AG Watch

The National Association of Attorneys General used its “Meeting of the Minds” to take full credit for the nationwide drop in cigarette sales.

While the NAAGers were busy patting themselves on the back, the rich got richer. The #1 effect of the Master Settlement Agreement is to cartelize government and Big Tobacco. Fewer cigarettes are being smoked, yes, but the Big Three Tobacco makers got richer: Reynolds American made more money, Philip Morris domestic tobacco went up and up, and Lorillard not only got richer, but even sold more cigarettes.

Of course, despite NAAG’s claims to the contrary, the states plugged their budget holes with growing slices from the MSA pie as well. Heck, the Campaign for Tobacco-Free Kids even assuages fears that state budgets will be harmed by reduced smoking.

Well, if the big boys are taking the lunch money, who is losing it? The little guys, of course: smokers and small tobacco companies (most of whom never committed the “crimes” that underpin the “logic” of the MSA). As Jonathan Rauch quips, “The deal was Robin Hood in reverse.”

In fact, the deal is so unconscionable and illegal that it even baffles state legislators, who are frustrated that the AG agreement restricts legislative authority—or simply cannot understand the deal at all. Minnesota, as we noted in December, has all but sued itself over the MSA. But Minnesota at least gets the import of the deal. They know that the AG has boxed them in, and now they just have to find a way out.

The New Hampshire legislature, on the other hand, really has no clue what they’ve done at the behest of their own AG. State Senators Ted Gatsas and Robert Clegg are kicking around a bill that, in Clegg’s words, “makes everybody equal.” They seem to have the false notion that the Non-Settling Manufacturers escaped sanction (and tax). But what sort of shoddy cartel would that be?!?!?! New Hampshire, like all the other states in the MSA, already has a law that captures the small and new manufacturers (lest Big Tobacco lose business).

For anyone else who missed the point, the Big Tobacco companies are pushing for a refund of some of the MSA money. The MSA signatories built in a stipulation that if Big Tobacco actually lost market share, they would get a refund. Big Tobacco claims it lost market share between 1999 and 2003, and now it want its money back.

The smart money bets that government and Big Tobacco will mend the rift and continue their awkward dance, pockets stuffed with cash and with one foot each firmly on the neck of the citizen. And heaven knows that NAAG will maintain its righteous pose.