Public Comments to FDA Help Define 'Black Market'

WASHINGTON – One of the byproducts of the U.S. Food and Drug Administration’s (FDA’s) round of public discussion around nicotine levels in cigarettes is a rush of reports surrounding one of the tobacco category’s biggest challenges: the black market.

Illicit trade is a big argument that major tobacco makers put up against any potential standard for lowering nicotine levels in cigarettes sold in the United States.

“History has demonstrated that banning products that millions of consumers want creates demand for contraband product,” wrote officials with Altria Client Services, Richmond, Va., in its public comments to the FDA. “As we approach the 100-year anniversary of Prohibition, we are seeing … the reality of black markets: Even well-intentioned regulatory interventions restricting access to a product create serious black-market problems.”

Here are additional insights into illicit trade as drawn from public comments that the FDA released in August …

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Citing various sources, officials with Reynolds American Inc., Winston-Salem, N.C., said black-market cigarettes are nearly a $60 billion annual problem worldwide. Approximately 8.5%-21% of the U.S. market for cigarettes is made up of contraband products, which equates to 1.24 billion cigarettes at the low end and as many as 2.91 billion cigarettes at the high end, officials said. That accounts for a loss in state and local tax revenues of $2.95 billion to $6.92 billion.

Higher percentages of contraband product exist in New York, Arizona, New Mexico and Washington.

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In contrast to FDA goals to discourage youth from tobacco use, Reynolds officials pointed to Canadian studies that said illicit trade promotes underage smoking. Black-market expansion “strongly correlates with an increased rate of smoking by adolescents,” they said. One study found that “between 1991 and 1994—the period during which black market sales peaked … smoking prevalence among 15- to 19-year-olds rose by 35% in Ontario and by 14% in Quebec,” they said.

Those figures stood in stark contrast to a 10% increase in the prevalence of youth smoking in the rest of Canada, Reynolds officials said.

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Citing a 2010 fact sheet from the Bureau of Alcohol, Tobacco, Firearms and Explosives, officials with ITG Brands, Greensboro, N.C., said counterfeit cigarettes had 75% more tar, 28% more nicotine and 63% more carbon monoxide than genuine cigarettes.

ITG officials quoted the National Center for Environmental Health at the Centers for Disease Control and Prevention in Atlanta as saying that levels of cadmium, thallium and lead in mainstream smoke were far greater in counterfeit than authentic brands.

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Delving into more unintended consequences, Altria officials said law enforcement would become an issue. As with Prohibition, such moves involving nicotine levels would drive millions of otherwise law-abiding citizens into illegal activity, Altria officials said.

“For the cigarette black market, enforcement responsibility is spread among numerous federal, state and municipal agencies, all with limited resources to address the problem and a panoply of other priorities, like the opioid crisis,” Altria officials said. “But the most significant impediment would be the size of the tobacco black market itself, which in the face of the contemplated product bans may dwarf law enforcement’s ability to contain it short of efforts that would be incompatible with what the American public will accept.”

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