For Greed or Public Health?

Master Settlement Agreement Doctor and Businessman

In 2015, a video was published on the Truth About Vaping YouTube Channel. This video was titled “Episode 1 Why They Hate Us” and has received over 259,000 views. Much like the famed outer space war movies that take place in a galaxy far far away, it packed a lot of information into a short amount of time. We felt that this amazing video deserved to be discussed in a bit more detail.

The video starts out by questioning the true motives of This project is part of California’s Tobacco Control Program and their mission, “is to improve the health of all Californians by reducing illness and premature death from the use of tobacco products.”1 But, if you have a quick look at their site, it seems that they are really in the business of writing baseless fear mongering articles and promoting youth tobacco use by showing pictures of actual children in the act of vaping and smoking.

The Truth About Vaping asks us why public health organizations like this are combating vaping when “More smokers are turning to e-cigs as a healthier alternative to tobacco cigarettes?” The answer to this question lies in the problems.

Problem No. 1 – The More Money Big Tobacco Makes, The More Money California Gets

It all began in 1998 when the Master Settlement Agreement, also known as the MSA, was struck between 46 states and 5 of the biggest tobacco manufacturers, also known as Big Tobacco.2 The MSA came about because of the mounting Medicaid lawsuits faced by Big Tobacco due to the sharp rise in health care costs caused by smoking related illnesses. The result of the deal was that States would receive more than 206 billion dollars over the next 25 years in exchange for dropping the lawsuits.

The result of the deal was that States would receive more than 206 billion dollars over the next 25 years in exchange for dropping the lawsuits.

Of this 206 billion dollars, $12.7 billion was to be paid up front and the rest would be paid out over time in annual payments. There was a catch to that annual payments though. Per the agreement, the annual payments were to be based off a “volume adjustment”, which compares the number of cigarettes sold in each payment year to number of cigarettes sold in 1997. So, if the states sell more cigarettes per year than they did in 1997, the “volume adjustment” system would leave them with a bigger payout when it comes time for Big Tobacco to cut the annual check.3

Big Tobacco would also have to create and fund the National Public Education Foundation, restrict advertising, restrict lobbying, restrict sponsorship and disband 3 tobacco related organizations. The billions of dollars in annual revenue was to be used for helping smokers quit and cover the cost of smoking related illnesses.4

Problem No. 2 – The States Spent That Money Before They Got It

Basically, the local state governments began to use that MSA money for anything and everything. In the years 2000-2005, the Government Accountability Office found that only 33.5% of the MSA money went to Health and Tobacco Control while 22.9% went to Budget Shortfalls.5 Budget Shortfalls have nothing to do with the health of the people. Essentially, over 30% of the billions of dollars that was supposed to be spent on public health actually ended up going to fix budget oversights by our elected officials.

In the years 2000-2005, the Government Accountability Office found that only 33.5% of the MSA money went to Health and Tobacco Control while 22.9% went to Budget Shortfalls.

First came the misallocation of funds to “save” the states’ budgetary crisis, then came the borrowing. It’s commonly known as securitization and it occurs when a state in need of immediate funds borrows against future MSA payments by issuing “tobacco bonds”. The money comes in quickly from major financial institutions but the problem with these “tobacco bonds” is that the state is only getting 40 cents on the dollar for them.6 That loss of money keeps moving forward with the states losing more money every year as a result.

The MSA isn’t the only source of tobacco income for the states though. The states also make money off the sales tax or “sin tax” associated with all tobacco products. The Truth Of Vaping goes on to connect the dots between the “lost tobacco revenue” that the states have come dependent on and the steady decrease in people purchasing tobacco products.

At the time this video was released, Wells Fargo estimated that tobacco cigarette sales would decrease by 68% over the next 10 years while e-cigarette sales would increase more than 13 times. It seems that even more than 3 years ago those estimates were pretty accurate, see the sales data for e-cigarettes here.

The Solution

According to the video, the only way for California and other states to recoup this loss of tobacco funds would be to ban e-cigarettes completely and force people to revert back to combustible cigarettes, or, classify vaping devices as a tobacco product so they would fall under the MSA agreement. We are seeing both of these options play out at this very moment. In San Francisco, flavors have already been banned and now legislation has been introduced to ban the sales of vaping devices completely. Countless cities have passed or introduced new tobacco legislation that lumps e-cigarettes right in with combustible tobacco so it can also be included in the MSA to help recoup funds lost by the decrease in tobacco sales.7

What Can You Do To Stop This Mindless Attack On Vaping?

Talk about it! Talk to anyone who will listen. Even if they’re not a fan of vaping, I’d be willing to bet they’re not a fan of elected officials spending money that is meant for the welfare of the community on their budgetary ineptitude. Share this blog post, the video and all the source material on every social media platform you can think of. And when voting time comes around, vote for the people that really have public health in mind.

Watch the Truth About Vaping “Episode 1 Why They Hate Us” here:


  2. Master Settlement Agreement Overview – Public Health Law Center
  3. Master Settlement Agreement – Wikipedia
  4. Master Settlement Agreement – Wikipedia
  5. U.S. Government Accountability Office – States’ Tobacco Payments Use 2000-2005
  6. Citizens Against Government Waste – “Up In Smoke…” Article
  7. American Vaping Association – Flavor Bans

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