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If you think the legal tobacco industry is sinister, imagine the sort of people who will be attracted to the business after prohibition. They will be aggressive risk-takers with no compunction about breaking the law or using violence to settle disputes. They will have experience in smuggling, deception, and bribery. And they will be fighting each other for shares of a very lucrative business.
The high price of cigarettes will force smokers to reduce other expenditures or seek extra income. Some will resort to begging, theft, or prostitution. In addition to shelling out a lot more for cigarettes, smokers will face the familiar hazards of a black market. They will not know if the product is adulterated or contaminated, and they will have no recourse if they are cheated. Suppliers will have little incentive to offer low-tar or otherwise safer cigarettes. Smokers will have to consume their drug on the sly, which will be difficult for people accustomed to smoking a pack or two a day. Every time they buy, carry, store, or smoke cigarettes, they will risk fines, arrest, humiliation, imprisonment, and property forfeiture. Tens of millions of smokers will suddenly start to identify with all those potheads and heroin addicts they once despised.
This scenario may seem distant, since a tobacco ban is not likely to happen soon. But taxation can have some of the same effects as a ban. In a sense, prohibition imposes a heavy tax on the proscribed commodity by raising the risks associated with producing and selling it. A more conventional tax also helps discourage consumption; in fact, that is often an explicit aim of cigarette tax hikes. But taxes also create an incentive for evasion and smuggling. In the United States, where the average cost for a pack of cigarettes is $1.75, the average federal and state tax burden accounts for about a third of the price. Sellers who can avoid the taxes stand to make a nice profit, even if they have to sell the cigarettes at a discount. A 1994 report by the investigative accounting firm Lindquist Avey MacDonald Baskerville (commissioned by the tobacco industry) estimated that such untaxed cigarettes -- which are smuggled from Mexico or diverted from duty-free shops, export shipments, or other sources -- may account for as much as 6 percent of U.S. consumption. The variation in state tobacco taxes also presents an opportunity for smugglers. Organized crime has long been involved in trucking cigarettes from low-tax states such as Virginia and North Carolina to high-tax states such as New York.
In Canada, where the national government sharply increased cigarette taxes in 1989 and 1991, the consequences precipitated a crisis and a dramatic policy reversal. Before taxes were cut last year, a legal carton of cigarettes in Canada sold for about $45, compared to between $15 and $20 in the United States. Because of this huge differential, smuggling by individuals and groups, including Mohawks operating out of reserves along the U.S.-Canadian border, rose dramatically. Smugglers brought in cigarettes and tobacco on boats and kayaks, in trucks carrying produce, even inside the bodies of cars and vans. The number of contraband-tobacco seizures by the Royal Canadian Mounted Police jumped from 303 in 1990 to 5,033 in 1993. By 1993 nearly one in three cigarettes sold in Canada was said to be contraband (either smuggled from the United States or diverted from Canadian exports).
A January 1994 story in TheNew York Times described Cornwall, Ontario, a small town near the Akwesasne Reserve along the border with New York state, as "Dodge City East" because of the violence associated with cigarette smuggling. "Shootings erupt almost nightly," the Times reported. "In recent weeks cars have been torched with firebombs, shots have been fired into a civic complex on the waterfront and at a building housing the radio station, and the hallway outside a pool hall has been bombed." In response to the rebellion by smokers, the smuggling, and the violence, Prime Minister Jean Chretien announced big tax cuts in February 1994. "Smuggling is threatening the safety of our communities and the livelihood of law-abiding merchants," he said. "It is a threat to the very fabric of Canadian society." Solicitor General Herb Gray added: "Organized crime has become a major player in the contraband market. What we are seeing is a frightening growth in criminal activity. We are seeing a breakdown in respect for Canadian law. Canadian society is the victim."
Regulation is another way to simulate the effects of prohibition. If the FDA set limits on nicotine yields, for example, the demand for more-potent cigarettes would invite black-market activity. Restrictions on advertising that prevent manufacturers from touting the health benefits of safer cigarettes discourage innovation that could make smoking less hazardous. Similarly, a moratorium on new cigarette designs, which FDA regulation threatens to impose, would prevent advances that could reduce smoking-related disease. R.J. Reynolds has developed a new cigarette called Eclipse that uses smoldering charcoal to generate a glycerine vapor that carries tobacco flavor and nicotine. Because the tobacco does not burn, the brand produces little smoke, and company executives say it yields 90 percent less tar than a conventional cigarette. In November 1994, a few days after TheNew York Times ran a story about Eclipse, two anti-smoking groups said they would ask the FDA to prevent RJR from selling the product.
Opposition to safer forms of tobacco is part of the prohibitionist mentality. Anti-smoking groups also condemn smokeless tobacco, even as a less hazardous alternative to cigarettes. Writing in the Summer 1990 issue of Priorities , a publication of the American Council on Science and Health, the addiction specialist John Slade argued that innovation by the tobacco industry should be prevented because it encourages people to continue smoking. "If the new products were not available," he said, "more people would be able to respond directly to concerns about illness and death from smoking and become completely abstinent from nicotine." The same sort of argument is offered by drug warriors who oppose making clean needles available to heroin addicts, which is said to "send the wrong message." If your goal is to stamp out the use of a particular drug, making the activity safer is counterproductive. By the same logic, supporters of alcohol prohibition should have welcomed the 50,000 cases of paralysis caused by ginger jake.
This attitude suggests that rational arguments against drug bans may not be decisive. Prohibition has never been based on a dispassionate cost-benefit analysis. It is driven by a moral vision that attaches paramount importance to eliminating a particular evil, no matter the price.
This article appeared in the March 1996 issue of Across the Board magazine.