Smaller Tobacco Firms Still Must Pay

Minn. court upholds MSA fee

ST. PAUL, Minn. -- Last week, Minnesota's highest court upheld a 35-cents-per-pack fee on smokes made by smaller manufacturers, reported the Associated Press.

The Minnesota Supreme Court voted 4 to 1 to keep the fee for cigarette makers who were not part of the state's Master Settlement Agreement (MSA) multi-billion-dollar tobacco settlement in 1998. The ruling applies to lesser-known brands such as USA Gold and Roger cigarettes, which have been gaining market share since the settlement.

Those manufacturers sued over the fee, [image-nocss] saying the state was unfairly targeting them even though they were never accused of misconduct in the lawsuit against the big tobacco companies.

"Whether appellants have engaged in wrongdoing is irrelevant to the inquiry: it is the harmful nature of their products that triggers the payment, and that their products are harmful is not disputed," Justice Alan Page wrote for the majority.

The current case does not involve the 2005 health impact fee, which raised cigarette prices by 75 cents a pack. A lower court struck down that fee, and the state Supreme Court is expected to weigh in later this year. The health impact feeworth about $200 million a year to the statehelped leaders find their way out of last session's budget disagreements.

The 2003 fee on off-brand cigarettes brings about $6 million a year, according to the state Department of Revenue.

The court opinion noted that the fee is significantly lower than the settlement costs borne by the big tobacco companies64 cents a pack for those involved in the settlement and 48 cents for those who later joined the agreement, which includes restrictions on advertising, lobbying and merchandising.

Justice Helen Meyer dissented, saying the fee is unfair treatment for the companies that were not part of the landmark tobacco case. Chief Justice Russell Anderson and Justice Lorie Gildea did not participate in the ruling.

Click here for the full text of the Minnesota Supreme Court ruling.