This article appeared July 9 2023 at American Institute for Economic Research.
Since 2008 we have published (with the Washington, D.C.-based Tax Foundation) estimates on the degree to which cigarettes are smuggled, by state, including those exported to Canada or imported from Mexico. New rules to ban menthol cigarettes being considered by the Food and Drug Administration may dramatically hike cigarette smuggling.
Our most recent estimates indicate that one state, Massachusetts, may represent something of a warning shot across the FDA policy bow. The Bay State banned menthol cigarettes in 2020. When factoring the ban into our statistical model we find that Massachusetts smuggling leaps to 38 percent of the market, or to fourth from its pre-ban rank of twelfth in 2019. Without the ban the state’s smuggling rate would be much lower.
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