Why states want you to keep smoking

I am sure you have all seen the ads states like Cal put out telling how bad smoking is for you.  They claim to want to help you quit and live a better life.  Truth is tho, they can not afford for you to quit smoking, nor can they afford reduced harm products like e-cigs to succeed.

In 1998, the 4 largest tobacco companies entered into what is known as the Master Settlement Agreement.  In that agreement, the tobacco companies agreed to pay 46 states (the other four states had already reached individual agreements) money to help cover the cost of smoking related illness and funds an anti-smoking advocacy group.

Now while that sounds good; the tobacco manufacturers paying to help care for those people their products were killing, and helping keep our children from getting hooked on smoking; that isn’t what some states did with the money.

Many states took out loans against the MSA money, such as CA.  This is taken from Report to Congressional Requesters February 2003 TOBACCO SETTLEMENT States’ Allocations of Fiscal Years 2002 and 2003 Master Settlement Agreement Payments.

California securitized its MSA payments in fiscal year 2003 and will receive $4.5 billion in securitized proceeds. The state pledged all of its MSA payments beginning in 2004 and continuing for 25 years to service the debt on the bonds issued to procure these securitized funds. According to the state’s Department of Finance, California allocated all of its fiscal year 2003 securitized proceeds to cover budget shortfalls.

So they got money but promised all the payments from the MSA money to pay it back. The problem with that is the amount of money that the participation manufacturers are required to annually contribute to the states varies according to several factors. All payments are based primarily on the number of cigarettes sold.

So, while they may say they don’t want you to smoke, reality is they can’t afford for you not to.


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