March 17, 2016 2 min read


Missouri lawmakers have a choice: Cheaper cigarettes or education, roads and health care.

An advertising campaign set to air next week is designed to highlight the choice Missouri lawmakers must make to finally close a loophole in Missouri that allows smaller tobacco companies to avoid paying fees as part of the landmark national tobacco settlement. The loophole will cost Missouri nearly $50 million in 2016 if lawmakers fail to act this legislative session — money that could go toward critical state needs.

“Our employer members ask that we support adequate funding to educate our workforce and maintain our infrastructure,” said Dan Mehan, Missouri Chamber President and CEO. “At the same time they ask that we support equitable and consistent laws, not policy that protects one business or industry at the cost of all the rest.”

The debate over this loophole has been smoldering for more than 15 years. In 1998, Missouri was among 46 states that settled a case with four major cigarette manufacturers in the United States to resolve numerous pending lawsuits filed by states against cigarette makers to recoup medical costs for tobacco-related illnesses. In exchange for dismissing the lawsuits, the Master Settlement Agreement (MSA) requires that participating manufacturers make annual multi-billion dollar payments to states for the associated health care costs, restrict targeting youth in tobacco advertising and invest in advertising to deter tobacco use.

As part of the settlement, the Missouri Legislature also passed legislation that compelled smaller tobacco companies not part of the master settlement to pay into an escrow fund to cover future damage claims and to keep them from gaining market share from the larger companies that had to charge higher prices following the master settlement.  In following years, states realized that the model legislation enforcing escrow payments by smaller tobacco companies needed to be tightened to make sure these companies were paying their fair share.  Forty-five states took action.  Missouri did not.

“At a time when lawmakers are faced with difficult decisions in order to fund critical needs, the choice between cheap cigarettes or equitable state policy should be clear,” Mehan said.

Sen. Bob Dixon, a Republican from Springfield, has sponsored Senate Bill 1096 to close the tobacco loophole. That legislation awaits debate by the full Senate.  Rep. Joe Don McGaugh, a Republican from Carrollton, has sponsored similar legislation, House Bill 2795. It awaits review by a House committee.



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