Tobacco Master Settlement Agreement & Colorado Escrow Funds Act Enforcement
In 1998, forty-six states, the District of Columbia and five U.S. territories (the states) entered into a settlement agreement with the four largest tobacco companies in the United States. This agreement, called the Master Settlement Agreement (MSA), restricts tobacco companies’ marketing practices and requires them to pay a projected $206 billion over twenty-five years to the states.
The Office of the Attorney General is responsible for enforcing the Master Settlement Agreement and for seeing that tobacco product manufacturers who have not signed the MSA comply with the Colorado Tobacco Escrow Funds Act.
Under the Master Settlement Agreement, tobacco companies agreed:
- to put restrictions on their marketing practices and
- to pay a projected $206 billion over twenty-five years to the states to compensate the states for costs arising from the health problems caused by the use of cigarettes and other tobacco products.
The main goal of the MSA is to reduce smoking, particularly among youth. The MSA prohibits the targeting of youth, the use of cartoons in cigarette advertising, outdoor advertising on billboards and in public transit facilities, the use of cigarette brand names on merchandise and other marketing and advertising devices.
More tobacco manufacturers have subsequently signed the MSA. All manufacturers who have signed the MSA are referred to as participating manufacturers (PMs).
There are a number of cigarette and roll-your-own tobacco (RYO) manufacturers who have not signed the MSA. They are referred to as nonparticipating manufacturers (NPMs).
PMs and NPMs are referred to collectively as tobacco product manufacturers (TPMs).
Colorado Tobacco Escrow Fund Act
Under the Colorado Tobacco Escrow Funds Act, C.R.S. sections 39-28-201 et seq., an NPM must put money into a qualified escrow fund “to guarantee a source of compensation and to prevent [an NPM] from deriving large, short-term profits and then becoming judgment-proof before liability may arise.”
The qualified escrow fund is an escrow arrangement between the NPM and a federally or state chartered financial institution, which, among other things, prohibits the manufacturer from using, accessing or directing the use of the funds’ principal. An NPM pays escrow based on the number of units sold in Colorado during the previous calendar year.
In April each year, the NPM must file with the Colorado Office of the Attorney General (OAG) a Certificate of Compliance by Non-Participating Manufacturer Regarding Escrow Payments (NPM certificate) certifying that it has fully funded its escrow obligation. Link to Information for Manufacturers.
Certified Brands Directory
In conjunction with the Colorado Tobacco Escrow Fund Act, the State of Colorado maintains the Colorado Certified Brands Directory (Directory). The Directory lists tobacco product manufacturers that have provided complete and accurate certifications.
All tobacco product manufacturers that wish to sell cigarettes and RYO in Colorado must file an annual certification with DOR and the OAG. These certifications are used as the basis for brands included in the Directory.
The brands listed on the Certified Brands Directory are the only brands that are legal for sale in Colorado. All other brands are contraband.
Colorado Office of the Attorney General
Tobacco Settlement Enforcement
Consumer Protection Section
Ralph L. Carr Colorado Judicial Center
1300 Broadway, 7th Floor
Denver, CO 80203
(720) 508-6228: Phone
(720) 508-6040: Fax