Massive Tobacco Payout Draws Criticism for Leaving Cigarette Business Untouched

A proposed multibillion-dollar settlement meant to close the book on decades of tobacco litigation in Canada is being met with skepticism from health specialists, who debate the agreement prioritizes compensation over real accountability.

Filed in court this week, the plan would require JTI-Macdonald Corp., Rothmans, Benson & Hedges, and Imperial Tobacco Canada Ltd. to hand over nearly $25 billion to provincial and territorial governments. The proposal is part of a wider $32.5-billion settlement framework tied to litigation over smoking-related diseace.

Under the terms, Quebec class-action plaintiffs would receive more than $4 billion, while another $2.5 billion would be set aside for smokers elsewhere in Canada who were diagnosed with lung cancer, throat cancer, or chronic obstructive pulmonary disease between March 2015 and March 2019. The organizations have also promised to invest upwards of $1 billion into a foundation focused on addressing diseases linked to tobacco use.

While the figures are historic, critics say the agreement lacks teeth when it comes to changing how the tobacco industry performs.

Michael Chaiton, a professor at the University of Toronto, said the agreement fails to challenge the profitability of cigarettes the product at the heart of the health crisis.

“The core message from years of litigation is that cigarettes cause extraordinary harm and shouldn’t be treated like a normal consumer good,” Chaiton said. “Yet this deal doesn’t force companies to move away from them. In many ways, it allows business as usual.”

He also cast doubt on tobacco companies’ repeated claims that newer products, such as e-cigarettes, represent a genuine shift toward harm reduction. According to Chaiton, vaping has not meaningfully substituted smoking at a population level.

He said that “A large number of people using these products and never smoked cigarettes in the first place,”. “That makes it hard to maintain this has been a public health success.”

Similar issues were raised by David Hammond, a professor at the University of Waterloo, who said the absence of required reforms was a missed chance.

“The settlement doesn’t touch the underlying business model,” Hammond said. “Cigarettes still bring in enormous returns, and without structural change, there’s little incentive for organizations to abandon what makes them money.”

Hammond noted that tobacco revenues have climbed over the last decade, driven largely by steep price increases. With billions now owed under the settlement, he warned companies may respond by raising prices further rather than reducing cigarette sales.

The agreement stems from a legal showdown that intensified in 2019, when the three organizations sought creditor protection in Ontario. That move followed a ruling by Quebec’s highest court upholding nearly $15 billion in damages awarded in two class-action lawsuits related to smoking and health harms.

Legal experts say the case could resonate far beyond the tobacco sector. Jacob Shelley, co-director of the Health Ethics, Law and Policy Lab at Western University, said the same reasoning applies to other products known to carry health risks.

“When companies sell products that can cause significant harm, they have a responsibility to clearly advise consumers,” Shelley said. “That principle doesn’t stop with tobacco it extends to alcohol, sugary drinks, and highly caffeinated beverages.”

The proposed agreement must still be approved by creditors and the courts. As it moves through that procedure, public health advocates alert that without stronger provisions, the deal may compensate for past damage while doing little to prevent future harm.