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.   The money in the receiver account serves as a reserve of responsibility.   If the NPMs are successfully sued for damage to cigarettes, the money in the trust accounts will pay the damages.   The payment of each NPM is based on market share and is approximately the cost per cigarette, such as the amount that OPMs must pay to comply with the MSA. Payments can only be used to pay a judgment or transaction on a claim against NPM, up to the amount that the NPM would otherwise pay under the MSA. All remaining funds in the trust account return to the NPM after 25 years. Another criticism relates to the alleged preference of large tobacco companies towards small independent tobacco producers and sellers. Proponents of this argument argue that certain price restrictions prevent smallholder farmers from competing with “Big Tobacco”. Over the past two years, twelve states have successfully fought this argument in court, and the long-term implementation of the MSA continues in the United States.

[Citation required] Topics: Five major tobacco manufacturers in the United States. During the development of the MSA, OPMs and implementing countries thought that many of the small tobacco companies would decide not to join the AMS. This possibility of non-membership has been a potential problem for both OPMs and billing statements. OPMs were concerned that, both because they are not related to advertising and other restrictions within the MSA and because they would not be obliged to make payments to Member States in billing, NPR would not be able to charge lower prices for their cigarettes and therefore increase their market share. Domestic tobacco receipts increased in 1999 and remained at a higher level in 1999-2002 than before the MSA (1990-1998) (2002 dollars, Chart 2). In 2002, the decline was greater than in 1998. Domestic sales profits were small between 1990 and 1998; Immediately after reaching the MSA, these profits reached a level before 1997. In the years following the MSA, domestic tobacco revenues exceeded the trend line for 1990-98, which was forecast until 2002. Earnings after MSA were higher than the expected trend line prior to the MSA.

In mid-2000, NPMs and domestic importers began to gain greater market share. [43] NAAG found that reductions in compensatory payments resulting from a general reduction in cigarette consumption benefited states, as the health costs imposed by each cigarette exceed offsets. [44] On the other hand, if there is a reduction in compensatory payments because NPM sales supersede pm sales, states will not benefit if NPMs do not make trust payments. That is why, at the end of 2000, NAAG established a contraband status model to ensure that NPM makes fiduciary payments for cigarettes. See PX 116. Contraband status provides that excise stamps can only sell cigarettes sold in the state if the manufacturer becomes an MSA MP or is an NPM that makes all the faithful payments required by the status of the trust. [45] The status of contraband imposes a criminal penalty on wholesalers who sell NPM cigarettes that are not properly registered in the state and pay full trusts.