Latest article, "States tackle deep-discount cigarettes," says that "cheap cigarettes have undercut the major tobacco companies and their ability to make payments to states under the master settlement agreement." Nothing could be further from the truth.
Participating manufacturers decrease in sales volume due to the reduction in smoking rates, increased government taxes, excise taxes and their inability to compete with independent brands on price, not because the situation in the settlement.
Supporters of the law to block the nonparticipating manufacturers to obtain the release of their escrow deposits (allocable share of provisions) see this as a way to put independent producers out of business brands. Ironically, some small companies, mostly foreign manufacturers who do not have U.S. tax obligations, to support this legislation because it would eliminate their smaller competitors. These stamps will still be in business, and price their products lower than the big tobacco. Legislation to abolish the allocable share of the provisions would lead to the closure of small local producers.
This law is anticompetitive and anticonsumer. Unfortunately, the settlement payments blinded by some States of the basic concepts of free enterprise. Independent producers propose legislation to make payments directly to the states based on the distribution share, rather than a deposit account. Big tobacco has shown his true colors, working to block these attempts.
A number of States, had the courage and foresight to block legislation to abolish the distribution share. Lawsuits filed by now in other countries to eliminate these TAWS unconstitutional. As only one of them makes its way through the courts successfully, similar laws in other states would fall like dominoes.