In the largest civil dispute settlement in U.S. history, states and territories have won a victory that has led tobacco companies to pay billions of dollars a year to states and territories. The money was used to compensate for taxpayers` money spent on tobacco diseases and loss to the local economy. The agreement also called for the creation of an independent organization for the prevention of youth smoking and included ways to create this organization, now a truth initiative. Over the years, states have collected huge amounts of commercial tobacco revenue, but they spend little on tobacco reduction and cessation programs. According to A State-by-State Look at the 1998 Tobacco Settlement 19 Years Later, states will raise $27.5 billion from the MSA and taxes in fiscal year 2018, but spend less than 3 percent on programs to prevent children from smoking and help smokers quit. No state currently funds tobacco prevention at the level recommended by the Centers for Disease Control and Prevention (CDC); 29 states and the District of Columbia spend less than 20% of the CDC recommendation. In this context, the status of the guardianship model requires that: that an NPM that sells cigarettes in a particular state do one of two things: 1) join the MSA and agree to “become a participating manufacturer (as defined in Section II (jj) of the [MSA] and, in general, make similar annual payments in a “reserve of responsibility” of the State. whose resources can only be used to pay a judgment or a means of transaction on a claim against the NPM.
(After 25 years, the balance of the fiduciary account is returned to the NPM.)   Annual trust payments of an NPM in a given state are calculated by multiplying a cigarette amount set by the state legislator and set by law by the number of cigarettes sold in that state by the NPM in the year for which the payment is made.  The parties agree that this amount per cigarette is roughly equal to that requested by the MSA to OPMs and PMS for sales that are not tax-exempt. To the extent that this differs, OPMs pay a little more than MNP who pay a little more than NPM.  Under the “qualifying law,” non-signatory tobacco companies (also known as “non-participating producers” or “NPMs”) must pay a portion of their income into a trust account.