Violent criminals expand into cigarettes

From 2007 to last year, 27 states raised their cigarette taxes, according to Michigan’s Mackinac Center for Public Policy, which closely tracks tobacco tax rates across the country. Mackinac describes tobacco smuggling as an “unintended consequence of high cigarette taxes.

There is so much illicit money to be made, Penninger says, that some drug and weapon trafficking organizations are adding tobacco to their product lines to boost profits. For example, in low-tax states such as Virginia, where cigarettes cost about $4.50 a pack, smugglers can sell a truckload (typically 800 cases) in New York at $13 a pack. New York is the highest tobacco taxing jurisdiction in the country.

Smuggling costs states and the federal government about $5 billion, according to U.S. government estimates. “Everybody out there (involved in illegal trafficking operations) is tapping into tobacco,’’ Penninger says.