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.

Special Report|From CrossBar 20K to 6-Methyl Nicotine KUMI: Two Routes Into U.S. State Vape Directories?
Special Report|From CrossBar 20K to 6-Methyl Nicotine KUMI: Two Routes Into U.S. State Vape Directories?
Several U.S. states have incorporated the September 9, 2020 PMTA filing deadline into eligibility rules for certain vaping products. CrossBar 20K drew attention after appearing on Pennsylvania's 163-entry directory. A broader 2Firsts investigation found that related registration businesses also listed KUMI and CROSSBAR SIX products, with 171 KUMI-related entries across Louisiana, Nebraska and Wisconsin. Corporate records link Scott Silverman to Blue Nine LLC and VR Products I LLC. PMTA compliance expert Mr. K said historical applications and nicotine-analogue products may offer two different approaches to state-directory access.
Regulations
Oct.26
R.J. Reynolds Vapor Company Launches Flavored Vuse Pro Pods in U.S. Without FDA Marketing Authorization
R.J. Reynolds Vapor Company Launches Flavored Vuse Pro Pods in U.S. Without FDA Marketing Authorization
R.J. Reynolds Vapor Company has begun selling four flavored Vuse Pro pods — Peach, Berry, Watermelon and Fresh Mint — in Ohio and selected other U.S. markets. According to the Vuse U.S. FAQ, Vuse Pro contains approximately 5.0% nicotine by weight, and Vuse Pro pre-filled pods are intended for use with Vuse Alto devices. Reynolds told 2Firsts that product labeling lists an e-liquid capacity of 2.0 mL per pod. The Vuse Alto Power Unit received FDA marketing authorization in 2024, while the new Vuse Pro pods themselves have not received marketing granted orders. The rollout follows the FDA’s May 2026 revision of enforcement priorities for certain unauthorized vaping products with qualifying pending applications.
BAT
Sep.10
On-Site Report | After FDA Announces Review of PMTA Framework, CTP Director Details Reform Priorities
On-Site Report | After FDA Announces Review of PMTA Framework, CTP Director Details Reform Priorities
FDA CTP Director Bret Koplow used his FDLI keynote in Washington to outline how the agency is rethinking the PMTA framework. He discussed category-specific review, nicotine pouch and sPMTA pilots, AI-assisted review, a 70% reduction in pending applications, and a major staffing constraint: CTP currently has only nine scientific review teams. He also reaffirmed tobacco harm reduction while stressing youth protection, flavored products, risk communication, and the challenge of unauthorized e-cigarettes.
Regulations
Oct.06
How Large Is France’s Off-Channel Tobacco Market? Logista Says It Has Become Structural, While the Official Estimate Is 17.7% and Some Industry Studies Put It Above 50%
How Large Is France’s Off-Channel Tobacco Market? Logista Says It Has Become Structural, While the Official Estimate Is 17.7% and Some Industry Studies Put It Above 50%
Logista France says tobacco consumption outside France’s official tobacconist network has become a large and structural market phenomenon, but official and industry estimates differ sharply. France’s TAFE study estimates that 17.7% of tobacco consumption escaped domestic taxation in 2023, with most of that volume attributed to cross-border purchasing rather than street sales. Some industry studies use broader off-channel definitions and put the figure above 50%. Meanwhile, French Customs seized 547.94 tonnes of tobacco in 2025, up 12%, showing continued pressure from illicit trade.
Sep.04
German Tobacco Tax Revenue Falls 10.8% Through August as Tax-Paid Cigarette Volume Drops 12.6%
German Tobacco Tax Revenue Falls 10.8% Through August as Tax-Paid Cigarette Volume Drops 12.6%
Germany collected €9.789 billion in total tobacco tax revenue from January through August 2026, down 10.8% from a year earlier, according to the Federal Ministry of Finance. Germany's tobacco tax base covers not only cigarettes and fine-cut tobacco but also heated tobacco and vaping liquids taxed as tobacco substitutes. The German Association of the Tobacco Industry and Novel Products, or BVTE, citing federal statistical data, said tax-paid cigarette volume fell 12.6% to 40.6 billion sticks. BVTE is using the latest figures to argue against further tax increases planned from 2027 through 2030, while Germany's parliament is scheduled to hold a first reading of the bill on September 24.
Sep.23
German Customs Seize 115,800 Vapes in €1.4 Million Tax Case
German Customs Seize 115,800 Vapes in €1.4 Million Tax Case
Germany's Magdeburg Main Customs Office seized 115,800 untaxed e-cigarettes containing a combined 4.366 million mL of e-liquid during four truck inspections between August 10 and September 4, 2026. The seizures prevented an estimated €1.397 million in tax losses and set a record for the customs office's jurisdiction. Criminal proceedings have been initiated against four truck drivers. The case follows a separate German investigation involving more than 7.6 million illicit vapes and an estimated €33.3 million in excise-tax losses.
Enforcement
Oct.13