Just five days after we published our review of what happens when states ban or levy high taxes on tobacco products, reporting out of California confirms what we already knew: Bans and high taxes fuel black markets.
California banned the sale of menthol cigarettes in 2021. And needless to say, it hasn’t gone according to plan. From the Orange County Register:
When policymakers made the decision to prohibit menthol cigarettes, their aim was to reduce the supply of these products in the market. However, an underground market was ready to ensure a steady supply and continued use of these products.
How does the author, retired police officer and La Mirada, Calif., Mayor Pro Tem Andrew Sarega, know this happened? Researchers started dumpster diving.
By analyzing the contents of trash in California, researchers began discovering the emergence of a menthol cigarette brand “Sheriff.” In fact, they figured out that “Sheriff” is the fifth-most popular discarded brand in the state.
This inexplicable prominence, coupled with the cartel’s association with it in Mexico, strongly points towards their involvement in disseminating these illicit menthol cigarettes across California.
Moreover, California’s ban on menthol products has led to the emergence of other new cigarette products being sold across the state.
Also, shortly after the ban took effect, other new cigarette products entered the market. These cigarettes looked just like traditional menthol products, with blue and green packaging, but somewhere on the pack is a designation that they are “non-menthol.” This was clearly meant to confuse menthol cigarette smokers to continue lighting up, and it appears to be working, with the study showing roughly 7% of discarded packs were these menthol “work-around” products.
The bottom line, as the reporting demonstrates, is that when the state uses the force of government to ban a multi-million-dollar product, that doesn’t eliminate the demand for the product. And as long as that exists, another actor—criminal networks—will work to supply it.
In addition to the Mexican cartels, the Golden State has seen another actor emerge to fill the void and benefit from California’s prohibition. Illicit flavored vaping/e-cigarette products from China have also poured into California as a result.
The survey unearthed another staggering statistic—98% of discarded vapes featured flavors, despite the FDA’s lack of approval for flavored e-cigarettes. Highly flavored brands like Elf Bar, Flum, and Funky Republic, mostly originating from China, should not even be on the market and are banned at the federal, state, and often local level. Yet these illegal products remain readily available across California.
Now, if these are the effects at the state level, just imagine the unintended consequences of this kind of policy on a national level.
It’s no secret that the U.S. Food and Drug Administration’s federal menthol cigarette ban would be a gift to the black market.