RICHMOND, Va. (AP) — Virginia officials are considering tightening regulation of tobacco retailers as a new approach to combatting illegal cigarette trafficking.
The Virginia State Crime Commission staff has recommended requiring stores to obtain a state license to sell cigarettes and turning enforcement over to the agency that oversees the state’s liquor monopoly. A staff report says the Alcoholic Beverage Control Department already has extensive experience licensing stores that sell beer and wine, as well as enforcing state liquor laws.
“If retail sales of tobacco are dependent upon a state issued license that can be revoked for criminal violations, retailers will have more of an incentive to properly obey all statues and regulations,” the staff report says.
The commission will discuss the proposal at its meeting Tuesday. The move would require General Assembly approval.
Kathleen Shaw, a spokeswoman for the ABC, said the agency does not have a position on the issue but is always willing to do what the Legislature asks.
“We know that resources are a big part of the conversation, but they need to have more discussions about it,” she said.
The crime panel’s report says costs of an ABC tobacco unit could be offset by funneling civil penalties for violations of various cigarette laws directly to the agency rather than to the Virginia Department of Taxation. Licensing fees would be another revenue source. Currently, ABC charges a $65 fee to apply for an alcohol license. The permit itself costs $120 to $665, depending on the specific type of license.
Thirty-six states already require cigarette retailers to obtain a license.
Mike O’Connor, president of the Virginia Petroleum, Convenience and Grocery Association, said the trade group strongly opposes the licensing proposal. He said the overwhelming majority of the state’s 4,600 convenience stores are law-abiding, and state officials should leave them alone and focus on prosecuting the offenders.
“To impose a burden on the 99 percent to go after the 1 percent doesn’t seem to be the Virginia way,” O’Connor said.
He said the trade group has supported other legislative measures over the past five years to clamp down on illegal cigarette trafficking, including increasing criminal penalties. But the Crime Commission says those steps have not been entirely successful, and cigarette trafficking remains a big problem because it is so lucrative.
Bootleggers can buy a pack of premium cigarettes in Virginia, which has the nation’s second-lowest tobacco tax, and sell it on the black market for a big profit in higher-tax states in the Northeast. Experts have told the commission that a smuggler can turn a profit of about $170,000 on a single vanload of cigarettes. A large truckload of 800 cases can net a profit of $4 million.
According to the commission’s new report, cigarette trafficking continues to have links to organized crime, gangs and even terrorism. In May of 2013, authorities in New York and Virginia arrested 16 members of a cigarette smuggling ring believed to be associated with Hamas and Hezbollah operatives, the report said.
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