Master Settlement Agreement/NPM Enforcement

Tobacco Master Settlement Agreement

On November 23, 1998 Michigan signed the Master Settlement Agreement (MSA) along with 45 other states, the District of Columbia, several territories and a number of tobacco product manufacturers.

Under the MSA, tobacco product manufacturers who signed the MSA agree to deposit funds into an escrow account for subsequent distribution to the settling states. The purpose of the funds is to settle existing and potential suits filed by the states against the tobacco product manufacturers.

On December 28, 1999 the Michigan Legislature enacted PA 244. This Act requires that tobacco product manufacturers either participate in the MSA or, as a nonparticipating manufacturer (NPM), deposit funds into an escrow account based on the number of cigarettes sold in each calendar year.

For purposes of PA 244, the definition of "cigarette" includes "roll-your-own" (RYO) tobacco (.09 ounces of RYO tobacco equals one cigarette).

The definition of "tobacco product manufacturer" under PA 244 includes the manufacturer of cigarettes (including RYO tobacco) intended to be sold in the United States, and the first purchaser for sale within the United States of cigarettes (including RYO tobacco) that were not intended for United States sale.

In order to determine accurately the number of units of cigarettes (including RYO tobacco) manufactured by NPMs and sold within Michigan, the Department requires that licensed Wholesalers and Unclassified Acquirers indicate the appropriate NPM Brand Code for sales or purchases when filing required monthly returns. This information is used to report the number of cigarette sticks and volume of RYO tobacco acquired or imported, the name of the NPM, and the brands of products acquired or imported. Returns of the NPM product(s) or exports to other states are also reported and deducted from acquisitions and imports to arrive at the units subject to escrow by the NPM.

The Department has developed a Web site that provides, directly or by reference to other sites, the names of participating manufacturers and non-participating manufacturers who have complied with the requirements, as well as other pertinent information related to PA 244 and the MSA. The Web address is

Direct questions regarding filing requirements to Special Taxes Division - Tobacco Tax Unit at (517) 636-4630. Technical questions concerning the MSA and PA 244 should be directed to Tax Policy Division at (517) 373-9600.