Canada’s three large tobacco companies have proposed a landmark settlement of $32.5 billion to settle all legal claims from all provinces and territories and all class action proceedings.
The provinces and territories will receive $24.8 billion as compensation for health care costs incurred to treat tobacco-related illnesses.
The three tobacco companies have been in bankruptcy protection since 2019, shortly after appeals were exhausted following a landmark $4 billion dollar class action judgment in the Province of Quebec.
After the Quebec judgment, Imperial Tobacco Canada, JTI-Macdonald Corp., Rothmans, Benson & Hedges, and their related companies, sought bankruptcy protection in an Ontario court. Since then, these companies have accumulated almost $12B in cash. Most of these funds will be used to pay the settlement. The balance owing will be paid out of profits in the ensuing years.
A significant portion of settlement money will fund a foundation dedicated to combatting tobacco-related diseases.
While the deal awaits creditor voting and court approval, it marks an historic moment, allowing compensation for victims and governments alike.
The Canadian Cancer Society praises the unprecedented scale, but also criticises the lack of any control measures to enforce greater transparency or further reduce tobacco use.