California Flavor Ban Spawned Illicit Market

California’s 2022 ban on menthol cigarettes and flavored vapes has spawned a large, illicit marketplace for such products in the state, according to a study carried out WPSM Group.

The researchers collected 15,000 empty discarded cigarette packs and 4,529 vapor product packages from May 1 through June 28 in 10 California cities. The study shows that the flavor ban has had limited effect on the access or demand for flavored vapor products or menthol cigarettes throughout the entire state. The results of the study include:

• Of the vapor packs found, almost all (97.9 percent) were flavored.
• Menthol (14 percent) and “menthol workaround” (7.1 percent) cigarettes combined made up 21.1 percent of the packs found compared to 24.5 percent of the California marketplace prior to the ban implementation.
• More than one-quarter (27.6 percent) of products found were nondomestic products, which are not intended for the U.S. market. These products were primarily from U.S. Duty Free, Worldwide Duty Free, China and Mexico.
• One cigarette brand, Sheriff, the fifth most prevalent brand found, is only intended for use outside the U.S.
• The study indicated significant loss of state cigarette tax revenue. Among packs where it was possible to determine what tax stamp was applied, only 45 percent bore the California tax stamp.
• This data suggests illicit cigarette markets are costing California as much as $1.27 billion annually in cigarette excise tax revenues—a funding source that supports important government programs.

“This study provides further evidence that keeping products legal and regulated is the best path forward for tobacco policy,” said David Fernandez, vice president of government affairs and public policy of Altria Group, in a statement. “This data shows these products shifting in real time to illicit markets, which we know lack proper government oversight and other benefits of a well-regulated system.”

The ban, which was implemented in December 2022, covers menthol cigarettes, flavored cigars, flavored smokeless tobacco and flavored vapor products.