WASHINGTON - Yesterday, the U.S. Senate unanimously approved legislation written by Senator Herb Kohl to crack down on black market tobacco selling. The Prevent All Cigarette Trafficking (PACT) Act closes loopholes in current tobacco trafficking laws, enhances penalties for violations, and provides law enforcement with new tools to combat the innovative methods being used by cigarette traffickers to distribute their products. In 1998, the Bureau of Alcohol, Tobacco, Firearms and Explosives (BATFE) had six active tobacco smuggling investigations. Today there are more than 400 open cases.  

"Tobacco trafficking is a lucrative business for criminals and terrorists, and costs our states billions of dollars in lost revenue. Law enforcement has identified cigarette smuggling as a serious and growing problem, and the Internet has made it more challenging to stop. This legislation will help cut off a reliable source of funding for those who wish to do us harm," Kohl said. 

Hezbollah, al Qaeda and Hamas have all generated significant revenue from the sale of counterfeit cigarettes. That money is often raised right in the United States, and then funneled back to these international terrorist groups. 

Kohl noted that cigarette trafficking, including the illegal sale of tobacco products over the Internet, costs states billions of dollars in lost tax revenue each year. It is estimated $5 billion of tax revenue is lost, at the federal and state level, each year. As lost tobacco tax revenue lines the pockets of criminals and terrorist groups, states are being forced to increase college tuition and restrict access to other programs because of these lost revenues. 

The Internet represents a new obstacle to enforcement. Illegal tobacco vendors around the world evade detection by conducting transactions over the Internet, and then shipping their illegal products around the country to consumers. Just a few years ago, there were less than 100 vendors selling cigarettes online. Today, approximately 500 vendors sell illegal tobacco products over the Internet.

The PACT Act will: 

·       Strengthen the reporting requirements for interstate cigarette sellers. 

·       Increase the criminal penalty from a misdemeanor to a felony and create a substantial civil penalty for violations, including violations of the reporting requirements and state tobacco tax laws. 

·       Grant federal and state law enforcement officials more powers to investigate and prosecute violators. 

·       Prohibit the United States Postal Service from delivering tobacco products   

On May 21, 2009 the House of Representatives passed companion legislation by an overwhelming majority, 397 to 11.   

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