A bill that would increase a fee some small tobacco companies pay on the sale of their cigarettes in Missouri has been heard in a House Committee.

The issue is related to a ruling in September by a 3-judge panel that Missouri would lose about $70-million of its $160-million tobacco settlement payment that is coming next month. The ruling was based on a lack of enforcement in Missouri of tobacco laws in 2003. Resolution of issues for years after 2003 could result in Missouri losing portions of tobacco settlement payments in future years.

Under legislation passed after the Tobacco Master Settlement was reached, tobacco companies that were not participating in the settlement had to pay into an escrow fund an amount based on their national share of the market. Because some companies’ percentage of the market nationally is significantly smaller than their share in Missouri, the formula related to those payments allowed them to recoup nearly all of those escrow payments. The legislation would change that formula.

Proponents, including the Attorney General’s Office and tobacco companies Phillip Morris, RJ Reynolds and Lorrillard Tobacco, say the legislation is necessary for Missouri to have a chance of losing less in future tobacco settlement payments, and say it would level the playing field between large and small tobacco companies. Opponents including small tobacco companies argue it would put them at a disadvantage to their big counterparts and force them to pay an inflated fee stemming from offenses they didn’t commit.

Budget Committee Chairman Rick Stream (R-Kirkwood) is the sponsor of the bill.  He called today’s hearing an informational session to get lawmakers familiar with the issue.