Sri Lanka’s Excise Department warned that anyone transporting beedi leaves (i.e. cheap, flake tobacco) without official transport permits will face immediate legal action, as authorities move to tighten enforcement against illegal production. Deputy Minister of Economic Development U. D. Nishantha Jayaweera said enforcement has been lax in the past, but new instructions have been issued to strengthen controls. While current tax revenue from domestically produced beedi stands at around 1–1.5 billion rupees ($3.4 million to $4.8 million), he said proper tax collection could raise this figure to nearly 15 billion rupees ($48 million). The government plans to introduce new measures to boost revenue and curb the untaxed, illegal manufacture of beedi.
Blog
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Virginia Asks for Stay in Vape Appeal
The Commonwealth of Virginia asked the U.S. Court of Appeals for the Fourth Circuit to stay a district court order that blocks enforcement of parts of a state law restricting the sale of unauthorized vaping products, according to Law360. Virginia argues that the lower court wrongly found the law preempted by the federal Food, Drug, and Cosmetic Act and the Tobacco Control Act, stating that these statutes permit states to impose stricter sales regulations and do not require state rules to differ from federal standards. The dispute stems from a ruling by U.S. District Judge David J. Novak, who granted partial relief to vape retailers. However, Virginia contends that the decision is an outlier, misreads the TCA’s savings clause, and improperly limits states’ ability to coordinate with federal oversight. The state also argues the plaintiffs lack standing and that a stay is necessary to prevent irreparable harm to public health, noting the products at issue are already illegal under federal law.
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Ultra Raises $11M Series A to Scale Nicotine-Free Functional Pouches
Ultra announced it has closed an $11 million series A funding round to expand product development, distribution, and team growth. The round was led by Left Lane Capital, with participation from top CPG founders such as Harry’s, Grüns, and Rockstar Energy, as well as celebrity athletes including Joe Burrow, Lindsey Vonn, and Dak Prescott. Launched in May 2025, the “nicotine-free functional pouch brand designed for clean, sustained focus” sold 1 million cans in its first six months.
The pouches, formulated with paraxanthine (via Enfinity) and other functional ingredients like L-theanine, Alpha GPC, B vitamins, and ginseng, offer a discreet, guilt-free alternative for focus without nicotine or caffeine. Ultra appeals both to those stepping down from nicotine products and to new users seeking functional “focus rituals.” CEO Eric Drymer said the brand was built to deliver clean, healthy cognitive support, while Left Lane Capital’s Harley Miller highlighted the company’s role in defining functional pouches at scale. Proceeds from the funding will support U.S. hiring, retail expansion, and product roadmap development.
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Australian Officials Seize $1.1M in Illegal Tobacco Products
Two men in Australia have been charged following the seizure of more than A$1.6 million ($1.1 million) worth of illegal tobacco and vaping products during a joint law enforcement operation in Sydney’s southwest district.
Police executed a search warrant at a Riverwood warehouse January 19, seizing 40,000 branded cigarettes, more than 600 kg of molasses tobacco, loose-leaf tobacco, nicotine pouches, vapes, and other assorted cigarettes, along with mobile phones and electronic devices. A 44-year-old man was arrested at the premises and charged with possessing a commercial quantity of vaping goods, while a 26-year-old man was arrested nearby and charged with dealing with the proceeds of crime and possession of a prohibited weapon after police allegedly found cash and an electronic stun device in his vehicle.
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Enforcement Continues, Yet Illicit Cigarettes Remain a Threat
PRESS RELEASE
Cigarette smuggling continues to rank among the most serious economic threats facing Malaysia, with the illicit cigarette market estimated to be worth up to RM5 billion ($1.3 billion) annually, underscoring the scale of the shadow economy that remains deeply entrenched in the system.
The Ministry of Finance (MOF) has reported that Malaysia lost approximately RM1.4 billion ($350 million) in unpaid taxes over the past five years, partly due to cigarette smuggling activities. According to MOF data, unpaid duties linked to illicit cigarettes were recorded as follows:
** Jan-Sep 2025
These figures not only reflect significant revenue leakage but also point to the presence of well-organized and resilient smuggling networks capable of adapting to escalating enforcement pressure.
According to security and defense analyst Zaki Salleh, the illicit cigarette problem should be viewed as a strategic threat to national economic security, rather than merely a border enforcement issue.
“National borders are not just geographical lines. They are the frontline of economic defense. As long as weaknesses exist at the borders, the shadow economy will continue to thrive,” he said.
Zaki noted that enforcement efforts by agencies such as the Royal Malaysian Customs Department (JKDM), the Royal Malaysia Police (PDRM) and the Malaysian Anti-Corruption Commission (SPRM) remain critical and deserve recognition. In 2025 alone, JKDM successfully foiled 2,742 attempted cigarette smuggling cases, reflecting a high level of operational intensity and commitment.
However, he stressed that enforcement effectiveness must be assessed against overall market outcomes, not just operational activity.
“These efforts deserve praise, but they remain small when measured against the size of Malaysia’s illicit cigarette market. Without more comprehensive coordination, the impact is unlikely to be sustainable,” he said.
Zaki added that border control approaches can no longer rely solely on conventional methods, as smuggling syndicates have become increasingly sophisticated and operate in a highly coordinated manner.
“Today’s smugglers use technology, modern logistics systems and alternative routes to avoid detection. Their operations span land and waterways, including areas that are difficult to monitor physically,” he said.
Beyond enforcement, Zaki pointed to structural market factors as the core challenge. The significant price gap between legal and illegal cigarettes continues to sustain demand among both consumers and retailers.
“This price difference creates strong economic incentives for illicit cigarettes to keep circulating, especially in a challenging cost-of-living environment. Under such conditions, enforcement alone becomes increasingly difficult to curb demand comprehensively,” he said.
As long as demand remains unaddressed, he cautioned, the shadow market will continue to adapt even as enforcement is intensified.
In this context, Zaki said the government needs to explore broader policy reforms aimed at narrowing the demand gap for illicit cigarettes. He noted that the existing policy framework should be objectively evaluated to ensure a better balance between public health objectives, revenue collection and market realities.
At the same time, he emphasized the importance of fully operationalizing the Border Control and Protection Agency (AKPS) as the central coordinating body for border control, to reduce overlaps and improve inter-agency efficiency.
In addition to coordination, Zaki highlighted the need for more aggressive deployment of technology, including drones, infrared sensors, AI-enabled smart cameras and GPS-based vehicle tracking systems, to strengthen detection capabilities and close persistent border vulnerabilities.
Without a consistent and integrated approach, he warned, the illicit cigarette market will continue to erode national tax revenues and weaken Malaysia’s economic resilience over the long term.
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Hong Kong Cracking Down on Smoking at Construction Sites
Hong Kong’s Secretary for Labor and Welfare Chris Sun said contractors and subcontractors could face legal action if workers are caught smoking at construction or building-maintenance sites, as the government moves toward a blanket smoking ban across all such locations. Sun said legal liability would apply unless employers can demonstrate they have fulfilled their responsibilities to prevent smoking on site.
The proposed ban follows the deadly Tai To fire in November and would be implemented through amendments to subsidiary legislation expected to be submitted to the Legislative Council early next month. If approved, employers could face fines of up to HK$400,000 ($52,000) for violations. Sun said exemptions may apply where employers can show adequate preventive measures, such as clear no-smoking signage, designated cigarette disposal points, and CCTV monitoring, warning that failure to take such steps could form grounds for prosecution.
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Indonesia Busts Lab Filling Vapes with Narcotics
Indonesia’s National Narcotics Agency (BNN) detained two Malaysian men suspected of producing e-cigarette liquids containing etomidate, an intravenous anesthetic drug, at an apartment in South Jakarta. The arrests were made after investigators identified the location as an illegal laboratory used to process the drug for use in vape products.
BNN Director General of Enforcement Aldrin Hutabarat said intelligence showed one suspect entered Jakarta carrying around 3,000 empty vape cartridges before heading to the apartment. During the raid, authorities found the two men actively mixing etomidate liquid for filling into cartridges and seized the drug, vape components, cash, and mobile phones. One suspect reportedly admitted being paid Rp 6.4 million ($377) to travel to Indonesia.
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Canadian Police Dismantle Vape Shop Theft Ring
Two suspects were arrested in connection with multiple vape shop break-ins across Western Ontario, Canada. Police said the investigation began in November and resulted in the recovery of thousands of vaping products valued at about C$150,000 ($108,000), and was connected to a commercial storefront in Brampton, Ontario. The Canadian Vaping Association said the case highlights a broader rise in targeted thefts against vape retailers following sharp excise tax increases in 2024, which significantly raised retail prices and increased the resale value of legally compliant products, making them more attractive to organized theft and potentially feeding illicit markets where age-verification safeguards do not apply.
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NY Gov. Vows Crackdown on Illicit Vapes
New York Governor Kathy Hochul announced plans to crack down on illegal flavored vapes by directing the state Department of Taxation and Finance to establish a Vapor Products Registry identifying which products may be legally sold in the state. Hochul said that despite state and federal bans enacted in 2020, an estimated 99% of vapes currently on the New York market are flavored and lack FDA authorization, with many manufactured in China and marketed toward youth. The registry, already used in more than a dozen states, is intended to give law enforcement clear authority to seize unlisted products, disrupt illicit supply networks, and support legitimate retailers, as agencies including the NYPD and NYC Sheriff’s Office have increasingly found illegal vapes linked to broader criminal activity.
“New York is the capital of illicit nicotine trafficking, and these illegal Chinese flavored vapes have made a bad situation even worse,” said former New York City Sheriff Edgar Domenech, who created the Big Apple enforcement strategy targeting illegal cigarette and tobacco sales under then-Mayor Mike Bloomberg. “Creating a clear vapor products registry gives law enforcement the information and transparency they need to quickly identify contraband, protect our children, and shut down bad actors who are almost always involved in dangerous, violent crime.”
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Imperial Names Rishton Incoming Chair
Imperial Brands PLC appointed John Rishton as non-executive director and chair designate, effective July 13. He will succeed Thérèse Esperdy as chair on December 1 when she retires after leading the board since January 2020. Rishton brings extensive board and executive experience, currently serving as chair of Informa PLC and non-executive director at Diageo PLC, and previously as CEO of Rolls-Royce Group PLC, CFO and CEO of Royal Ahold NV, and CFO of British Airways PLC. The appointment follows a comprehensive succession process overseen by the People, Governance & Sustainability Committee.
Sue Clark, senior independent director, praised Rishton’s experience in leading complex, regulated businesses through transformation, describing him as an “exceptional candidate” to guide the board. Esperdy was recognized for her decade of leadership, including the turnaround of Imperial Brands’ core tobacco business, expansion into next-generation products, and delivery of over £10 billion in shareholder returns. CEO Lukas Paravicini welcomed Rishton, emphasizing continuity in the company’s strategic objectives and ongoing focus on sustainable growth.