Tobacco firm joins settlement, pays up $78M

Vibo Corp. of Miami, Florida, has joined the Tobacco Master Settlement Agreement as a participating manufacturer, making an immediate payment of $78 million to the MSA states, from which the CNMI will get its share as one of the original states that participated in the class action suit against tobacco manufacturers.

Vibo, which does business as General Tobacco, sells a number of cigarette brands such as Bronco, GT One, Silver and Champion. General Tobacco’s Champion brand should not be confused with the Champion brand that is widely sold in the CNMI, and is produced by Fortune Tobacco Company and/or Hong Kong Tobacco Company. The later brand is produced by a non-participating manufacturer that is currently not in compliance with CNMI law.

“Under current market conditions, this agreement will be worth $1.7 billion to all the states over the next 10 years,” said attorney general Pamela Brown yesterday. “The CNMI’s share of that will be around $143,439.20. The first payment was received over the weekend.”

The MSA was originally entered into between 46 states and the major tobacco companies in November 1998. Since that time, more than 40 other companies have joined the MSA.

Participating manufacturers under the MSA are bound by a wide array of restrictions on the advertising, promotion and marketing of cigarettes, including outright bans on targeting youth, outdoor advertising, and distribution of any merchandise advertising a cigarette brand.

Since the MSA took effect, youth smoking rates nationally have dropped by more than 25 percent and overall smoking has declined nearly 20 percent. Participating manufacturers also make substantial payments to the states, and as a result of yesterday’s agreement, Vibo will make an immediate payment of $78 million to the MSA states, and make full payment of its ongoing obligations in each succeeding year. Vibo agreed to make quarterly payments of these obligations to the states.

Brown said that Vibo’s decision to join the MSA is “especially significant” because the company represents by far the largest tobacco product manufacturer remaining outside the MSA. Vibo is the exclusive U.S. importer of cigarettes from Protabaco, S.A., of Bogota, Colombia, and yesterday’s agreement binds Protabaco to sell all of its cigarettes in the U.S. through Vibo and in accordance with the MSA.

Attorneys general Lawrence Wasden of Idaho and Tom Miller of Iowa, co-chairs of the Tobacco Committee of the National Association of Attorneys General, which coordinates state enforcement of the MSA, said: “Vibo’s agreement to join the MSA is a very important indicator of a growing recognition by companies outside the agreement that it is in their interest to observe the public health restrictions of the MSA. Persuading the largest cigarette company outside the MSA to join the agreement represents a great achievement for the MSA states.”