The Rise of Illicit Trade in E-cigarettes and Tobacco Products.

In Russia, one out of every seven e-cigarettes is produced illegally; in New South Wales, Australia, authorities seized over $1 million worth of illegal e-cigarettes and nicotine-containing e-liquids; and in the UK, officials have seized over 3,500 illegal e-cigarettes worth £27,000 since April 2022. Illegal trade in e-cigarettes persists in markets across the US, UK, Russia, Southeast Asia, and the Middle East. What are governments doing to crack down on illegal trade, and what are the main causes of its proliferation?

Taking the example of Middle Eastern countries, in Central Asia, such as Qatar, the electronic cigarette market has extremely high taxes, with the average price for an electronic cigarette kit ranging from 500-1,000 Qatari riyals (about 1,840 RMB), pushing many to turn to the black market and abandon certified electronic cigarette products. Similarly, Germany began imposing taxes on e-cigarette oil on July 1st, with a tax of 0.16 euros per milliliter. This could result in a nearly 40% increase in retail prices, prompting smokers to switch to traditional cigarettes or the black market.

Driven by immense profits, the illegal tobacco trade has crossed legal boundaries and some have fallen on the wrong side of the law. Former Scottish inspector, Philip Morris, claims that criminal organizations make approximately £1.5 million in profit for each container they load into Britain. The UK government and institutions are cracking down on illegal tobacco trade. In the Dallow area of Luton, the UK, a campaign called "Dallow Cares" has been launched, with law enforcement seizing illegal e-cigarettes and cigarettes, resulting in 11 arrests. UK authorities caution the public to be wary of unusually low prices, unauthorised retailers, disposable e-cigarettes with 1500 puffs or more, and e-cigarettes and e-liquids containing nicotine that have not been certified by the MHRA.

According to Vladimir Vladimirov, the Director of the Nicotine Industry Manufacturers Alliance (SPINI), the illegal tobacco trade in Russia is growing every year due to a lack of proper control. SPINI experts predict that the amount of illegal sales could exceed 30 billion rubles by 2022, resulting in annual budget losses of over 5 billion rubles. Oleg Barvin, Director of Public Relations for British American Tobacco, predicts two major trends in the Russian tobacco market: consumers moving away from traditional cigarettes and an increase in illegal trade. The issue of illegal trade is one that urgently needs to be addressed in the future of the Russian market.

Victoria Wilson, a cabinet member responsible for trading standards at Staffordshire County Council in the UK, has expressed concern regarding the rising popularity of e-cigarettes as a substitute for traditional cigarettes. She stated that the increase in use has led to a rise in illegal and counterfeit products. These products come in various shapes and sizes, and a worrying trend witnessed by trading standards is their growing popularity among young people as more people try them out.

Excessive taxation on tobacco and new forms of tobacco in some countries has led to people turning to the black market. The proliferation of illegal trade signifies a lack of regulation in the market. Despite strict government supervision and increasing penalties, some illegal e-cigarettes and unscrupulous traders continue to operate on the black market, making it difficult to eradicate it completely.

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