In 1998 the company was part of the Master Settlement Agreement.
In 2002 the company was fined $15m for handing out free cigarettes at events attended by children, and was fined $20m for breaking a 1998 agreement between tobacco companies and 46 states, which restricts targeting youth in its tobacco advertisements.
In October 2002, the European Community accused R. J. Reynolds of selling black market cigarettes to drug traffickers and mobsters from Italy, Russia, Colombia and the Balkans.
On July 30, 2004, R. J. Reynolds merged with the U.S. operations of British American Tobacco (operating under the name of Brown & Williamson). A new parent holding company, Reynolds American Inc., was established as part of the transaction.
In May 2006 former R. J. Reynolds vice-president of sales Stan Smith pleaded guilty to charges of defrauding the Canadian government of $1,200,000,000 (CDN) through a cigarette smuggling operation. Smith confessed to overseeing the 1990s operation while employed by RJR. Canadian-brand cigarettes were smuggled out of and back into Canada, or smuggled from Puerto Rico, and sold on the black market to avoid taxes. The judge referred...