tocacco plant Native American Tobaccoo flower, leaves, and buds

tocacco Tobacco is an annual or bi-annual growing 1-3 meters tall with large sticky leaves that contain nicotine. Native to the Americas, tobacco has a long history of use as a shamanic inebriant and stimulant. It is extremely popular and well-known for its addictive potential.

tocacco nicotina Nicotiana tabacum

tocacco Nicotiana rustica leaves. Nicotiana rustica leaves have a nicotine content as high as 9%, whereas Nicotiana tabacum (common tobacco) leaves contain about 1 to 3%

tocacco cigar A cigar is a tightly rolled bundle of dried and fermented tobacco which is ignited so that its smoke may be drawn into the mouth. Cigar tobacco is grown in significant quantities in Brazil, Cameroon, Cuba, Dominican Republic, Honduras, Indonesia, Mexico, Nicaragua, Sumatra, Philippines, and the Eastern United States.

tocacco Tobacco is an agricultural product processed from the fresh leaves of plants in the genus Nicotiana. It can be consumed, used as an organic pesticide, and in the form of nicotine tartrate it is used in some medicines. In consumption it may be in the form of cigarettes smoking, snuffing, chewing, dipping tobacco, or snus.

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Arbitration to begin in tobacco dispute

Financially pressed states might have to return $1.1 billion to Big Tobacco this year, if a review finds the states aren’t trying hard enough to keep a 12-year-old legal settlement from hurting the companies too much.

This summer, states and the nation’s Big Three tobacco firms will begin arbitrating a dispute over 2003 payments made under the settlement, the companies have disclosed in financial filings with the U.S. Securities and Exchange Commission.

Sums ranging from $705 million to $1.1 billion for each of the subsequent years also are headed for arbitration. And that’s on top of the fact that the money actually paid to the states has run as much as $2.2 billion a year less than the sums touted when the settlement was signed, a Richmond Times-Dispatch review found.

At the heart of the arbitration dispute is the roughly 54 cents a pack the settlement currently costs Big Tobacco. The money is intended to repay states for the costs of caring for sick and dying smokers over the years — but only a few states use the money for that, or for the tobacco cessation and prevention programs public-health advocates hoped the settlement would fund.

As part of the settlement, 46 states, the District of Columbia and several territories agreed to require all other cigarette-makers to pay into special set-aside accounts, to be available to cover any future health-care costs if states find their products sicken smokers.

But another key purpose of the small companies’ set-aside accounts was to make sure the major manufacturers did not suffer a competitive disadvantage by signing the settlement.

Consultants hired by the states already have found that Big Tobacco has been at a disadvantage but, under the settlement, that’s the companies’ bad luck — unless arbitration finds the states weren’t working hard enough to make the small companies put money into the set-aside accounts. Courts have rejected motions by the states for orders finding arbitration is not necessary.

“It’s just like insurance,“ said Dr. Alan Blum, the physician who directs the University of Alabama’s Center for the Study of Tobacco and Society.

The two co-chairs of the National Association of Attorneys General’s tobacco committee, Martha Coakley of Massachusetts and Jon Bruning of Nebraska, and the association itself, which oversees the settlement, did not respond to repeated requests for comment over the past several weeks.

Bruce Gottstein, spokesman for Virginia Attorney General Ken Cuccinelli, said he could not comment on how Virginia has enforced the provision because of the arbitration.

The windfalls from the settlement have made marketplace allies of Big Tobacco and the states — most of which have not been using their payments for health care or to help smokers quit or to keep young people from starting to smoke, Blum said.

Eric Lindblom, director of public-policy research at the Campaign for Tobacco-Free Kids, said the $1.1 billion adjustment at issue this summer should have provided a big incentive to each state to get the small companies to pay into the set-aside accounts.

“It’s a real hammer,“ Lindblom said. “The industry really won that in negotiations because they worried about competitors getting some of their market.“

Their worries were especially intense because shortly after signing the settlement, cigarette-makers took the opportunity to beef up profit margins by increasing prices by more than what was needed to cover the agreement’s payments, he said.

Collaboration between the states and Big Tobacco also seems apparent to Everett W. Gee III, general counsel for Virginia-based S&M Brands, which makes Bailey’s cigarettes. His firm isn’t part of the settlement, because the states never sued it, but the Keysville company pays into state escrow funds, he said.

“We didn’t do anything they did; didn’t misrepresent the risk, sell to kids, use cartoon characters . . . but we’re paying anyway,“ he said.

“All the majors have to do is file and say, ‘Yep, we’re a participating manufacturer.‘ Nonparticipating manufacturers have to tell each state, ‘Here’s who we are, here are our brands, here’s our sales history, here’s our bank account, here’s our ingredients, here’s our officers and directors, here’s what our plant looks like,‘ “ Gee said.

“We’re concerned the result of the arbitration will be one more agreement that helps the majors maintain their market share.“

Some public-health advocates brush off that concern.

“It’s not like you want the [nonparticipating manufacturers] out there competing,“ Lindblom said. “They are selling cigarettes dirt cheap, and they are not subject to the [settlement’s] marketing provisions.“

Lindblom said the smaller, discount manufacturers routinely offer free samples, which the settlement bans. But the real problem is that many don’t pay the 54-cent-a-pack cost of the settlement, he said.

The states’ count of cigarette sales shows the major manufacturers’ share of the market plunged after the settlement. Smaller manufacturers, which had only 1 or 2 percent of the market before the settlement, now have about 15 to 16 percent, a Times-Dispatch review found.

An econometric study by the Mackinac Center for Public Policy estimates that no Rhode Island state tax was paid on 45 percent of cigarettes smoked there — which means settlement-related payments from Big Tobacco and smaller firms to the state don’t reflect actual consumption. The figure exceeds 40 percent in New York, New Jersey, Washington state and New Mexico, the study estimates.

In New Mexico, which regularly files lawsuits to shut down small cigarette sellers that don’t pay into the set-aside accounts, state officials worry some of those are also dodging the state’s below-average 91-cent-a-pack excise tax, former Deputy Attorney General David Thomson said, speaking shortly before his appointment to the bench this year.

“The declines [in smoking rates] we thought we were seeing because of the [settlement] may not really be happening,“ Blum said.

A minority of the 46 states and the District of Columbia that signed the settlement, meanwhile, have steered any tobacco settlement payments specifically to health care, or to tobacco cessation and prevention programs, a Times-Dispatch review of states’ financial reports and budget documents found.

Twenty-four states and the District either put the money into their general funds, which pay for most government activities, or use it to pay interest and principal on bonds. Six states use all the money for tobacco or health problems, while 16 others use some of the money for those purposes.

In Virginia, half of the settlement money goes to a trust fund to help growers and tobacco-dependent communities, 10 percent goes to a special fund for tobacco prevention and the rest to the general fund.

Only one state, North Dakota, funds its tobacco prevention programs at the level recommended by the Centers for Disease Control and Prevention, according to the Campaign for Tobacco-Free Kids, a public-health advocacy group. Only Alaska, Arkansas, Delaware, Hawaii, Maine, Montana, South Dakota, Vermont and Wyoming fund such programs at half the level the CDC recommends.

“It is absolutely clear that the settlement money should be allocated to tobacco control, it is very clear that that is what the purpose was,“ said Lindblom, at Tobacco-Free Kids.

“But the cigarette companies have no interest in money going for that, and the states want to be free to use the money as they want.“

David Ress reports on business for the Richmond Times-Dispatch.

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