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In 2005, California's BOE invested in high-tech cigarette stamps, filled with microscopic bar codes that permit quick auditing by a properly equipped BOE inspector. No other state has been willing to buy these expensive stamps, despite their value in thwarting counterfeiters. Revenue from legally taxed sales has risen since the stamps' adoption.
California's illicit cigarette market has grown rapidly since the passage of Proposition 99 in 1988, and even faster since Proposition 10 in 1998. The available evidence supports the BOE's estimates of substantial tax evasion, suggesting that hundreds of millions of cigarette packs escape untaxed each year. The untaxed cigarettes represent over $100 million in potential state tax revenue.
