Phase I vs. Phase II

Phase I

The Phase I agreement is the $246 billion settlement that was reached in 1998 between the major tobacco companies and the 14 tobacco producing states. Virginia is slated to receive $4 billion of that over a 25-year period. Fifty percent of the funds will go directly to the Virginia Tobacco Indemnification and Community Revitalization Commission. Ten percent is allocated fot support efforts to restrict the use of tobacco among minor, and the remaining 40 percent goes to the state's general fund, to be used for things such as mental health and other activities. Using an average amount of quota from 1995-1998, Virginia tobacco farmers have suffered losses to date of $554 million. It is estimated that a payment equivalent to $12 per pound of quota lost since the 1995-1998 base would indemnify both the quota owner and producer.

Phase II

The Phase II trust fund is a separate agreement between the major tobacco manufacturers and attorneys general of the 14 tobacco producing states. Phase II was established to circumvent anticipated losses experienced by growers and quota owners as a result of the reduced sales of tobacco products following the Phase I settlement. Phase II monies will be distributed over a 12-year period and will be split proportionately between the 14 states. Unlike Phase I monies, 100 percent of the Phase II funds are distributed directly to certified growers and quota owners.