As excise taxes increase, so do the prices of tobacco products. The increased cost of cigarettes creates a financial incentive for criminals to engage in contraband cigarette trafficking. Criminal organizations exploit these higher costs by selling smuggled, counterfeit, illegally-imported and stolen tobacco products for their own financial gain.
The illicit trade includes trafficking in:
- smuggled cigarettes (genuine cigarettes intended for sale in the United States for which applicable excise taxes have not been paid);
- counterfeit cigarettes (cigarettes not manufactured by or with the consent of the trademark owner);
- illegally imported cigarettes (cigarettes manufactured for sale outside the United States);
- and stolen cigarettes (cigarettes that become contraband as a result of crimes such as truck hijacking, theft from cargo shipments and warehouses, or stealing from retail stores).
Illicit trade is a concern for our business, law enforcement and regulatory authorities, as well as wholesalers and retailers. Illicit activity deprives governments of tax revenue and hurts law-abiding businesses. Tobacco diversion costs the states and the federal government more than $5 billion in annual revenue from unpaid excise taxes1. One shipping container of counterfeit cigarettes represents more than $900,000 in state and federal tax losses2.
Contraband cigarette sales undermine trade programs that PM USA offers wholesalers and retailers to responsibly market and sell its products, and harms legitimate cigarette wholesalers and retailers who can face unfair competition when lower-priced contraband cigarettes are introduced into a market.
Altria’s tobacco operating companies (PM USA, U.S. Smokeless Tobacco Company, and John Middleton) actively work to address the problem of contraband tobacco products.
- We support federal, state and local law enforcement and regulatory agencies to address the sale and distribution of contraband tobacco products.
- We monitor the marketplace through intelligence gathering and product purchase programs to understand contraband cigarettes and other tobacco product trends.
- We enforce trade policies at the retail and wholesale level.
- We pursue civil remedies, including litigation, to protect our trademarks.
We support federal and state legislation to better protect the legitimate channels of distribution, impose more stringent penalties for the violation of laws, and provide additional tools for law enforcement. For example, at the federal level, our tobacco companies strongly supported the 2010 Prevent All Cigarette Trafficking Act (The PACT Act). The PACT Act strengthens federal laws governing Internet sale of cigarettes and smokeless tobacco products.
If you are a federal, state or local law enforcement agent or a regulatory official and would like additional information, please call the Law Enforcement Support Line at 877-224-3487. Resources from this Support Line include:
- The Law Enforcement Training Video: "Where there's smoke...the growing black market in illicit cigarette trade.
- The Contraband Cigarette Quick Guide provides information on recognizing the various forms of contraband cigarettes and potential indicators of illicit trade.
- The Federal Cigarette law Card provide a summary description of federal laws applicable to the illicit cigarette trade.
- The Date Code Card provides an explanation of manufacturing date codes on cigarette packs and cartons with counterfeit cigarette pack recognition tips.
Altria's tobacco operating companies support three websites: