The Tobacco Master Settlement Agreement, Model Escrow Statute, And The Nevada Tobacco Directory
The Master Settlement Agreement
In 1998, the Attorneys General of 46 states signed the Master Settlement Agreement (“MSA”) with the four largest tobacco companies in the United States: Brown & Williamson, Lorillard, Philip Morris, and R.J. Reynolds. The MSA and related documents can be found at the National Association of Attorneys General website, http://www.naag.org/tobacco.php.
The MSA settled lawsuits by the states to recover costs associated with the treatment of smoking-related illnesses. Four states – Florida, Minnesota, Texas, and Mississippi – settled their tobacco cases separately from the MSA states. The MSA authorizes other tobacco product manufacturers to participate in the Agreement, and since November 1998, over forty additional tobacco companies have joined the MSA.
The MSA imposes restrictions on the advertising, promotion, and marketing or packaging of cigarettes, including a ban on “targeting youth,” and requires the participating manufacturers to make payments to the MSA states on or before April 15th of each year.
In 1999, the Nevada Legislature approved two bills which determine how the tobacco settlement proceeds are distributed. Pursuant to the mandates set forth by the Nevada Legislature in Assembly Bill 474 and Senate Bill 496, approximately 60% of Nevada’s annual MSA payment goes toward health care programs, and 40% funds Nevada’s Millennium Scholarship Program. The Nevada State Treasurer is charged with administering the annual MSA payments.
The Model Escrow Statute (NRS Chapter 370A)
Recognizing that not all cigarette manufacturers are signatories to the MSA, the MSA also contains provisions designed to ensure a source of recovery for the treatment of smoking-related illnesses from non-signatory manufacturers. Pursuant to the MSA, states enacted legislation, generally referred to as “Model Escrow Statutes,” requiring the non-participating manufacturers (NPMs) to annually deposit into a qualified escrow fund, of which the State is a designated beneficiary, approximately 2 cents per cigarette based upon the preceeding year’s sales. Nevada’s Model Statute is Chapter 370A of the Nevada Revised Statutes (NRS), and can be found on the Nevada Legislature’s website, http://www.leg.state.nv.us/. The escrow fund is a fund against which Nevada can recover any judgment or settlement the State may obtain based on claims against an NPM for costs arising out of smoking-related illnesses. If no judgment is entered within twenty-five years following the date of deposit, the funds revert back to the NPM.
The Nevada Tobacco Directory
During the 2005 Nevada Legislative Session, the Nevada Legislature adopted Assembly Bill (AB) 436. The provisions of AB 436 compliment Nevada’s Model Escrow Statute. AB 436 has been codified into NRS Chapter 370.
AB 436 imposes several requirements on tobacco product manufacturers and distributors. In order to sell cigarettes and/or roll-your-own tobacco in Nevada, the manufacturer of the tobacco product must submit an initial Certificate of Tobacco Product Manufacturer to the Office of the Attorney General. If the certificate is approved, the tobacco product manufacturer and its certified brands will be placed on the Nevada Tobacco Directory. The Tobacco Directory is posted on the Department of Taxation’s website, http://tax.nv.gov/Forms/Cigarette_and_Other_Tobacco_Products_Tax_Forms/. It is unlawful for any person to affix a stamp to a package or other container of cigarettes of a manufacturer of tobacco products or brand family which is not included in the Tobacco Directory, or to sell or offer or possess for sale in Nevada cigarettes and/or roll-your-own of a manufacturer of tobacco products or brand family not included in the Tobacco Directory.
In addition, on or before April 30th of each year, all tobacco product manufacturers that sold cigarettes and/or roll-your-own product in the preceding year, or that are currently selling cigarettes and/or roll-your-own product in Nevada, are required to execute and deliver to the Office of the Attorney General an annual Certificate of Tobacco Product Manufacturer.
Finally, the law requires that all NPMs make the escrow payment required by NRS Chapter 370A on a quarterly basis.
The Certificate of Tobacco Product Manufacturer and related Definitions, General Information, and Checklist are to be used when filing an initial certification, annual certification, or supplemental certification. The NPM Quarterly Certificate of Compliance is to be used by NPMs when filing their quarterly escrow payment certification.
In addition, as of July 1, 2010, all cigarettes sold in Nevada must be Fire Standard compliant. For more information about Fire Standard certification of cigarettes, refer to the link below for the Nevada State Fire Marshal’s tobacco web page.
For further information, please contact:
Nevada Attorney General's Office
Tobacco Enforcement Unit
5420 Kietzke Lane, Suite 202
Reno, NV 89511
Certificates of Compliance
NPM Escrow Resources
Fire Safe Certification Information
Tobacco Enforcement Unit Volunteer Form