SNOW HILL — State and local enforcement officials gathered in Snow Hill this week to present united support for a pending piece of state legislation that would drastically increase penalties for smuggling cigarettes.
Senate Bill 69, which has passed the state Senate and is pending in the House of Delegates, would triple the current fine per carton for cigarette smuggling for first offenders and double the increased fine for repeat offenders.
“The tool we desperately need to combat this wave of smuggling is tougher penalties for those who commit these crimes,” said State Comptroller Peter Franchot this week. “Far too often our agents with local law enforcement arrest a smuggler and we find out it’s the third, or fourth, or fifth time they’ve been arrested for the same offense.”
The current penalty for smugglers is $50 per carton of cigarettes and up to two years in prison. However, Franchot pointed out that the penalties aren’t mandatory and the average fine per pack of cigarettes is only about $3. Because of differences in state tobacco taxes, smugglers are often able to make more than that in profit per pack, pulling the teeth out of the threat of a fine.
“Unless guns or drugs are involved smuggling penalties are incredibly weak,” said Franchot. “It’s worth the risk for criminals to keep trying even if they get arrested multiple times.”
If Senate Bill 69 is accepted by the House, the fine would be $150 per carton for first time offenders and $300 per carton for subsequent offenses. Both of those fines would be mandatory.
Franchot estimated that a single carload of cigarettes purchased in a state with a low tobacco tax like Virginia which attaches a $.30 per pack tax, smuggled in bulk across state lines, and sold in a state with a high tax like New York, where the state tax is $4.35 could net the criminals upwards of $30,000 in untaxed profit.
Because it is so lucrative and because penalties right now are so low, Franchot said that many criminals seem to be viewing it as a favorable alternative to drug running.
“It’s not as dangerous as smuggling heroin but it’s just as profitable,” he said.
While tobacco smuggling has been a problem for many years, Franchot revealed that his office has seen the crime become more and more prevalent recently. He attributed it to a number of factors, including the tough economy, but argued that the barebones of the issue is that smuggling offers a much higher reward-to-risk ratio than other crimes.
“We don’t have the necessary tools right now to stop this problem from growing exponentially,” said Franchot.
Continued smuggling is having a noticeable impact on state coffers, he added. In January alone Franchot said that there was a 150 percent increase in illegal tobacco products confiscated than in that same month last year. And in the first six months of this fiscal year, 116 arrests have been made with nearly 260,000 packs or $1.6 million worth of smuggled tobacco seized, representing a roughly $500,000 tax loss to the state.
This year Maryland is already closing in on last year’s final numbers and “we’re only halfway through” the fiscal year, said Franchot. Last year 220 arrests were made and $2.3 million in tobacco contraband, roughly 378,000 packs, was confiscated. This year has already surpassed 2011, which had 115 arrests over the entire year with about 184,000 packs of cigarettes, a $1.1 million value, confiscated.
Besides the financial side, smuggled cigarettes are unregulated by nature and can be tampered with or tainted easily. They are also much more likely to be sold to minors.
“And worse it prevents our ability from regulating them and keeping them out of the hands of our kids,” said Franchot.
Franchot’s message was driven home the very day he visited Worcester County. Early Wednesday morning $26,445 worth of contraband cigarettes were confiscated by the comptroller’s Field Enforcement Division on Route 13 and Stockton Road near Pocomoke. Agents made the bust while conducting routine surveillance on the Maryland-Virginia border where they “observed a significantly large quantity of cigarettes” loaded into a 1995 Toyota Camry with Maryland plates. Three suspects were arrested with 4,100 packs of smuggled cigarettes.
On Wednesday morning, the suspects were in holding in the Worcester County Circuit Courthouse in Snow Hill which, coincidently, had been chosen to serve as the backdrop for Franchot’s presentation well before the arrests were made.
“This morning’s arrest is a prime example of the dire need for Senate Bill 69’s passage,” said Franchot.
Standing behind Franchot during his visit were members of his Field Enforcement Division, various local law enforcement from Worcester and Wicomico Counties, as well as Worcester State’s Attorney Beau Oglesby. Franchot said that the House could review SB 69 as early as next week and he urged state legislators to pass the measure quickly.