MIDLAND, Mich. — The Mackinac Center for Public Policy released new data showing that 17% of cigarettes consumed in Michigan during 2024 were smuggled from other states or taxing jurisdictions.

The analysis, produced in partnership with the D.C.-based Tax Foundation since 2008, ranks Michigan 17th among the 48 contiguous states for cigarette smuggling. The state’s smuggling rate has fallen steadily since 2006, when more than 34% of cigarettes consumed were estimated to be illicit. The illicit cigarette trade can be highly profitable, encouraging theft, counterfeiting, and other criminal activity.

The Mackinac Center’s annual study uses a statistical model to estimate the percentage of cigarette consumption that cannot be explained by legally taxed sales. The gap between what should be getting smoked based on federal survey data and what is legally purchased is attributed to tax evasion and avoidance.

“Michigan still has a large illicit cigarette market, but it’s much smaller than it was 20 years ago,” said Michael LaFaive, senior director of the Morey Fiscal Policy Initiative at the Mackinac Center. “That is likely a function of other states raising their own taxes higher. This makes smuggling to Michigan for personal consumption or criminal profiteering less attractive.”

The new analysis also notes that while Michigan’s inbound smuggling rate is elevated compared to many states, it remains well below the highest rates in the country, led by New York, where 61% of cigarettes consumed are estimated to be smuggled.

The full report and state-by-state smuggling estimates are available here.