New York and California should in the next six months clear legal hurdles blocking distribution of last year's multibillion-dollar tobacco settlement, an analyst said Tuesday.

``I think it will come by the end of January for them,'' David Adelman, an analyst for Morgan Stanley Dean Witter, told Reuters after participating in a panel discussion on the tobacco settlement at the National Association of State Treasurers' annual meeting. The $206 billion settlement reached last year between 46 states and major tobacco companies stipulates that payments can't be released until June 2000, unless strict rules are met. Those rules require 80 percent of the states to clear up any outstanding legal appeals and finalize the settlement, with those states representing 80 percent of the total payments, or $165 billion. New York and California are crucial because they make up a big enough chunk to push the level close to 80 percent, if they are ready before the June target date.

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