LAKEVILLE, Minn. —Federal, state and local policymakers continue to press forward with restrictions on legal, regulated tobacco sellers by increasing taxes, banning products including flavored products or putting burdensome restrictions on retailers. It is the conscientious, law-abiding, taxpaying retailers who feel the brunt of these efforts, as their customers are, to one degree or another, incentivized to obtain products outside the normal retail channels, and as those illicit sellers are encouraged by the more lucrative market created by these government actions. NATO lets policymakers know about these negative unintended consequences of their actions.
Every week there are news stories about these kinds of criminal activities involving tobacco products, ranging from petty theft to organized crime. What follows are just a few examples of the kinds of things that have been reported in the press regularly:
Theft:
- A New Jersey man stole $3,500 worth of cigarettes by reaching over the counter of a convenience store.
- Houston police asked for help in finding a suspect who had robbed multiple stores, including at least one where he brandished a weapon and another where, while the employee was emptying two cash registers at his direction, he filled up a box with cigarettes.
Embezzlement:
- In Connecticut, a man was accused of stealing over $240,000 in cigarettes over a five-month period from his employer, a distribution company.
Tax Evasion:
- A New York man plead guilty to conspiracy to traffic in contraband cigarettes, which deprived the State of New Jersey of over $600,000 in cigarette taxes.
- A Florida man plead guilty to defrauding California of more than $10 million in tobacco tax revenue.
- In North Carolina, at least 25 people were charged with a conspiracy to obtain cigarettes in that state and sell them in northern states without paying tax.
- A Massachusetts man plead guilty to tax evasion, money laundering, and conspiracy for running an illegal tobacco distribution network out of his home and a self-storage facility, evading over $360,000 in taxes.
International Smuggling:
- Nearly half a million dollars’ worth of fake vaping products were confiscated by customs officers at the Atlanta airport.
- Federal prosecutors charged truck drivers with transporting loads of contraband tobacco from North Carolina to New York and Canada over a nine-year period that involved nearly 7 million pounds of tobacco and evaded nearly $700 million in taxes.
This is just a small sample of recent activity. Each of these stories was reported in the press in just the last six months.
As tobacco products become more expensive and as more restrictions are put on them, the demand for the products will continue, and a criminal element already exists ready and willing to fill that demand. Policymakers need to become educated about the facts of illicit trade in tobacco products before they adopt policies that will not only make a bad situation worse, but also negatively impact the responsible retailers who will abide by the law.
Thomas A. Briant is the executive director of NATO, a tobacco retailing association based in Lakeville, Minn. Reach him at info@natocentral.org.
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