Oregon has enacted a new “equity assessment” upon non-signatories to the tobacco Master Settlement Agreement (MSA).  We previously blogged about the bill’s introduction. The law replaces Oregon’s escrow deposit system, applicable to tobacco product manufacturers that are nonparticipating manufacturers (NPMs) under the MSA, with an equity assessment.

The law as originally proposed would have also required NPMs to make these payments retroactively to 1999.  The law as passed requires prospective payments only, starting with cigarette sales in 2024.  Starting in 2024, each NPM will be required to annually certify to the attorney general that the NPM complies with the law by remitting the required equity assessment to Oregon by April 15 of the year following the sales year at issue in lieu of making an escrow payment.  The law also allows the attorney general to bring a civil action on behalf of Oregon against any NPM that fails to remit the equity assessment to recover the equity assessment plus reasonable attorneys’ fees, costs, and expenses incurred in prosecuting the action and any appeal.

The law passed by thin majorities in both houses of the Oregon legislature and was introduced at the request Oregon Attorney General Ellen Rosenblum.

This law is the first of its kind, and it remains to be seen whether other states will attempt to enact similar legislation in an effort to generate millions in revenue by laying claim to what were previously NPMs’ escrow payments.  It will also be interesting to see whether the law is challenged in court.  Stay tuned for further developments.