Missouri, the last remaining state in which nonparticipating manufacturers can obtain allocable share releases from their escrow payments, has again introduced legislation to repeal the release mechanism. The bill, Senate Bill 629, was introduced on January 9th.
The allocable share repeal has been introduced in Missouri in prior years. It was narrowly defeated in 2002 and 2006. In 2011, a coalition of small wholesalers and retailers defeated the attempted repeal of the release provision.
The major tobacco companies have relied on Missouri’s failure to repeal the allocable share release provision to withhold settlement payments under the MSA. However, Missouri’s only obligation under the MSA is to enforce the original escrow statute passed in the late 1990s, not to amend the statute to make nonparticipating manufacturers’ payment burdens more onerous.
Missouri has the lowest cigarette excise tax rate in the country at 17 cents a pack and is a popular destination for lower-priced cigarettes.