could do to the body and to the environment. Since the enactment of the MSA, cigarette smoking rates are at its lowest since 1951 (despite the doubling of the U.S. population) and per capita are at its lowest since the 1930s.


The Link Between The MSA and Vaping

Now you might ask, what does any of this have to do with vaping? First of all, consumers have reported switching to vaping from cigarettes when asked about their vaping experience. This has put vaping under the spotlight, as health officials from various health agencies and government officials such as local and state politicians have questioned the safety and efficacy of vaping compared to traditional cigarette smoking. A recent string of vaping-related illnesses and deaths have been misattributed to the legitimate vaping industry. These illnesses and deaths are due to black market vaping products containing THC and other illicit ingredients. Legitimate eLiquid manufacturers and retailers such as eLiquid.com do NOT sell THC products.

Today’s vapers may have been unaware of the MSA. This adds another layer of information regarding vaping that may have been previously unexplored by the majority of those who have reported switching to vaping from cigarettes. The states often speak about health concerns when flavor bans are discussed in the media, as well as the potential for addiction from certain products, but the story might go a lot deeper than that thanks to the presence of the MSA. 

A ProPublica report states that as of 2014, many states were still receiving millions and millions of dollars under the MSA. In addition, some states may have purchased tobacco bonds in 1998 under the impression that smoking rates would stay the same or even increase, which was not the case. Some states also demanded payment from the tobacco industries upfront. Combined with the stipulations of the MSA, the state governments saw it as an easy way to raise revenue perpetually. However, the opposite was true: smoking rates decreased drastically. Tobacco companies were paying less and less money to the states per the MSA as a result.

California is one of the prime examples of a state who purchased tobacco bonds and also proposed flavor bans statewide (there are already localities that have flavor bans in place). Governor Gavin Newsom encouraged California residents to not vape. The state has $8 billion in proceeds from selling these tobacco bonds that are outstanding since 2014. This bet on the future has raised concerns from pro-vaping advocates: what if California never even purchased those tobacco bonds? What if the MSA money was used more effectively in anti-smoking campaigns?

Massachusetts is another example of MSA money being misappropriated. Earlier this month, Governor Charlie Baker banned the sale of all e-cigarette products temporarily for four months. This state also received $282 million in 2014 alone per the MSA. The state only spent 1.4% of that money ($3.95 million) on smoking prevention efforts for that year. Like California, what could have been done if the money was used towards its intended purpose (smoking prevention) as stipulated in the MSA?


What can I do as a consumer advocate?

There is a close relationship between states with flavor bans or proposed flavor bans and the states who issued tobacco bonds and get significant amounts of money from the tobacco companies. This should shine a new light on why there are many current and proposed flavor bans throughout the United States. The relationship can help you when you advocate for vaping and take action on behalf of the vaping industry and all its consumers.

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