Aug. 19, 2004 – The territory stands to gain around $300,000 over the next 10 years as a result of another cigarette manufacturer joining the 1998 tobacco Master Settlement Agreement, Attorney General Iver Stridiron announced on Thursday.
The company, Miami-based Vibo Corp., does business as General Tobacco and sells cigarette brands including Bronco, GT One, Silver and Champion, a release from Stridiron's office stated.
The nation's major tobacco companies entered into the Master Settlement Agreement in 1998 with 46 states, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, American Samoa and the Mariana Islands. "Since that time, more than 40 other companies have joined the MSA," the release stated.
Under the settlement, which covers 25 years, the participating jurisdictions receive cash payments from the tobacco companies in exchange for exempting the companies from future legal action. Gov. Charles W. Turnbull signed the agreement in 2000 and the Virgin Islands government is expected to realize up to $50 million over the years.
By law, the proceeds are to be divided among the Health Department and the territory's two hospitals. In 2001 the Public Finance Authority floated $21.7 million in bonds backed by the Virgin Islands' share of the settlement money. The bond proceeds were earmarked for improving the territory's health-care system.
Vibo's decision to join the agreement "is especially significant because the company represents by far the largest tobacco product manufacturer remaining outside the MSA," the release from Stridiron's office said. "Vibo is the exclusive U.S. importer of cigarettes from Protabaco S.A. of Bogota, Colombia, and today's agreement binds Protabaco to sell all of its cigarettes in the U.S. through Vibo and in accordance with the MSA."
In addition to the agreed-upon payments, the MSA imposes an array of restrictions on the manufacturers, including bans on targeting youth, outdoor advertising, and distribution of any merchandise advertising a cigarette brand. According to the release, the number of youth smokers has dropped by 25 percent and overall smoking has declined by nearly 20 percent since the MSA took effect.
Vibo will make an immediate payment of $78 million to the states and other jurisdictions and quarterly payments from then on. "The first allocable amount that the Virgin Islands will receive will be approximately $14,000 through the release of funds in escrow," the release stated. "Future payments will increase each year."
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