Tobacco companies drop challenge against Delaware

Big tobacco companies have abandoned their legal challenge to Delaware’s enforcement of the 1998 settlement between the states and the tobacco companies.

The companies had claimed that Delaware did not meet its obligation to regulate smaller tobacco companies who were not a part of the Master Settlement Agreement.  That deal required the tobacco companies to make annual payments to the states worth billions of dollars ever year.  As part of the settlement, Delaware enacted laws regulating smaller tobacco companies that weren’t part of the settlement.  It required those smaller companies to put a portion of their sales in escrow.

The companies filed their legal challenge in 2005, but have now dropped it.  Delaware Attorney General Beau Biden responded to the news in a statement, “I’m pleased that we have succeded in protecting Delaware’s payments, which are used to improve public health and fund anti-tobacco education.”

If the challenge had succeeded, Delaware could have lost between $4.5 million and $24 million.

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