FRANKFORT, Ky. — Kentucky has received $94.4 million in its 2026 Tobacco Master Settlement Agreement payment, bringing the state's total haul from the historic 1998 settlement with cigarette manufacturers to nearly $3 billion, Attorney General Russell Coleman announced last week.

The settlement, reached in 1998 between Kentucky and 51 other states and territories with major cigarette manufacturers, resolved state lawsuits against the tobacco companies for Medicaid and other health costs related to smoking. Under settlement terms, participating cigarette manufacturers must make yearly payments to states based on an annually adjusted rate per number of cigarettes sold each year, with Kentucky to continue receiving payments as long as manufacturers sell cigarettes in the United States.

However, the distribution of settlement funds in Kentucky highlights a stark disparity in how the state prioritizes tobacco-related spending. Kentucky has designated half of the settlement funds for agricultural diversification, with grants distributed by the Kentucky Department of Agriculture, while the remaining funds are split evenly between the Early Childhood Development Fund and the Kentucky Health Care Improvement Fund. This means no settlement money is directed specifically toward tobacco prevention or cessation programs.

The funding allocation has drawn criticism amid broader concerns about Kentucky's tobacco prevention efforts. The 2026 State of Tobacco Control report released by the American Lung Association gives Kentucky mostly failing grades when it comes to funding prevention programs, the strength of the state's smokefree workplace laws and more. Kentucky spends about $2 million on tobacco prevention, which is about 10 percent less than what it should based on Centers for Disease Control and Prevention recommendations.

Republicans in both the House and Senate are trying this year to redirect settlement dollars into smoking and vaping prevention and cessation efforts, with House Bill 187 and Senate Bill 74 proposing Kentucky establish a vaping settlement trust fund administered by the attorney general for the purpose of funneling money from litigation toward tobacco-cessation efforts.

The General Assembly's Tobacco Settlement Agreement Fund Oversight Committee oversees all agricultural grant application decisions and monitors expenditures under the other funds.