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Posted at 01:14 PM ET, 09/06/2012

The cigarette pipeline starts in Va.


Somehow it seems as quaint as a black-and-white crime movie from the 1950s. A van pulls up to a country store in the dark of night. A gang of men led by gravel-voiced Robert Mitchum loads up on cartons of cigarettes and sets off for the big city Up North, where they can sell the bootleg smokes at a huge profit.

That scene describes Virginia today. The state Crime Commission reported this week that Virginia’s ultra-low taxes on cigarettes are making their illegal shipment to high-tax states more lucrative than cocaine, heroin, marijuana or guns, according to a State Police source.

Profits are so high on the contraband tobacco trade, says Stewart Petoe, an official with the commission, that it is attracting organized criminal elements and drug traffickers. Such groups include the MS-13 Latino gang with ties to Fairfax County and, incredibly, Hezbollah, the Lebanese terrorist group.

The reason for the attractiveness of the trade is very simple and goes to the heart of Virginia’s stubborn insistence on keeping taxes low and paying homage to the tobacco leaf, which has been a major player in the state’s history since before Jamestown.

Virginia charges only $3 tax on a 10-pack carton of smokes. In New York City, the levy is $58.50. Even with gas prices approaching $4 a gallon, the math shows just how profitable running cigarettes can be. It’s also a low-pressure challenge. Your chances of running into a machine gun ambush over a trunk-load of Marlboro Blend No. 27 are a lot less than one brimming with bags of powder cocaine.

That’s one reason why it’s the kind of smuggling anyone can do very easily. “Stand right near the shelves full of crackers or a case of Ding Dongs and you can see people in the middle of the day coming in, buying five cartoons of cigarettes and going back out to the car,” Petoe said, according to the Richmond Times Dispatch.

According to news accounts, Petoe said that 30 percent of all cigarettes in New York come from other states, and of that number, 71 percent are from Virginia.

About 20 years ago, Virginia was gaining fame as the source for a lot of firearms used in crimes in mid-Atlantic and Northern cities such as Philadelphia, New York and Boston. The reason was Virginia’s loose, laissez-faire attitude on guns and intense political pressure from the Second Amendment rights lobby.

The Right to Smoke crowd is indirectly to blame because they have helped shoot down every attempt to hike the state’s low tobacco tax rates. It is ironic, because they often harangue the state about deficit spending while shutting off an obvious source of revenue.

Another factor is that while Virginia is nowhere as large a tobacco producer as North Carolina or Kentucky, it hosts one of the largest cigarette factories left — the Philip Morris plant just south of downtown Richmond on Interstate 95. Altria, the owner, moved its headquarters to Henrico County a few years ago from New York, where city officials indicated to the company that it wouldn’t really be missed if it left.

Virginia’s in-your-face attitude on tobacco taxes may hurt it with the large payments it receives from the 1998 Master Settlement Agreement that 46 states, including Virginia, won against the four largest cigarette makers, including Philip Morris. For Virginia to continue getting its share of the $206 billion over 25 years, it has to keep bootleg butts in check. About 60 cents in taxes on each pack of cigarettes sold go to help pay for states’ smoking-related health costs.

It seems strange that contraband cigarettes are shoving aside cocaine and heroin and assault rifles. But then Virginia’s hilly Franklin County is now being featured in “Lawless,” a movie about moonshine wars during the Depression. Old-style crime can be so sentimental.

Peter Galuszka blogs at Bacon’s Rebellion. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

By  |  01:14 PM ET, 09/06/2012

 
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