Billions to flow to provinces as part of historic tobacco settlement

Billions of dollars in initial payments from tobacco companies are set to be distributed to provincial and territorial governments on Friday as part of a historic $32.5 billion settlement. Ontario and Quebec are poised to receive over a billion dollars each, with other provinces also receiving substantial amounts.

Anti-smoking advocates are emphasizing the importance of using this money for public health programs. While the settlement does not include any remedial actions to restrict the sale and marketing of tobacco products in Canada, advocates are urging provinces to invest in tobacco-reduction strategies.

Despite the decreasing number of smokers in Canada, there are still approximately four million tobacco users in the country, and about 46,000 Canadians die from tobacco-related illnesses each year. The settlement, which was approved by an Ontario judge in March, is a result of years of mediation between major tobacco companies and their creditors, including provincial and territorial governments seeking reimbursement for smoking-related healthcare costs.

The compensation, which will be distributed over two decades, includes $24 billion for provinces and territories, over $4 billion for plaintiffs in Quebec class-action lawsuits, $2.5 billion for Canadian smokers not included in the lawsuits, and more than $1 billion for a foundation dedicated to combating tobacco-related diseases. Despite the significant financial implications of the settlement, public health advocates have criticized the lack of smoking-reduction measures in the agreement.

The legal proceedings that led to this settlement began in Quebec with a ruling that ordered tobacco companies to pay $15 billion to plaintiffs in class-action lawsuits. The case later moved to Ontario when the companies sought creditor protection after the Quebec ruling was upheld on appeal. The final approval of the settlement in March marked the conclusion of all outstanding tobacco litigation in Canada.

In a recent ruling, Ontario Superior Court Chief Justice Geoffrey Morawetz approved $909 million in legal fees for class-action lawyers who have been involved in the tobacco litigation for the past three decades. While this fee request is unprecedented in Canadian legal history, Morawetz deemed it reasonable considering the complexity and significance of the case.

As the initial payments from the tobacco settlement are dispersed, the focus now shifts to how provinces and territories will allocate these funds to benefit public health initiatives and reduce smoking rates across the country.