New Regulations on Production and Imports of Nicotine Products

The Deputy Head of the Customs Policy and Alcohol Market Regulation Department at the Ministry of Finance, Alexander Korobutov, announced during a roundtable discussion at the Federal Council on November 17th that it is necessary to introduce mandatory licensing for the production and import/export of goods containing nicotine, as well as for the raw materials used to manufacture these products. Additionally, it is necessary to register the technical equipment used in cigarette production with the state. These measures are outlined in a package of laws proposed by the Ministry of Finance, and the legislation has now been sent to the Presidential Administration's Department of Legal Affairs for review.

Regarding illegal tobacco, Russia ranks fourth in the world in terms of production, making it an attractive market for counterfeit products. Senator Alexei Sinitsyn believes that it is evident that in the near future, the consumption habits of fellow citizens will not fundamentally change and those who use nicotine will continue to do so.

According to him, over 20% of the adult population in the country is currently active smokers in 2021. Meanwhile, the senator pointed out that legal cigarette production has decreased by over 17% in the first half of the year. He believes the main issue is the discordant tax rates imposed by Russia and neighboring EAEU countries.

If legal production decreases, counterfeit quantities will increase. This is logical and a focus of the Federal Commission for a long time. The Treasury's initiative will also aid in combating crime. The department has prepared a comprehensive package of laws on behalf of the government aimed to regulate the tobacco and nicotine-containing industries.

According to Alexander Korobutov, the main regulatory document for this industry stipulates the licensing of both the production of these products and the raw materials used in their production. It also covers import and export permits for these materials. The proposed law also requires national registration of tobacco production technology equipment, with a provision for equipment to be confiscated and destroyed if registration requirements are not met. If business owners choose not to use production equipment for any reason, they will need to comply with the new regulations for storing it.

According to the official, the planned effective date for the main provisions of the bill is September 1, 2023. Meanwhile, certain provisions are expected to allow for the submission of permit applications before September 1 of the following year.

The bill also includes several satellite bills that strengthen administrative and criminal liability for violating mandatory requirements in cigarette production. Specifically, amendments to the Russian Federation Criminal Code involve criminal responsibility for large-scale production of tobacco products without a license (i.e., exceeding 100,000 rubles). Korobtsov stated that the proposed measures will be toughened and will help combat the illegal trafficking of tobacco products.

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