New Mexico Sues Tobacco Companies over Breach of Settlement Agreement

Dec.06.2022
New Mexico Sues Tobacco Companies over Breach of Settlement Agreement
New Mexico sues tobacco companies for breach of settlement agreement and conspiracy, alleging over $84 million in losses.

The state of New Mexico is currently suing several tobacco companies, alleging they conspired and breached contracts.


New Mexico Attorney General Hector Balderas announced a legal challenge on Tuesday, alleging that tobacco companies have been withholding annual payments required by a multi-state settlement that resolved dozens of lawsuits seeking reimbursement for healthcare costs related to smoking-related illnesses.


Complaints from New Mexico are focused on a specific provision of a 1998 settlement agreement, alleging that the company's abuse of that provision has resulted in the state losing over $84 million in the past 14 years.


In a statement, Balderrama said, "These baseless tactics of delay have no end, and now is the time to compel tobacco companies to pay the damages owed to New Mexico - providing funding for much-needed health initiatives.


The companies did not immediately respond to requests for comment regarding the lawsuit in the state of New Mexico.


According to a settlement agreement, each company is obligated to make annual payments to the state of New Mexico. However, the Attorney General's office claims that these companies often raise disputes every year, resulting in a certain percentage of payments being withheld and potentially leading to arbitration procedures that could last for years.


For example, the arbitration payment made in 2004 concluded last month, while the arbitration payments made from 2005 to 2007 have only recently begun.


Officials from the state government have stated that the average annual cost paid is between $30-40 million, which only covers less than 5% of New Mexico's healthcare costs directly attributed to smoking. They estimate that healthcare costs related to smoking will exceed $980 million by 2021.


In 2020, Montana launched a similar legal challenge and successfully retrieved over $49 million in payments that tobacco companies had wrongly withheld. The state also reached an agreement with these companies, ensuring they would not contest annual payments to Montana over the next ten years.


Officials in the state of New Mexico have stated that the amount of settlement money being withheld each year is increasing.


According to the lawsuit, defendants - including tobacco giants Philip Morris and RJ Reynolds - did not disclose to the state of New Mexico how much money they withheld or where the funds were held. The practice of withholding taxes may also vary from year to year.


According to state prosecutors, the best estimates suggest that defendants in New Mexico are withholding between $6 million and $9 million annually due to a lack of transparency. "This scheme is a calculated strategy designed to permanently and fraudulently reduce the contractual payments defendants are obligated to pay under settlement agreements, and to undermine the purpose of such agreements," the complaint stated.


The Office of the Attorney General has stated that many states have been renegotiating with tobacco companies for years to avoid continuing arbitration regarding annual payments and to concede more favorable terms to the companies.


Officials in New Mexico state that only eight states are still demanding full payment of the funds they are entitled to under a settlement agreement.


2FIRSTS will continue to report on this topic, with future updates available on the "2FIRSTS APP." Scan the QR code below to download the app.



Disclaimer

This article is provided solely for professional research, industry discussion, and informational purposes. Any references to brands, companies, products, technologies, or policies are made for factual reporting and analytical purposes only, and do not constitute endorsement, recommendation, promotion, or advertising by 2Firsts.

Nicotine-containing products, including but not limited to cigarettes, e-cigarettes, heated tobacco products, and nicotine pouches, carry significant health risks. Readers are responsible for complying with all applicable laws and regulations in their respective jurisdictions, including age restrictions and access limitations.

The information contained in this article should not be regarded as investment, legal, medical, regulatory, or commercial advice. While 2Firsts strives to ensure the accuracy and reliability of its content, it does not assume liability for any direct or indirect loss arising from errors, omissions, inaccuracies, or reliance on the information contained herein.

This article is not intended for individuals below the legal age for accessing tobacco or nicotine-related information in their jurisdiction.

 

Copyright Notice

This article is either original content produced by 2Firsts or content reproduced, translated, summarized, or adapted from third-party sources with attribution where applicable. The intellectual property rights of the original content remain with 2Firsts or the respective original rights holders.

No individual or organization may copy, reproduce, distribute, republish, modify, translate, or otherwise use this content without prior authorization. Any unauthorized use may result in legal action.

For copyright-related inquiries, corrections, or removal requests, please contact: info@2firsts.com.

 

AI-Assisted Translation and Editing Notice

Portions of this article may have been translated, edited, or reviewed with the assistance of artificial intelligence tools to improve efficiency and readability. Due to the limitations of AI-assisted translation and editing, discrepancies, omissions, or inaccuracies may exist when compared with the original source.

Where applicable, readers are advised to refer to the original source for the most complete and accurate information. If you identify any errors or believe that any content infringes upon your rights, please contact us at info@2firsts.com, and we will review and address the matter promptly.

NAS 2026 | Former FDA Tobacco Chief Mitch Zeller Calls for Shift From “End Game” to “End State”
NAS 2026 | Former FDA Tobacco Chief Mitch Zeller Calls for Shift From “End Game” to “End State”
At the 2026 New Approaches Summit in New York, former FDA Center for Tobacco Products Director Mitch Zeller called for the tobacco harm reduction debate to shift from the traditional “end game” toward defining a desired “end state.” He also highlighted unresolved concerns around dual use, argued that biomarkers of exposure may be more meaningful than cigarettes-per-day in assessing risk reduction, and said nicotine misperceptions remain a major barrier to public health progress.
Sep.25
Wall Street Journal: U.S. FDA Plans Faster Vape and Nicotine Pouch Reviews, Revisit of 2021 PMTA Rule
Wall Street Journal: U.S. FDA Plans Faster Vape and Nicotine Pouch Reviews, Revisit of 2021 PMTA Rule
The Trump administration is preparing changes intended to accelerate FDA market authorization reviews for e-cigarettes and nicotine pouches, according to The Wall Street Journal. The FDA is expected to revisit its 2021 PMTA rule and may simplify some scientific study requirements and shorten review times. The agency has not formally announced the changes. Over the past year, the FDA has already accelerated nicotine-pouch reviews, expanded ENDS authorizations and upgraded its CTP Portal NextGen application system. As of August 2026, 43 nicotine pouch products and 48 e-cigarette products had received FDA marketing authorization.
Sep.24
JTI’s Nordic Spirit Signs Co-op Live Partnership Ahead of New UK Nicotine Sponsorship Restrictions
JTI’s Nordic Spirit Signs Co-op Live Partnership Ahead of New UK Nicotine Sponsorship Restrictions
JTI nicotine pouch brand Nordic Spirit has entered a long-term partnership with Manchester’s Co-op Live, becoming the venue’s Official Nicotine Pouch Partner. The 23,500-capacity venue is the UK’s largest indoor live entertainment arena. Nordic Spirit will run in-venue activations for existing adult nicotine consumers and sell products at selected arena bars. The agreement was entered into before the relevant UK sponsorship restrictions were introduced, while the government intends to implement a comprehensive ban on advertising and sponsorship of vaping and nicotine products from June 1, 2027.
Sep.07
Gallup Tracks Nicotine Pouch Use for the First Time: 11% of U.S. Adults Smoke, 9% Vape and 4% Use Nicotine Pouches
Gallup Tracks Nicotine Pouch Use for the First Time: 11% of U.S. Adults Smoke, 9% Vape and 4% Use Nicotine Pouches
Gallup’s 2026 Consumption Habits survey tracked nicotine pouch use for the first time. The survey found that 11% of U.S. adults reported smoking cigarettes in the past week, 9% reported vaping, and 4% reported using nicotine pouches. Cigarette smoking remained near Gallup’s long-term low, while adult vaping rates stayed relatively stable in recent years.
Market
Aug.25 by 2Firsts Perspectives
New Zealand Associate Health Minister Casey Costello Warns on Illicit Cigarettes as Legal Tobacco Sales Halve Over Decade
New Zealand Associate Health Minister Casey Costello Warns on Illicit Cigarettes as Legal Tobacco Sales Halve Over Decade
New Zealand Associate Health Minister Casey Costello said legal tobacco sales in the country have fallen by more than half over the past decade, with sales declining more than 20% in 2025 compared with the previous year. She warned that the decline may not fully reflect lower smoking rates, as increased availability of illicit cigarettes could also be contributing. The government said it would continue strengthening tobacco and vape retail enforcement while monitoring the impact of illicit tobacco on public health and tax revenue.
Aug.26
Ireland Raises Nicotine Product Taxes Again as Cigarettes Gain €1 and Vape Duty Is Set to Jump 40%
Ireland Raises Nicotine Product Taxes Again as Cigarettes Gain €1 and Vape Duty Is Set to Jump 40%
Ireland has increased tobacco excise under Budget 2027 and announced a further rise in its E-liquid Products Tax. From Oct. 7, the tax burden on a pack of 20 cigarettes in the most popular price category increased by €1, with pro-rata increases on other tobacco products. The government plans to raise EPT from €0.50 to €0.70 per millilitre from Jan. 1, 2027, a 40% increase applying to both nicotine-containing and nicotine-free e-liquids. The tobacco duty increase is expected to raise about €63.1 million in a full year.
Regulations
Oct.09