Major Tobacco Companies to Pay $32.5 Billion to Provinces and Smokers in Landmark Settlement Proposal

Three major tobacco companies are set to pay nearly $25 billion to provinces and territories, and over $4 billion to thousands of Quebec smokers and their families, as part of a proposed settlement in a corporate restructuring process triggered by a lengthy legal battle.

The proposed arrangement, developed through mediation, was submitted to an Ontario court on Thursday following five years of negotiations. JTI-Macdonald Corp., Rothmans, Benson & Hedges, and Imperial Tobacco Canada Ltd. sought creditor protection in 2019 after losing a landmark court case in Quebec.

The Ontario court halted all legal proceedings against the companies while they negotiated a deal with creditors, including plaintiffs in two Quebec class-action lawsuits and provincial governments seeking to recover smoking-related healthcare costs.

Under the proposal, provinces and territories would receive payments over time, with around $6 billion paid once the deal is implemented. Quebec plaintiffs could file for compensation of up to $100,000 each.

Additionally, the plan allocates more than $2.5 billion for smokers in other provinces and territories who were diagnosed with lung or throat cancer or chronic obstructive pulmonary disease between March 2015 and March 2019. These individuals could receive up to $60,000 each.

Bruce W. Johnston, a lawyer for the Quebec plaintiffs, hailed the proposal as “historic and unprecedented,” noting it compensates both smokers and governments. “When we took this case in 1998, no plaintiff had ever received a penny from a tobacco company,” Johnston said. The proposed deal will provide $24 billion to governments and compensation to tens of thousands of victims, mostly in Quebec.

Despite years of delays, Johnston noted that there is now “light at the end of the tunnel” for plaintiffs, though many have died before receiving any compensation. Their heirs, however, will be eligible for the payments.

The deal also includes over $1 billion for a foundation dedicated to fighting tobacco-related diseases, with $131 million coming from the Quebec plaintiffs’ share.

The proposal must still pass several stages, including creditor approval and court validation.

The mediation process was confidential, leaving many class-action members in the dark about its progress. Some healthcare groups expressed concern that the lack of transparency benefited the tobacco companies. Last month, organizations like Action on Smoking & Health and the Quebec Coalition for Tobacco Control argued that recent court filings suggested the provinces had granted the companies veto power over the final agreement.

Other groups, including the Canadian Cancer Society, called for the settlement to include public disclosure of internal company documents. Rob Cunningham, a lawyer for the Canadian Cancer Society, described the proposal as “the most significant settlement of its kind outside of the U.S.” but noted it lacked the policy measures seen in the 1990s U.S. tobacco deal aimed at reducing smoking rates.

The Quebec lawsuits involve smokers who picked up the habit between 1950 and 1998 and later became ill or addicted, with their heirs also included in the claims. Court filings suggest many class-action members have died since the creditor protection process began.