Minnesota asks Big Tobacco firms: Where's the money?

Several cigarette brands, including Salem and Winston, have stopped paying money owed to the state of Minnesota under the historic 1998 court settlement with Big Tobacco.

The shortfalls, estimated at $15 million a year, come as funding for the state's free quit-smoking assistance program is set to expire next year.

Without new funds, Minnesota would be the only state that does not provide a free tobacco cessation program — even as teen tobacco use is rising and a historic drop in adult tobacco use appears to be slowing down.

The state has sued the tobacco firms to recapture the funds, and bills were introduced in the Legislature last week to dedicate any resulting money to anti-tobacco efforts. Those efforts include the free Quitplan program, now operated by ClearWay Minnesota, a nonprofit established using some money from the original $6.5 billion tobacco lawsuit settlement.

Still, Minnesota pulled in $154 million in 2018 in tobacco settlement payments from brands that have been paying, as well as $648 million in taxes on tobacco products. That revenue goes into the state's general fund, with little spent on tobacco control.

Altogether, Minnesota spends $17 million annually on tobacco control, with $12 million of that coming from ClearWay, according to the Minneapolis-based nonprofit. By comparison, a 2014 study by the U.S. Centers for Disease Control and Prevention (CDC) in Atlanta said that Minnesota should be spending $54 million annually.

"This was the largest and most significant lawsuit in the state's history, and for none of that money to be earmarked for the purposes that the lawsuit was serving is an unforgivable shame," said Doug Blanke, director of the Public Health Law Center at Mitchell Hamline School of Law in St. Paul. "That is one of the great tragedies of this experience."

Since the landmark legal settlement, Minnesota's adult smoking rate has dropped 38 percent, reflecting the impact of tobacco cessation programs, higher cigarette taxes and indoor smoking bans.

But recent trends paint a changing picture. A recent ClearWay survey found that the decline in adult smoking rates leveled off between 2014 and 2018. The rates went from 14.4 percent to 13.8 percent, a drop that is not statistically significant.

Among young Minnesotans, tobacco use has increased for the first time in 17 years, fueled by a 50 percent jump in e-cigarette use by teens over the past three years, according to a Minnesota Department of Health survey.

The CDC released a "Progress Erased" report last week showing that 4.9 million middle school and high school students were users of tobacco products in 2018. One in 5 teens used e-cigarettes, according to the CDC, which highlighted prevention efforts in Minnesota and encouraged other states to adopt them.

Twenty-three cities in Minnesota have raised the age for purchasing tobacco products to 21, said Laura Oliven, tobacco control manager for the Health Department.

Oliven participated in a CDC national news conference to release the report, describing Minnesota's efforts to reduce e-cigarette usage among teens by educating teachers and doctors about the harm that nicotine can cause in developing brains.

"The nicotine changes that early brain chemistry," she said in an interview. "It kind of locks in that association between nicotine and pleasure and creates a lifetime susceptibility to addiction. And that's really scary."

Cigarette use has plummeted 70 percent among teenagers in Minnesota since 2000 — evidence that prevention efforts do work, Oliven said. "I don't want to say we are winning the war, but a smoke-free generation is within reach. With e-cigarettes, it's threatening to undermine our success."

More than 185,000 Minnesotans have used ClearWay's Quitplan service, which provides online, texting and e-mail support as well some free tobacco cessation medications to those who want to quit smoking.

The program has been financed with funds set aside as part of the 1998 tobacco settlement, but ClearWay's mandate was limited to 25 years, and Quitplan will stop providing services in March 2020. "We provide most of the money in the state for tobacco cessation," said Laura Smith, public affairs manager. "It is especially critical as we go away that the state has more money for this work."

Bills were introduced in both chambers of the Legislature that would dedicate some tobacco settlement money to tobacco efforts.

"It's time for all Big Tobacco brands selling in Minnesota to pay up and honor this settlement. And it's time for the state to dedicate some of that tobacco money to preventing youth from ever starting this deadly addiction," said Sen. Jeff Hayden, DFL-Minneapolis, lead author of the Senate bill.

In March 2018, then-Minnesota Attorney General Lori Swanson filed a lawsuit in Ramsey County District Court against the tobacco companies R.J. Reynolds Tobacco Co. and ITG Brands to recoup payments that have not been made since 2015.

Reynolds sold four of its cigarette brands to ITG to resolve antitrust concerns after Reynolds acquired another large tobacco manufacturer, Lorillard Inc., in 2015, and the four brands' payments to Minnesota stopped that year.

Reynolds and ITG have since sued each other over who bears responsibility for the payments.

"Our position is that ITG purchased the brands and should be making the payments," said Reynolds spokesman Michael Shannon.

ITG spokesman Mark Smith said: "We are currently paying Minnesota all legally required fees on the products we are selling in the state."

Staff writer Jeremy Olson contributed to this report Glenn Howatt • 612-673-7192