Tobacco counterfeiting may be overstated, says study

A wide-ranging study across the US has concluded that counterfeiting of tobacco products may be rarer than previously thought in retail outlets.

The investigation draws on data from a few years ago – a five-month period in 2012 – but concludes that “when no attempt is made to purchase untaxed or counterfeit cigarettes, the vast majority of standard tobacco retailers appear to be selling properly taxed cigarette packs that do not show indications of product counterfeiting.”

There’s a caveat however. The study doesn’t take into account real-world behaviours, for example, retailers providing illicit tobacco only to trusted customers with whom they have developed a long-term relationship, or purchases outside retail channels. The team suggest this sort of

The findings – published in the journal Preventive Medicine Reports - run counter to cigarette pack litter studies, which have found that a substantial proportion of discarded packs, particularly in high-tax jurisdictions, lack the appropriate tax stamp.

The data for the study came from a sample of 2,147 cigarette packs from two brands – Newport Green and Marlboro Red - purchased in 97 US counties. Almost all tax stamps were present where mandated and matched the location of purchase, although 13 per cent (mainly using older technology) were damaged, and the researchers say they found no clear evidence of counterfeit products.

The evidence from litter studies – which have suggested up to 18.5 per cent of packs showed signs of tax avoidance – “likely represent some combination of illegal bootlegging and tax avoidance from individual smokers' legal travel to lower-tax jurisdictions,” they note.

Their results tie in with findings from the National Academy of Medicine (NAM) which published a report in 2015 indicating that tobacco litter studies were not able to distinguish between tax avoidance, tax evasion, tourism and commuting patterns, and suggested that the background illicit tobacco rate was around 8.5 per cent.

One key limitation of the study was that the researchers had no way to identify whether the tax stamps used on packs were in fact genuine and not copies – which could be significant given that a New York study found that two-thirds of illicit packs had fake stamps.

“More covert approaches to identifying bootlegged cigarettes in inspections programs and approaches that address counterfeit tax stamps, as well as policies that reduce opportunities for legal price minimizing strategies, may be necessary,” they conclude.