Last Drag


One of these days, the guy in Washington Square Park muttering "smoke, weed" may be selling tobacco. The hungry addict breaking into your home may be a smoker. Smugglers from the south may be carrying cigarettes more often than cocaine. The drug dealers shooting at each other in Bedford-Stuyvesant and South-Central L.A. may be competing to offer their customers a nicotine fix.

These were the images summoned up last year, when the Food and Drug Administration first indicated that it might regulate cigarettes. FDA Commissioner David Kessler repeatedly expressed the concern that such a move could lead to a ban. If the FDA decided to regulate cigarettes as a drug, it would have to certify them as "safe and effective" under the Food, Drug, and Cosmetic Act. "A strict application of these provisions could mean, ultimately, removal from the market of tobacco products containing nicotine at levels that cause or satisfy addiction," Kessler said in a February 25 letter to Scott Ballin, chairman of the Coalition on Smoking or Health. "Given the widespread use of cigarettes and the prevalence of nicotine addiction, such a regulatory action could have dramatic effects on our society."

To avoid those effects, the FDA decided to regulate cigarettes and smokeless tobacco as drug-delivery devices rather than drugs, an approach that gives the agency more discretion. The regulations it proposed last August—restrictions on advertising, promotion, and sales aimed at reducing underage smoking—fall well short of a ban. But the FDA says it will "take additional measures" if smoking by minors is not cut in half within seven years after the regulations go into effect, a goal that is not likely to be met. And it appears the FDA still claims the authority to remove cigarettes from the market if it decides that is the best solution. Furthermore, Kessler has expressed interest in the idea of forcibly weaning the nation's smokers from their habit by ordering tobacco companies to gradually reduce the nicotine content of cigarettes.

Kessler and President Clinton have insisted that FDA regulation, which the tobacco companies are challenging in federal court, is not a prelude to prohibition. More generally, anti-smoking politicians and activists almost uniformly agree that a cigarette ban would be impractical. But as in Kessler's letter, that judgment is always tied to "the widespread use of cigarettes and the prevalence of nicotine addiction." If the proportion of Americans who smoke (now about 25 percent) continues to fall, a ban may not seem so unthinkable anymore. It could even be accomplished indirectly: The combination of lawsuits by state governments and huge class actions threatens to impose ruinous liability on the cigarette companies, which would have much the same impact as prohibition.

Given the current consensus that banning cigarettes would be a mistake, now may be a good time to review the basis for that assessment. History and economics tell us that attempts to prevent the use of psychoactive products lead to smuggling, high prices, uncertain quality, greater health hazards, violence, theft, official corruption, disrespect for the law, and the erosion of civil liberties. Although scholars disagree about the extent of these effects, the general pattern is clear. That is why even the most vociferous opponents of smoking, who once spoke of achieving "a smoke-free society" by the year 2000, are reluctant to endorse a ban.

For Americans, the folly of prohibition is most vividly illustrated by the experience with the 18th Amendment, which banned the manufacture, sale, transportation, import, and export of alcoholic beverages from January 1920 until its repeal in December 1933. The Volstead Act, which implemented the 18th Amendment, created a huge opportunity for criminals—an illegal, risky, highly profitable business—and gave birth to modern organized crime. Operating outside the legal system, suppliers of alcohol used violence to settle disputes, enforce contracts, and defend their market share. Gangster murders became frequent events in major cities and a familiar theme in the movies. The economist Milton Friedman, a senior fellow at the Hoover Institution, has noted that the U.S. homicide rate, which began climbing in 1910, rose throughout alcohol prohibition, peaking the year of repeal. It then fell dramatically and remained low during the 1940s and '50s, except for an increase during World War II. Friedman also looked at the rate of imprisonment, which rose sharply from 1926 (the first year for which data were available) until 1931.

Official corruption was another conspicuous feature of alcohol prohibition, a fact reflected in the image of Eliot Ness's Chicago task force (later portrayed in The Untouchables , prohibition agents who were considered unusual because they weren't on the take. The artificial profits created by the Volstead Act gave criminals an incentive and the means to bribe law enforcement officers. Since supplying alcohol was a victimless crime, cops were both more inclined to look the other way (if not actively participate) and less likely to be caught when they did. The Wickersham Commission, appointed by President Hoover to evaluate the effectiveness of alcohol prohibition, cited evidence of widespread corruption at every level of government. "There have been other eras of corruption," the commission's 1931 report said. "But the present regime of corruption in connection with the liquor traffic is operating in a new and larger field and is more extensive."

Along with corruption, opposition by millions of drinkers undermined respect for the Volstead Act and for the law in general. Although alcohol consumption fell during the early years of prohibition, continuing a trend that had started a few years earlier, it soon began to rebound. Similarly, the incidence of cirrhosis of the liver, which had fallen dramatically since 1903, dropped in the first year of prohibition but then rose steadily through the '20s. John P. Morgan, a professor of pharmacology at the City University of New York Medical School, suggests this increase in cirrhosis may be partly explained by the shift from beer and wine to liquor that occurred during prohibition. Given the risks of apprehension, both suppliers and drinkers were attracted to higher-potency beverages, which were more compact and offered more bang for the buck. Drinkers also tended to consume more in one sitting, since availability was iffy, and the ambience at underground taverns (speakeasies) encouraged excess. Without the protection afforded by open competition and the threat of legal liability, buyers of illegal alcoholic beverages risked blindness, paralysis, and death from adulterants (such as methanol) and contaminants. In the early 1930s, some 50,000 people were permanently paralyzed after drinking an adulterated ginger extract ("jake") that was designed to provide beverage alcohol on the sly.

Thirteen years of experience taught Americans that prohibition was not very effective and that it caused a host of unintended consequences, making life noticeably less pleasant and more dangerous for drinkers and teetotalers alike. A growing number of Americans, including prominent academics, judges, journalists, and politicians, have reached a similar conclusion about the prohibition of other mind-altering chemicals. As with alcohol, the prohibition of drugs such as marijuana, heroin, and cocaine has enriched and strengthened criminal organizations, from the Cali Cartel to the Bloods and Crips of Los Angeles. Black-market violence leads to hundreds of "drug-related homicides" each year, and today's drug suppliers are far more indiscriminate than Al Capone's thugs, killing bystanders with alarming frequency. The artificially inflated prices of illegal drugs encourages heavy users to support their habits through theft.

From New York to L.A., scandals involving cops who take bribes, sell drugs, commit perjury, plant evidence, and rob suspects show that the corrupting power of prohibition continues. Roughly 1.4 million Americans are behind bars, largely because of the war on drugs. Millions of other Americans risk losing their freedom and their property because of the substances they choose to ingest. (Unlike the Volstead Act, the current drug laws prohibit possession as well as manufacture and sale.) In the name of preventing people from consuming the wrong chemicals, U.S. courts have whittled away at our civil liberties, especially property rights and protection against unreasonable searches and seizures.

As with alcohol prohibition, the war on drugs makes "controlled substances" more dangerous. Like consumers of illicit rotgut during the 1920s and '30s, buyers of the currently illegal drugs are rarely sure of what they're getting. Potency and additives vary widely, leading to overdoses and poisoning. Laws limiting access to needles and syringes encourage the sharing of injection equipment, which spreads AIDS, hepatitis, and other diseases. Prohibition discourages innovations, such as coca gum or marijuana vaporizers, that would reduce the risks associated with drug use.

In addition to these kinds of side effects, a tobacco ban would mean additional spending on law enforcement. Federal, state, and local governments already spend $20 billion to $30 billion a year to enforce the drug laws. Adding tobacco to the list of proscribed substances would presumably require more cops, more prosecutors, more judges, and more prison cells. To the extent that taxpayers resisted additional expenditures, the cost would be felt in less attention to crimes against people and property, more-crowded courts, and more early releases of burglars, muggers, rapists, and murderers.

Two other important considerations are transition costs and lost tax revenue. According to a 1992 Price Waterhouse report, the tobacco industry is responsible, directly and indirectly, for the employment of some 2.3 million Americans. (This includes 426,000 employed by the industry, 255,000 employed by its suppliers, and 1.6 million supported by their expenditures.) These people would eventually find new jobs, but they would suffer over the short term. Similarly, much of the capital (land, buildings, equipment) used by the industry would be redeployed, but the adaptation would be costly, and the new uses would not necessarily be as productive. The tax-revenue loss would also be substantial. Price Waterhouse estimated that the tobacco industry and its suppliers generate about $10.6 billion in federal taxes and $8.3 billion in state and local taxes each year. Some of this revenue would reappear as people found new jobs and capital found new uses, but about $11 billion is from tobacco excise taxes, which would be gone forever. Furthermore, the emergence of a black market would divert money into hidden, and therefore untaxable, purchases and incomes.

The size of that market, of course, would depend on the number of smokers. According to government survey data, about 48 million Americans smoke, roughly four times the number who have used any of the currently illegal drugs in the past month. A ban would probably convince some smokers to quit, but history suggests most would keep smoking. Boston University economist Jeffrey A. Miron and MIT economist Jeffrey Zweibel estimate that, after passage of the Volstead Act, alcohol consumption dropped to between 20 and 40 percent of the pre-prohibition level, then rebounded to between 60 and 70 percent. Smokers are at least as attached to tobacco as drinkers are to alcohol. During the 17th century, penalties ranging from fines to death failed to stem tobacco's growing popularity in Europe and Asia. Bans on cigarettes in this country, adopted by more than a dozen states around the turn of the century, were generally ineffective. During wartime shortages, smokers have been willing to sacrifice other valuable commodities, including food, to obtain cigarettes. Indeed, the demand for cigarettes is so hardy that they have often taken the place of currency.

A ban would increase the price of tobacco dramatically, though exactly how much is hard to say. The economist Irving Fisher, a supporter of alcohol prohibition, estimated that the price of beer rose eightfold between 1916 and 1928, while the prices of brandy and gin rose fourfold and sixfold, respectively. John Morgan estimates that prohibition has raised the price of cocaine roughly 20-fold. Dale Gieringer, coordinator of the California chapter of the National Organization for the Reform of Marijuana Laws, estimates that cannabis is more than 100 times as expensive as it would be if it were legal. Unlike cocaine or marijuana, tobacco would probably be smuggled in from countries where it remained legal, but it's reasonable to assume that the price would be several times what it is today. Current tobacco sales total some $50 billion a year—coincidentally, about the same as the government's estimate of spending on illegal drugs. Even if we assume that prohibition would cut demand for tobacco in half, the illicit market would be bigger than the market for all other illegal drugs combined. That's a conspicuous business opportunity for enterprising criminals.

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.