UNDERSTANDING THE
U.S. ILLICIT
TOBACCO MARKET
Characteristics, Policy Context, and Lessons
from International Experiences
Committee on the Illicit Tobacco Market:
Collection and Analysis of the International Experience
Peter Reuter and Malay Majmundar, Editors
Committee on Law and Justice
Division of Behavioral and Social Sciences and Education
Board on Population Health and Public Health Practice
Institute of Medicine
NATIONAL RESEARCH COUNCIL AND
INSTITUTE OF MEDICINE
OF THE NATIONAL ACADEMIES
THE NATIONAL ACADEMIES PRESS
Washington, D.C.
THE NATIONAL ACADEMIES PRESS 500 Fifth Street, NW Washington, DC 20001
NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance.
This study was supported by Contract No. HHSF223200810020I, TO# HHSF22301031T (NAS-10001543) between the National Academy of Sciences and the Food and Drug Administration of the U.S. Department of Health and Human Services. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project.
International Standard Book Number-13: 978-0-309-31712-2
International Standard Book Number-10: 0-309-31712-6
Library of Congress Catalog Card Number: 2015935250
Additional copies of this report are available from the National Academies Press, 500 Fifth Street, NW, Keck 360, Washington, DC 20001; (800) 624-6242 or (202) 334-3313; http://www.nap.edu.
Copyright 2015 by the National Academy of Sciences. All rights reserved.
Printed in the United States of America
Suggested citation: National Research Council and Institute of Medicine. (2015). Understanding the U.S. Illicit Tobacco Market: Characteristics, Policy Context, and Lessons from International Experiences. Committee on the Illicit Tobacco Market: Collection and Analysis of the International Experience, P. Reuter and M. Majmundar, Eds. Committee on Law and Justice, Division of Behavioral and Social Sciences and Education. Board on Population Health and Public Health Practice, Institute of Medicine. Washington, DC: The National Academies Press.
THE NATIONAL ACADEMIES
Advisers to the Nation on Science, Engineering, and Medicine
The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences.
The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. C. D. Mote, Jr., is president of the National Academy of Engineering.
The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine.
The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. C. D. Mote, Jr., are chair and vice chair, respectively, of the National Research Council.
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COMMITTEE ON THE ILLICIT TOBACCO MARKET:
COLLECTION AND ANALYSIS OF THE
INTERNATIONAL EXPERIENCE
Peter Reuter (Chair), School of Public Policy and Department of Criminology, University of Maryland, College Park
Martin Bouchard, School of Criminology, Simon Fraser University, Canada
Frank J. Chaloupka, Health Policy Center, University of Illinois at Chicago
Philip J. Cook, Sanford School of Public Policy, Duke University
Matthew C. Farrelly, Public Health Policy Research Program, RTI International, Research Triangle Park, NC
Geoffrey T. Fong, Department of Psychology and School of Public Health and Health Systems, University of Waterloo, and Ontario Institute for Cancer Research, Canada
Rachel A. Harmon, University of Virginia Law School
Edward R. Kleemans, Faculty of Law, VU University Amsterdam
Conrad Phillip Kottak, Department of Anthropology, University of Michigan (emeritus)
Michael Levi, School of Social Sciences, Cardiff University, Wales
Emily Owens, Department of Criminology, University of Pennsylvania
Vaughan W. Rees, Center for Global Tobacco Control, Department of Social and Behavioral Sciences, Harvard School of Public Health
Anthony D. So, Sanford School of Public Policy, Duke University
Klaus von Lampe, John Jay College of Criminal Justice, City University of New York
Heather Wipfli, Institute for Global Health, University of Southern California
Malay Majmundar, Study Director
Julie Anne Schuck, Senior Program Associate
Emily Backes, Research Associate
Barbara Boyd, Administrative Coordinator (until January 2014)
Mary Ghitelman, Program Assistant (until June 2014)
Leticia Garcilazo Green, Program Assistant
COMMITTEE ON LAW AND JUSTICE
Jeremy Travis (Chair), John Jay College of Criminal Justice, City University of New York
Ruth D. Peterson (Vice Chair), Department of Sociology, Ohio State University
Carl C. Bell, Department of Psychiatry, School of Medicine and School of Public Health, University of Illinois at Chicago, and St. Bernard’s Hospital Inpatient Psychiatric Unit, Chicago
John J. Donohue, III, Stanford Law School, Stanford University
Mindy Fullilove, New York State Psychiatric Institute and Mailman School of Public Health, Columbia University
Mark A.R. Kleiman, Department of Public Policy, University of California, Los Angeles
Gary Lafree, Department of Criminology and Criminal Justice, University of Maryland, College Park
Janet L. Lauritsen, Department of Criminology and Criminal Justice, University of Missouri
Glenn Loury, Department of Economics, Brown University
James P. Lynch, Department of Criminology and Criminal Justice, University of Maryland, College Park
Charles F. Manski, Department of Economics, Northwestern University
Daniel S. Nagin, Heinz College, Carnegie Mellon University
Anne Morrison Piehl, Department of Economics and Program in Criminal Justice, Rutgers University
Daniel B. Prieto, Cybersecurity and Technology, U.S. Department of Defense
Susan B. Sorenson, School of Social Policy and Practice, University of Pennsylvania
David Weisburd, Center for Evidence-Based Crime Policy, George Mason University
Cathy Spatz Widom, Psychology Department, John Jay College of Criminal Justice, City University of New York
Paul K. Wormeli, Integrated Justice Information Systems, Ashburn, VA
Arlene Lee, Director
BOARD ON POPULATION HEALTH AND
PUBLIC HEALTH PRACTICE
Ellen W. Clayton (Chair), Center for Biomedical Ethics and Society, Vanderbilt University
Alfred O. Berg, Department of Family Medicine, University of Washington
Sheila P. Burke, Malcolm Weiner Center for Public Policy, John F. Kennedy School of Government, Harvard University
Susan J. Curry, College of Public Health, University of Iowa
Susan Dentzer, Robert Wood Johnson Foundation, Washington, DC
Garth Graham, Aetna Foundation, Hartford, CT
Grace M. Lee, Harvard Medical School and Boston Children’s Hospital
Howard Markel, Center for the History of Medicine, University of Michigan Medical School
Linda A. McCauley, Nell Hodgson Woodruff School of Nursing, Emory University
Daniel Polsky, Perelman School of Medicine and Wharton School, University of Pennsylvania
John A. Rich, Department of Health Management Policy, Drexel University
Joshua M. Sharfstein, Maryland Department of Health and Mental Hygiene
Steven Teutsch, Los Angeles County Public Health, CA
James N. Weinstein, Dartmouth-Hitchcock Medical Center, Lebanon, NH
Winston F. Wong, Kaiser Permanente, Oakland, CA
William A. Yasnoff, National Heath Information Infrastructure Advisors, Arlington, VA
Rose M. Martinez, Director
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Acknowledgments
The U.S. Food and Drug Administration (FDA) asked the Committee on Law and Justice (CLAJ) of the National Research Council (NRC) and the Board on Population Health of the Institute of Medicine (IOM) to assess the international illicit tobacco market, including variations by country; the effects of various policy mechanisms on the market; and the applicability of international experiences to the United States. The FDA also asked for recommendations for research and data collection, though not for policy. The NRC appointed the Committee on the Illicit Tobacco Market: Collection and Analysis of the International Experience to carry out this task.
In addition to its own research and deliberations, the committee received input from several other experts at two open meetings. We first thank Mitch Zeller, director of the Center for Tobacco Products at FDA, for a very helpful presentation at our November 2013 meeting, explaining and elaborating on the charge to the committee.
At our open session in January 2014, the committee benefited from presentations from a wide range of experts about enforcement and policy experiences at the federal, state, local, and international levels (with an emphasis on the domestic U.S. experience). We thank Emmy Ansinelli and Alex Finkel, from SICPA Product Security, LLC, Springfield, Virginia; Jerry Bowerman, from the Alcohol and Tobacco Tax and Trade Bureau at the U.S. Department of the Treasury; Paul Carey, from the Northern Virginia Cigarette Tax Board; Jeffrey Cohen and Ryan Kaye, from the Bureau of Alcohol, Tobacco, Firearms, and Explosives at the U.S. Department of Justice; Brent Crawley, from Immigration and Customs Enforcement at the U.S. Department of Homeland Security; Edgar Domenech, from the
New York City Sheriff’s Office; Chris Martin, from Her Majesty’s Revenue and Customs, United Kingdom; and Kevin Schroth, from the New York City Department of Health and Mental Hygiene
This report would not have been possible without the contributions of many people. Special thanks go to the members of the committee, who dedicated extensive time, thought, and energy to the drafting of the report. Several members of the staff of the NRC also made significant contributions to the report. Project staff Julie Schuck and Emily Backes provided invaluable research and writing assistance and played an important substantive role in the drafting of the report. Leticia Garcilazo Green, Mary Ghitelman, and Barbara Boyd provided key administrative and logistical support and made sure that committee meetings ran smoothly. From the Division of Behavioral and Social Sciences and Education Office of Reports and Communication, Eugenia Grohman helped edit the draft report, Kirsten Sampson Snyder managed the report review process, and Yvonne Wise managed the production process. Finally, throughout the project, CLAJ director Arlene Lee provided helpful guidance and oversight.
This project was one of three requested by the FDA related to tobacco, and thanks are also due to IOM staff for their wonderful collegiality in the endeavor: to the Board on Population Health director Rose Martinez; Kathleen Stratton, study director for the Committee on the Health Implications of Raising the Minimum Age for Purchasing Tobacco Products; and Amy Geller, study director for the Committee on the Assessment of Agent-Based Models to Inform Tobacco Product Regulation.
This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the NRC’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We thank the following individuals for their review of this report: Georgios A. Antonopoulos, School of Social Sciences and Law, Teesside University, Middlesbrough, United Kingdom; Richard A. Berman, chief executive officer and founder, LICAS; Kenneth Michael Cummings, Holling Cancer Center, Medical University of South Carolina; Michael G. Hering, project director and chief counsel, National Association of Attorneys, General Tobacco Project, Washington, DC; Luk Joossens, Association of European Cancer Leagues; Mark Kleiman, Department of Public Policy, University of California, Los Angeles; Robert MacCoun, Stanford Law School; Kurt Ribisl, Department of Health Behavior and Health Education,
University of North Carolina at Chapel Hill; Thomas C. Schelling, distinguished university professor emeritus, University of Maryland, College Park; Ayda A. Yurekli, Tobacco Control Economics Unit, Prevention of Noncommunicable Diseases Department, World Health Organization, Geneva, Switzerland.
Although the reviewers listed above provided many constructive comments and suggestions, they were not asked to endorse the content of the report nor did they see the final draft of the report before its release. The review of this report was overseen by Robert B. Wallace, Department of Epidemiology, College of Public Health, University of Iowa, and Charles E. Phelps, university professor and provost emeritus, University of Rochester. Appointed by the NRC, they were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the committee and the institution.
Peter Reuter, Chair
Malay Majmundar, Study Director
Committee on the Illicit Tobacco Market:
Collection and Analysis of the International Experience
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4 Measuring the Size of the Illicit Tobacco Market
Estimates for the United States
5 Interventions in the Illicit Tobacco Market: Policy and Regulatory Options
6 Interventions in the Illicit Tobacco Market: Law Enforcement
Enforcement in Two Key States: Virginia and New York
The Risks of Cigarette Smuggling
Enforcement Challenges and Opportunities
7 Interventions in the Illicit Tobacco Market: International Case Studies
8 Possible Changes in Tobacco Products: Considering Consumer and Supply Responses
Product Appeal and Consumer Response
E-Cigarettes: A Tobacco Alternative
Appendix Biographical Sketches of Committee Members and Staff
