Rise in Cross-Border Tobacco Smuggling: Impact on Massachusetts

Regulations by 2FIRSTS.ai
Oct.05.2023
Rise in Cross-Border Tobacco Smuggling: Impact on Massachusetts
Maine's stricter tobacco regulations have led to an increase in cross-border smuggling and a decrease in tax revenue.

According to the Maine Policy Research Institute on September 4th, since June 2020, following the implementation of stricter regulations on tobacco products in Massachusetts (referred to as "The Bay State"), including the ban on sales of all flavored tobacco products (including e-cigarettes and menthol cigarettes) and a 75% increase in tobacco consumption taxes, there has been an increase in cross-border smuggling, a decrease in tax revenues, and a heavier workload for state inspectors.

 

After a year of implementing the ban in Massachusetts in June 2020, tobacco consumption in the region has not decreased. Instead, sales have shifted to neighboring New Hampshire, where taxes on tobacco are lower. Consequently, the only apparent outcome is a significant decrease in income for Massachusetts store owners and employees, as well as the loss of $11.4 million in tax revenue.

 

The ITTF (Illegal Tobacco Task Force) mentioned in last year's report that the high tax rates on tobacco products in Massachusetts provide motivation for smugglers to import such products from low-tax states and illegally sell them within the state. The Bureau of Alcohol, Tobacco, Firearms, and Explosives also noted that "tobacco smugglers will purchase tobacco from low-tax states and then sell it in high-tax states.

 

When it comes to this, it raises concerns about how authorities may have missed the significant increase in tobacco smuggling last year. Menthol cigarettes and cigars constitute the largest category among illegal tobacco products. According to the Massachusetts police report, the confiscation of smuggled cigarettes in 2021 surged from 40 packs to over 1,900 packs compared to the previous year. Additionally, the seizure of illegal smokeless tobacco in 2022 witnessed an 800% increase compared to 2021.

 

In fact, the state's revenue agency has stepped up its enforcement efforts against tobacco tax evasion. From the fiscal year 2020 to the fiscal year 2022, inspection activities have increased by more than 42%. This has led to a significant surge in confiscation actions, while the practice of cross-border smuggling still persists.

 

We welcome news tips, article submissions, interview requests, or comments on this piece.

Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn


Notice

1.  This article is intended solely for professional research purposes related to industry, technology, and policy. Any references to brands or products are made purely for objective description and do not constitute any form of endorsement, recommendation, or promotion by 2Firsts.

2.  The use of nicotine-containing products — including, but not limited to, cigarettes, e-cigarettes, nicotine pouchand heated tobacco products — carries significant health risks. Users are responsible for complying with all applicable laws and regulations in their respective jurisdictions.

3.  This article is not intended to serve as the basis for any investment decisions or financial advice. 2Firsts assumes no direct or indirect liability for any inaccuracies or errors in the content.

4.  Access to this article is strictly prohibited for individuals below the legal age in their jurisdiction.

 

Copyright

 

This article is either an original work created by 2Firsts or a reproduction from third-party sources with proper attribution. All copyrights and usage rights belong to 2Firsts or the original content provider. Unauthorized reproduction, distribution, or any other form of unauthorized use by any individual or organization is strictly prohibited. Violators will be held legally accountable.

For copyright-related inquiries, please contact: info@2firsts.com

 

AI Assistance Disclaimer

 

This article may have been enhanced using AI tools to improve translation and editorial efficiency. However, due to technical limitations, inaccuracies may occur. Readers are encouraged to refer to the cited sources for the most accurate information.

We welcome any corrections or feedback. Please contact us at: info@2firsts.com

Related Topics