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.

PMI CEO Attends Opening of IQOS Global Flagship in Tokyo’s Ginza as 1,814 Limited ILUMA i PRIME Sets Launch
PMI CEO Attends Opening of IQOS Global Flagship in Tokyo’s Ginza as 1,814 Limited ILUMA i PRIME Sets Launch
IQOS opened its first global flagship, IQOS Flagship Ginza, in Tokyo on September 4, 2026, replacing the former IQOS Store Ginza after nearly a decade of operation. The new location expands conventional product retail into member lounges, digital experiences, art installations and brand programming. IQOS also launched a Ginza-exclusive IQOS ILUMA i PRIME set limited to 1,814 individually numbered units, priced at JPY11,980, or about US$77. PMI Sales Strategy Consultant Yuji M. later said on LinkedIn that more than 500 people had lined up from the night before the opening.
Sep.07
As Regulators Focus on Nicotine Pouch Child Safety, Safeguard Pursues an External Packaging Route
As Regulators Focus on Nicotine Pouch Child Safety, Safeguard Pursues an External Packaging Route
As regulators pay closer attention to child safety in nicotine pouches, manufacturers face a practical challenge: how to strengthen child-resistant packaging without unnecessarily reworking products, production lines and regulatory submissions already in place. In a written interview with 2Firsts, Chemular detailed Safeguard’s external packaging approach, its customer-specific testing requirements and possible PMTA pathways. The model remains early-stage, but it offers a new way to think about an increasingly important regulatory and manufacturing issue.
Industry Insight
Sep.19
FDA Appoints Former Tobacco Enforcement Deputy Jessica Zeller as Director as Agency Weighs PMTA Framework Changes
FDA Appoints Former Tobacco Enforcement Deputy Jessica Zeller as Director as Agency Weighs PMTA Framework Changes
The U.S. Food and Drug Administration (FDA) has named Jessica Zeller director of the Center for Tobacco Products' (CTP) Office of Compliance and Enforcement (OCE), effective November 1, 2026. Zeller, the office's inaugural deputy director, returns from medical device manufacturer Edwards Lifesciences with more than 20 years of regulatory and legal experience. The appointment follows CTP leadership changes and adjustments to tobacco regulation. Bret Koplow became permanent CTP director in September; the FDA revised enforcement priorities for unauthorized e-cigarettes and nicotine pouches in May and announced faster PMTA review procedures. On September 28, the agency said it would evaluate changes to the existing PMTA regulatory framework, including potential rulemaking to replace it.
FDA
Oct.20 by 2Firsts Perspectives
Cochrane 2026 Update Adds Nine Trials, Keeps High-Certainty Finding That Nicotine E-Cigarettes Improve Quit Rates Over NRT
Cochrane 2026 Update Adds Nine Trials, Keeps High-Certainty Finding That Nicotine E-Cigarettes Improve Quit Rates Over NRT
Cochrane’s 2026 update of its living review on electronic cigarettes for smoking cessation included 80 randomized controlled trials involving 29,861 adult smokers, with nine trials added in this update. The review retained its high-certainty conclusion that nicotine e-cigarettes increase smoking cessation rates compared with nicotine replacement therapy. In absolute terms, about 10 in 100 people using nicotine e-cigarettes may quit smoking for at least six months, compared with about 6 in 100 using NRT. The review found no clear difference in serious adverse event rates between the two groups, while longer-term safety and the relative effectiveness of newer device types remain less certain.
Sep.07
GAO Audit Finds Nearly 132,000 FDA Tobacco Applications Waiting an Average 1,266 Days as Nicotine Pouch Pilot Practices Move Into Vape PMTA Reviews
GAO Audit Finds Nearly 132,000 FDA Tobacco Applications Waiting an Average 1,266 Days as Nicotine Pouch Pilot Practices Move Into Vape PMTA Reviews
A U.S. Government Accountability Office audit found that 131,915 tobacco product applications submitted to the FDA since 2018 remained without a final review as of December 31, 2025, with pending applications waiting an average of 1,266 days. GAO also found FDA lacks the data needed to systematically determine whether scientific reviews meet applicable timelines. HHS agreed to upgrade the agency's tracking systems. At the same time, FDA has begun applying lessons from its nicotine pouch PMTA pilot to e-cigarette reviews, while changes to enforcement policy and electronic submissions are making the specific stage of a PMTA increasingly relevant to market access.
FDA
Oct.03
South Korea Fully Reviews Nicotine-Analog and Nicotine-Free Vape Liquid Imports, With Over 99% From China and Chinese Supply-Chain Documents Under Scrutiny
South Korea Fully Reviews Nicotine-Analog and Nicotine-Free Vape Liquid Imports, With Over 99% From China and Chinese Supply-Chain Documents Under Scrutiny
Korea Customs Service has tightened import controls on nicotine-analog and nicotine-free e-cigarette liquids, placing the products under 100% document review and subjecting all e-cigarette liquid import declarations to pre-clearance ingredient analysis. As of September 20, 2026, South Korea had imported about 15 metric tons of nicotine-analog liquids, 99.99% from China, and about 316 metric tons of nicotine-free liquids, including roughly 315 metric tons, or 99.7%, from China. The measures follow South Korea's April expansion of its tobacco definition to include synthetic nicotine products and include new checks on Chinese manufacturing, transaction and export documentation.
Sep.24