A Message from Senator Kohl on Black Market Cigarette Smuggling

The following was posted on US Senator Herb Kohl's e-newsletter on November 20. -emily

Cigarette trafficking has become a highly profitable revenue source for criminal and terrorist organizations like Hezbollah, al Qaeda and Hamas. Money is often raised in the United States, then funneled back to these international terrorist groups. Cigarette smuggling is a multibillion dollar phenomenon and getting worse. To counter this trend, I introduced the Prevent All Cigarette Trafficking (PACT) Act of 2009 which recently passed the Senate Judiciary Committee. It provides law enforcement essential resources to crack down on black market tobacco ventures.

The PACT Act will strengthen our tobacco laws to ensure that law enforcement has the tools they need to investigate and prosecute cigarette traffickers. Illegal tobacco vendors around the world evade detection by conducting transactions over the Internet, then shipping their illegal products around the country to consumers. Just a few years ago, there were less than 100 vendors selling cigarettes online. Today, approximately 500 vendors sell illegal tobacco products over the Internet. Each day we delay the PACT Act's passage, terrorists and criminals raise more money, states lose significant tax revenue, and kids have easy access to tobacco products sold over the internet.

In 1998, the Bureau of Alcohol, Tobacco, Firearms and Explosives had six active tobacco smuggling investigations. Today there are more than 400. But the number of cases alone does not sufficiently put the challenge into perspective. The amount of money involved is truly astonishing. Cigarette trafficking, including the illegal sale of tobacco products over the internet, costs states billions of dollars in lost tax revenue each year. It is estimated that we lose $5 billion of tax revenue, at the federal and state level, every year.

The cost to Americans is not merely financial. Internet tobacco sales have been used by terrorist and organized crime groups to raise millions of dollars to support their illicit activities. Hezbollah is estimated to have earned $1.5 million between 1996 and 2000 through tobacco smuggling. The 9/11 Commission noted that terrorists often raise money by trafficking in counterfeit goods, such as cigarettes. We can no longer continue to let terrorist organizations exploit the weaknesses in our tobacco laws to their advantage.

The Prevent All Cigarette Trafficking (PACT) Act will:

· Strengthen reporting requirements for interstate cigarette sellers.

· Increase the criminal penalty from a misdemeanor to a felony and create a substantial civil penalty for violations, including violations of the reporting requirements and state tobacco tax laws.

· Grant federal and state law enforcement officials more power to investigate and prosecute violators.

· Prohibit the United States Postal Service from delivering tobacco products

The common sense approach taken in the PACT Act to combat this problem has brought together a strong coalition of supporters. The legislation has the backing of the law enforcement community, numerous public health advocates, and tobacco companies. I am encouraged by the Judiciary Committee's vote and am optimistic that we can work together to pass this bill.