Legislative fix would force cheap tobacco companies to raise prices and protect millions in state budget

March 12, 2014 – Tobacco Free Missouri (TFM) joined health organizations and associations urging Missouri legislators to pass legislation that would protect state budget resources and result in raised prices for tobacco companies that sell cheap discount cigarettes.

The legislation, HB 1242 (sponsored by Reps. Rick Stream and Chris Kelly) and SB 820 (sponsored by Sen. Kurt Schaefer), would close a current loophole within the Master Settlement Agreement (MSA).  By closing the loophole, millions of dollars in Missouri revenue could go towards programs such as health care for low-income Missourians (Medicaid), education and tobacco cessation.  In addition, the change would result in smaller, discount tobacco companies increasing the price of their cigarettes. Missouri is the only state that participated in the 1998 MSA that has failed to close this loophole for nonparticipating manufactures.

“We support legislative changes that would force discount tobacco companies to raise their prices because higher cigarette prices discourage smoking, particularly for younger people,” said Traci Kennedy, Director of TFM. “The higher the prices, the harder to get hooked on cigarettes.”

In accordance with the MSA, tobacco companies are required to pay into an escrow account each year.  Monies paid into this account were awarded to the states as retribution for the costs associated with smoking related death and disease.  The problem in Missouri is that funds paid in by smaller tobacco companies, are released back to the companies.  It is imperative that Missouri comply with the standards set by the MSA or be in jeopardy of losing the $130 million received each year.  Thus far, the state has failed to invest these dollars in tobacco prevention and cessation.  Legislators have the opportunity to close the loophole and commit to investing in the health of Missourians.