Fast Facts
The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) is the federal law enforcement agency with primary jurisdiction over the Contraband Cigarette Trafficking Act (CCTA) and the Prevent All Cigarette Trafficking (PACT) Act. The PACT Act now includes Electronic Nicotine Delivery Systems (ENDS), otherwise known as “vapes.”
Tobacco traffickers typically purchase cigarettes and other tobacco products from low-tax states and localities and sell them in higher-tax areas. They also sell counterfeit tobacco products at a discounted price to consumers that are often manufactured overseas and smuggled into the United States without any tax payments.
ATF works to disrupt and dismantle criminal organizations by identifying and arresting offenders who traffic in tobacco products. ATF conducts financial investigations to seize proceeds obtained through these illegal actions and deny further access to assets and funds used by criminals and terrorist organizations. ATF also uses criminal prosecution, civil fines and other sanctions to achieve compliance for certain violations under both the PACT Act and the CCTA.
The primary goal of ATF in combating tobacco trafficking—through enforcement of the Contraband Cigarette Trafficking Act (CCTA) and the Prevent All Cigarette Trafficking (PACT) Act—is to protect streams of tobacco excise tax revenues for state, local and tribal governments through lawful commerce. ATF combats the illegal distribution of tobacco, which often finances or launders money for other criminal activities, including narcotics trafficking, violent crime and terrorism.
Statutes Enforced
Contraband Cigarette Trafficking Act (CCTA)
ATF is the federal law enforcement agency with primary jurisdiction over the CCTA, which addresses:
- Illegal possession, transportation and/or distribution of more than 10,000 unstamped (non-state-tax-paid) cigarettes.
- Illegal possession, transportation and/or distribution of more than 500 single-unit consumer-sized cans or packages of smokeless tobacco.
- Anyone distributing more than 60,000 cigarettes must maintain detailed records regarding these transactions. These records are subject to inspection by ATF.
- Proceeds derived from the illegal distribution of CCTA products which are subject to seizure and forfeiture, as are the products themselves.
Violations of the CCTA are felony offenses that could result in 3-5 years of imprisonment. Fines and civil penalties may also be assessed for CCTA violations.
Prevent All Cigarette Trafficking (PACT) Act
ATF also enforces the PACT Act, which:
- Requires interstate distributors of cigarettes (including ENDS) or smokeless tobacco products to:
- Register with ATF and with the tobacco tax administrators of each state and locality where taxable products are shipped.
- File monthly reports with the tobacco tax administrators of each jurisdiction where one or more shipments of products were made during the previous month.
- Requires remote sales to consumers to comply with all state licensing, regulatory, excise tax and cigarette stamping laws.
- Requires tobacco sellers who ship to end users to comply with labeling, shipping, age verification, and recordkeeping requirements.
- Mandates that ATF maintain and distribute the PACT Act non-compliance list (a list of delivery sellers that have violated the statutory requirements of the PACT Act) to government and commercial entities.
- Prohibits common carriers or other shippers from knowingly delivering products for someone once they have been added to the PACT Act non-compliance list.
- Requires that delivery sellers provide detailed records to ATF and to state and local regulators upon request.
Violations of the PACT Act are felony offenses punishable by up to 3 years of imprisonment. Fines and civil penalties may also be assessed for PACT Act violations.
Trafficking Patterns
Tobacco traffickers purchase cigarettes or other tobacco products from low-tax jurisdictions and sell them in high-tax areas without paying applicable taxes. For example, legal distributors pay between $0.17 to $7.16 per pack in state and local cigarette excise taxes while manufacturers and importers pay $1.01 per pack in federal cigarette excise tax.
Avoidance of taxes can yield significant profits for tobacco traffickers. For example, purchasing legally taxed products in Virginia (a low-tax jurisdiction) for approximately $4.70 per pack and reselling them in New York City (a high-tax jurisdiction) for approximately $13.50 per pack creates an estimated profit margin of $8.80 per pack. In this example, a single carton of trafficked cigarettes could yield a profit of $88, a single case (60 cartons) could yield a profit of $5,280, and a single truckload (approximately 800 cases) could yield a profit of approximately $4.2 million.
ENDS are often smuggled from China and distributed illegally in the United States in violation of state and federal laws, including the PACT Act. Flavored ENDS, which are illegal under the U.S. Food, Drug and Cosmetic Act and many state laws, are advertised primarily towards the juvenile market. ENDS are often sold on the internet and distributed without payment of taxes and/or proper age verification, which violates state and federal laws. Shipping ENDS by mail in the United States may also be illegal under the PACT Act.
Counterfeit cigarettes are imitations of legitimate brand name cigarettes, which are manufactured under low quality control standards and smuggled into the United States to avoid paying applicable taxes.
For more information on ATF tobacco programs, visit the Alcohol and Tobacco section of the ATF website.
