Contraband Cigarettes Sales Increased in Virginia

Cigarette contraband has become so profitable that it is attracting organized crime and former drug contrabandists, Virginia Crime Commission staffer Stewart Pettoe declared on Wednesday, during a study to the commission on cigarette smuggling in and from Virginia. He quoted an unnamed Virginia State Police agent as reporting the profit margin on illegally trafficked cigs is now higher than on cocaine, heroin, marijuana or guns. A Wall Street Journal post from 2009 mentioned at least one incident in which criminals were ready to trade cocaine for cigarettes, that’s how high the profit margin is.

Pettoe argued that cigarette trafficking has existed for years. But as the difference among states’ tax rates has extended in recent years, the problem has worsen.

“We see data in the field that just in the last year it is blooming in the commonwealth,” Pettoe told.

That’s because Virginia has the second-lowest cigarettes tax in the nation, at 30 cents a package (2010 figures give Missouri’s tax as the lowest, at 17 cents). Every state to the north has a higher tobacco tax, and by the time you reach New York state, the tax is $4.35 a package.

Adding on federal taxes and other costs means that a carton of Marlboro cigarettes that costs almost $40 to $45 in Virginia costs more like $120 to $150 in New York City.

Truck 1,500 cartons of Virginia cigs to the Big Apple and you could see a $100,000 income. That’s assuming you even take legally purchased smoking products; traffickers also deal in cigs without Virginia tax stamps, as well as contraband cigarettes and those with fake stamps.