Kentucky receives $105 million from tobacco settlement

Kentucky received $105,477,754.14 as the state’s share of this year’s Tobacco Master Settlement Agreement (MSA) payment, Attorney General Russell Coleman said on Tuesday.

In 1998, Kentucky was among 51 states and territories who reached the MSA with four major cigarette manufacturers. The historic agreement resolved dozens of state lawsuits against the tobacco companies for Medicaid and other health costs related to smoking. In addition to the annual compensation, the MSA seeks to reduce underage smoking and decrease new smokers. Each state determines how the settlement funds are used.

Here in Kentucky, half of the funds received under the MSA are allocated for agricultural diversification through grants distributed by the Kentucky Department of Agriculture. The rest of the money is split evenly between the Early Childhood Development Fund and the Kentucky Health Care Improvement Fund. The General Assembly’s Tobacco Settlement Agreement Fund Oversight Committee oversees all agricultural grant application decisions and monitors the expenditures of the other funds.

“As someone who spent his teenage years working in Logan County tobacco patches, this is a reminder of the enduring importance of this industry to our commonwealth,” Coleman said. “For more than two decades, Kentucky has put these funds to work supporting our farm families and helping our children live healthier and more productive lives.”

Under the settlement terms, participating cigarette manufacturers must make a yearly payment to the states based on an annually calculated rate per number of cigarettes sold each year. Kentucky will continue to receive payments from participating manufacturers each year they sell cigarettes in the United States. Last year, Kentucky received over $118 million, which shows a decrease in cigarette use in the state.

Assistant Attorney General Michael Plumley administers the MSA for the Attorney General’s Office, ensuring that cigarette manufacturers perform their responsibilities, and that Kentucky gets its share of funds, under the agreement.

According to the National Association of Attorneys General, the MSA continues to have a profound effect on smoking in America, particularly among youth. Between 1998 and 2019, U.S. cigarette consumption dropped by more than 50%. During that same time, regular smoking by high schoolers dropped from its near peak of 36.4% in 1997 to a low 6.0% in 2019.

Kentucky has now received $2.7 billion from the nationwide agreement with cigarette manufacturers since its inception in 1998.