Russia To Require Permits For Nicotine Production And Distribution Under New Law

Article by [Parker Tang]; Edited by [Rui Tian]-The Russian tobacco industry will introduce state control similar to alcohol, including production permits, a unified information system, and criminal liability for violations, as reported by Russian media rg.ru on March 8th.The Ministry of Finance's bill will be reviewed at a government meeting on March 9th.

According to the Ministry of Finance, the purpose of the bill is to introduce a comprehensive national regulatory system to manage the tobacco industry. This regulatory model has already been applied in the alcohol market. Currently, the management of the Russian cigarette market is problematic, with one out of every seven packs of cigarettes sold being illegal. Therefore, the government plans to reform the industry.

The bill stipulates that a license is required for the production and import of tobacco, nicotine-containing products, and production materials. In addition, producers are required to register the main equipment used in the production of such products. If the equipment is not in use, it must be sealed. Equipment used in illegal production will also be confiscated. The records of products and raw materials will be made in the "honest label" tagging system. This will ensure the implementation of comprehensive government supervision, according to the Ministry of Finance.

The bill also includes other measures to prevent illegal production and trading, such as prohibiting the sale of tobacco products and nicotine-containing products in non-consumer packaging, and requiring accompanying documents and labels in their transactions. "The implementation of this bill will help reduce the circulation of illegal tobacco and nicotine-containing products," the department believes. At the same time, experts believe that in addition to production, retail also needs to be controlled by permits, as the share of illegal tobacco products has grown 12 times in the past eight years.

According to data from the Ministry of Industry and Trade, illegal tobacco circulation caused a loss of 61.6 billion rubles (approximately 560 million yuan) to the budget in just the first nine months of last year. One of the reasons for the increase in illegal tobacco circulation is unfinished legal reforms.

Sergey Ryabukhin, the first deputy chairman of the Budget and Financial Market Committee of the Russian Federation Council, believes that regulatory measures that have been prepared for a long time have become urgent. He believes that state regulation of the industry will help track the quality of tobacco products.

However, industry experts have criticized the bill. For example, Pavel Shapkin, chairman of the National Consumer Rights Protection Association and head of the National Alcohol Policy Development Center, believes that retail sales of tobacco should also be subject to a permit system. He believes that manufacturing permits do not eliminate the possibility of selling illegal products at the retail level. Dmitry Vladimirov, chairman of the Tobacco and Nicotine Product Joint Enterprise Association, pointed out that the bill only applies to nicotine-containing products.

Ryabukhin believes that the bill should be passed in the proposed form as soon as possible. Practice will show where further improvements are needed. The next step should be to coordinate tax rates across the entire Eurasian Economic Union (EAEU) to combat illegal tobacco products.

Reference:

[1] Russian Ministry of Finance Issues a Bill Introducing State Regulation of the Tobacco Industry.