In a commendable move, Republican Sens. Bill Cassidy (LA), Marco Rubio (FL), Tom Cotton (AR), Rick Scott (FL), and Bill Hagerty (TN) are urging the U.S. Treasury Department to take immediate measures against Tobacco International Holdings (TIH), a Switzerland-registered business suspected of having ties to Mexico's Cártel de Jalisco Nueva Generación (CJNG).
The senators' request for sanctions is rooted in well-documented evidence that the CJNG has used tobacco products as an alternative revenue stream since 2018. Mexico's Financial Intelligence Unit (UIF) has already initiated an investigation into TIH, suspecting its association with the CJNG. Reports indicate that TIH, with assistance from current and former Mexican government officials, has successfully monopolized the tobacco market in several Mexican states, backed by the ominous threat of CJNG reprisals.
This request for sanctions is a crucial step towards dismantling the cartel's financial network and safeguarding American communities from the perils of illicit drug trade. It is imperative that policymakers understand the intricate connection between illicit tobacco sales and the cartels' trafficking of narcotics and fentanyl and ensure that their policies do not inadvertently expand the illegal tobacco market.
The gravity of this issue cannot be overstated. By diversifying their income streams, cartels can sustain and expand their illicit operations, fueling violence and instability on both sides of the border. In Texas, which serves as the epicenter for drug trafficking into the U.S., local authorities have seen a rise in the recruitment of teenagers into drug trafficking, human and sex trafficking, fentanyl overdoses, and increased gang activity.
The negative impact of cartel activity doesn't just impact the border region. Illicit fentanyl, a highly potent synthetic opioid that is 50-to-100 times more potent than morphine, has been a major factor in the increase of overdose deaths in the U.S. Over 150 Americans die every day from overdoses related to synthetic opioids like fentanyl.
While sanctioning TIH and related entities will effectively disrupt the CJNG's revenue generation, it is just a small part of the larger problem of illicit cartel activity, which requires a holistic approach. Unfortunately, tobacco policies the Biden administration is considering may inadvertently expand the illicit tobacco marketplace, thereby providing a new platform and increased funding for cartels.
First, President Biden’s expected menthol ban will remove menthol cigarettes from the marketplace. Thirty-nine percent of the 30 million U.S. smokers report using menthol cigarettes. If even a fraction of these smokers resort to obtaining menthol products through illicit means, it will become a substantial source of revenue for cartels operating on the black market. Even before this policy goes into effect, an estimated 8%-21% of cigarettes consumed in the U.S. are purchased illicitly, which translates to billions of dollars in revenue a year.
The Very Low Nicotine Content rule that the Food and Drug Administration (FDA) is pursuing would be an even greater boon to illegal actors. This rule could require the nicotine content in cigarettes to be as low as 5%, effectively resulting in a ban on conventional cigarettes. Given the FDA's slow approval process for alternative products like vapes, smokers won’t have a legal market to turn to when the ban takes effect, funneling more money into the hands of cartels. While smoking cigarettes undeniably carries significant health risks, funneling business and cash into the hands of cartels by means of an illicit market poses a dire national security threat to all Americans.
Addressing the issue of cartels and their funding necessitates a comprehensive approach. While the call to sanction TIH, its principals, subsidiaries, and affiliates demonstrates a firm commitment to protecting American communities from the scourge of drug trafficking, it is equally essential to carefully evaluate the administration’s tobacco policies to prevent inadvertently fueling the cartels' other drug trafficking efforts.
Combating drug trafficking requires proactive measures that encompass both targeted sanctions against entities like TIH, as well as prudent tobacco policies. The urgent request for sanctions against TIH will help dismantle the cartel's operations by disrupting their financial network.
However, policymakers must exercise caution to prevent unintended consequences that could inadvertently bolster the cartels' other criminal activities.
By aligning a comprehensive strategy with effective tobacco policies, policymakers can contribute significantly to the protection and well-being of American communities, particularly along our southern border.
Matt Mackowiak is the president of Potomac Strategy Group, a Republican consultant, a former Bush administration official, a Bush-Cheney re-election campaign veteran and a former press secretary to two U.S. Senators.