Beyond The Horizon
How Cartels In Mexico Are Moving In On The Tobacco Game (6/26/24)
Mexican drug cartels have increasingly turned to the tobacco industry as a new revenue stream amidst crackdowns on traditional narcotics. One prominent player, the Jalisco New Generation Cartel (CJNG), has been implicated in forcing cigarette vendors in several Mexican states to sell only specific brands, often under threat of violence. This operation, often referred to as the "Tobacco Cartel," employs tactics such as posing as government officials to confiscate non-approved brands and intimidate vendors.
The shift to the tobacco market is partly driven by declining revenues from traditional drug markets. Legalization of marijuana in several regions, increased law enforcement pressure on heroin distribution, and the rise of synthetic drugs like fentanyl have squeezed profits from older drug trades, pushing cartels to diversify into areas like tobacco. Moreover, local production of illegal cigarettes is a new phenomenon in Mexico, with cartels collaborating with local tobacco growers to meet demand, thereby reducing reliance on international smuggling networks.
In this episode, we take a trip south of the border to see how the Cartels are making their move into this market and why it matters to you.
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From drug trafficking to tobacco: Cigarettes become a new branch of business for Mexican cartels | International | EL PAÍS English (elpais.com)
- Duration:
- 13m
- Broadcast on:
- 26 Jun 2024
- Audio Format:
- mp3
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Anytime you have any sort of market that the cartel can exploit, you better believe that's exactly what's going to happen, they're going to exploit it, and they're going to attempt to turn it into a revenue stream. And that's exactly what we see here with the tobacco industry. So let's dive into this article from El Pius, and let's see what Carina Suarez, the author, has for us. Headline, from drug trafficking to tobacco, cigarettes become a new branch of business for Mexican cartels. The black market in cigarettes as a business and money laundering option for organized crime accounts for up to 30% of a $25 billion smuggling industry. And considering they're about to ban menthol cigarettes here in America, can you imagine what that's going to do for the revenue stream for the cartels? What, because there's a law saying menthol cigarettes are no longer allowed to be sold, nobody's going to sell them, there's going to be a whole-ass black market for it, like any other product that becomes illegal. And if you don't think that the cartels are licking their chops over the fact that they're going to have another revenue stream in the black market, you're crazy. Like I said, this article was authored by Carina Suarez. Among shipments of textiles and footwear entering the port of Cologne in Panama, dozens of containers with illegal cigarettes circumvent customs controls every month en route to the domestic market and to be re-exported to other countries. In parallel to drugs and weapons, tobacco smuggling by drug trafficking groups has increased in recent years, worn port authorities and social groups in Latin America. Now, this is something that the mafia in America has done for a long time. They'd get cigarettes and they'd sell them on the black market. Anything you could possibly imagine that these people can sell on the black market, they're going to look to sell it on the black market. And whenever there is a market for it, like there is for cigarettes, we all know how addicted people are to cigarettes, you're going to see different criminal organizations start to exploit these sorts of things, and you're going to see them make money hand over fist doing so. I mean, look what we've seen with the cartels in the avocado market or the lime market. Anything that they feel that they can make a few bucks on, they're getting involved with, and anybody standing in their way, they'll have a choice. Plata y Plomo, either the silver or the lead. And as you can imagine, most people, they choose the silver. Who wants to have the cartel as an enemy if you have to live in Mexico? Every time you leave your house, you have to worry about getting blown up, getting your head chopped off, getting taken to some crazy ass camp. Who the hell wants to live like that? I know I don't, and I'm guessing most of you out there don't either. But unfortunately, for the people of Mexico, that's the reality. Juan Carlos, Butrago Arias, a retired Colombian police general and leader of the public private alliance between Colombia, Ecuador, and Panama to curb this crime, says the tobacco has become a branch of business for Mexican criminal organizations such as the Sinaloa cartel. According to his research, cocaine, methamphetamine, and fentanyl cartels in the region, use the same networks and routes to smuggle illegal cigarettes, mostly from Asia, to widen the black market for this product and launder drug money. There is no doubt about it. Every single market that you could possibly imagine where these guys can make some money, they're going to have their fingers in that market. And the only way to make sure that that doesn't happen is to make sure there is no corruption and good luck making sure there is no corruption down in Mexico. Butrago Arias says the smuggling in Mexico is valued at some $25 billion a year, of which 30% corresponds to the black market in cigarettes. In our investigations, we have identified that Mexico plays a similar role to Panama in terms of the influence of transnational organized crime. Specifically, drug trafficking uses the illicit trade of cigarettes, alcohol, clothing, household appliances, and gold to monetize drug trafficking profits, he says. Arias says that in 2019, while still an active general in the Colombian police, he was in charge of Operation Empire, a tactic to dismantle the structure of cigarette and liquor smuggling operated by the Sinaloa cartel and whose detection originated from the seizure of $100 million from Joaquin El Chapo Guzman's cartel in Los Angeles. Arias states that the routes used by Mexican cartels to move drugs and weapons are now used to move tobacco to other destinations such as the United States, but they also enter the domestic market, for example, in the Tapito neighborhood in Mexico City. The transfer of illegal tobacco, mostly from Asia, he adds, has permeated most Latin American countries with Panama being one of the main points of access. And all of this has to do with taxes, right? The last thing people want to do is pay more money for their cigarettes or their addiction, so if they can get them for a little bit cheaper without taxes, hey, so much the better. And for the cartels, their source in this shit for pennies on the dollar. So any money they make on it is good money. According to these investigations, criminal groups use Panama's ports to re-export without paying taxes, thousands of cigarettes and containers that return with contraband drugs, weapons, and minerals. One of the most vulnerable points for smuggling is the Cologne-free trade zone in Panama, which covers over 1,000 hectares and whose tax exemption mechanism for private companies made it the main port for re-exporting, Licit, any Licit goods in Latin America, and the Caribbean. All of this stuff is connected. And when you see the vastness of these operations, it really puts it in the focus. How it's very difficult, no, impossible, to win a war on drugs doing it the way we're doing it. Because for all of the money that's been spent, all of the blood that's been spilled, what exactly has been accomplished? Cigarettes with brand names such as Gold City, Time or Bright, written in Chinese or English, enter Latin American countries for up to $1 per pack, compared to the almost $5 for which a legal pack is sold. And like anywhere else, people are looking for a deal, right? People want to get the most bang for their buck. And if they can get cigarettes for a dollar instead of $5, that's what they're going to do. The Alyssa tobacco, which is not subjected to sanitary or equality controls, enters Panama through smuggling routes and continues to the north of the continent by sea or land. Most of this merchandise comes from production centers in China, South Korea, India, and Cambodia, according to Copa, which states that in Panama, Latin Americas, logistic hub, par excellence, 90.2% of the tobacco market is illegal, followed by Ecuador with 90% and Colombia with 40%. So as you can see, there's a lot of money to be made. And if you think the cartels are going to leave that money on the table, you have not been paying attention. They are not leaving any money on the table ever. What they're trying to do is maximize their profits, and they're going to do that with whatever revenue stream they can get their fingers on. Lucky Land Slots, asking people what's the weirdest place you've gotten lucky? Lucky? In line with the deli, I guess? Aha, in my dentist's office. More than once, actually. Do I have to say? Yes, you do. In the car, before my kids' PTA meeting. Really? Yes. Excuse me, what's the weirdest place you've gotten lucky? I never win and tell. Well, there you have it. You can get lucky anywhere, playing at luckylandslots.com. Play for free right now. Are you feeling lucky? No purchase necessary. In Latin America, the amount of taxes lost due to cigarette smuggling amounts to over $6 billion. Now, think about that. Think about how poor some of these countries in Latin America are. And then, think to yourself, can they really afford not to have this revenue? Copa has identified and analyzed more than 80 companies, 29 maritime, land and air routes for illicit trade, and 14 criminal groups involved in tobacco smuggling. The lucrative profits combined with minimal penalties make cigarette smuggling attractive for drug trafficking groups in Mexico, Colombia, Ecuador, and other Latin American countries. Gregor Verdo, senior vice president of US Tobacco Company, Philip Morris International, and part of Copa says his goal is to replicate in Latin America the decline in cigarette smuggling achieved in countries such as Greece and Italy. Many governments think that cigarette trafficking is not important, but this is not the case. It is part of the criminal system and the system is growing very rapidly. He says, well, also affecting his bottom line, you know, Mr. Verdo here, the head of Philip Morris, lasting he wants to do, is miss out on any money. These guys are in the business of turning a profit, right? So they're certainly enemies of the black market. They want to make sure that they're getting every last dollar as they kill you with these cigarettes. Panama is not only a destination but a transit point. Cigarettes are made generically in Asian factories, specifically for smuggling and the fiscal advantage of Panama's free and logistical zones are taken advantage of for distribution to the rest of Latin America. On the land route, the contraband goes up from the ports in Cologne or Manzanillo in Panama to Paso Canos Costa Rica. And from there onward to countries such as Honduras, Nicaragua, Mexico, and the United States. Alejo Campos, director of the Crime Stoppers Collective for Latin America, warns that cigarette smuggling is a transnational crime that involves the trafficking of people, drugs, arms, and merchandise with overlapping locations, routes, and criminal groups. Not wrong about any of that. These people that are doing this are the same people that are bringing the drugs in. What do you think they made new routes because they want to bring in other product? They're using the same exact routes, time and time again. Specifically, Campos organization works in Belize and Guatemala to prevent the transfer of cigarettes to Mexico. In Guatemala, in the entire Patan Department, Los Etas, and also the Barrio 18 gang, controls the border crossing, and in the end, there is illegal trade not only on cigarettes but also many products. What we're trying to do is contain the problem from Guatemala destroying the product in that country and with that to prevent them from passing to Mexico, he says. Authorities and social groups agree that the lack of resources and customs to invest in more technology and controls, as well as corruption and lacks legislation, contribute to cigarette smuggling, gaining ground year after year. It is necessary to create more effective laws to prevent, prosecute, and punish this crime and also to offer alternatives to the tobacco-consuming public, says Campos. From tobacco factories in China, Cambodia, or India, to the Cologne Free Trade Zone in Panama, one of the biggest in Latin America, thousands of generic cigarettes legally produced in their countries of origin, traveled thousands of miles to be repackaged, and re-exported to other destinations illegally. Side-stepping taxes and without meeting the sanitary standards of their end markets. clandestine tobacco routes have become yet another means of profit to be exploited by drug trafficking networks. And in the coming weeks, we're going to be focusing a little bit more on what's going on down at the border. That way, we can try and swim through some of the muck and get to the clarity, because there's a whole lot of BS being pitched by a lot of people about what's going on down at the border. So like usual, we're going to take our katana and cut through the bullshit and try and get to the stuff that really matters to you. All right, folks, that's going to do it for this one. 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