BOSTON — State police have nearly run out of space to store untaxed cigarettes and other products seized from smugglers, which has stymied tobacco tax enforcement efforts.
Since July, state law enforcement officials have seized about $30,000 worth of untaxed tobacco products, according to a new report by the Multi-Agency Illegal Tobacco Task Force. There haven't been more seizures, the report said, "due to the lack of an appropriate storage facility for seized tobacco evidence."
"Current tobacco storage is nearly at maximum capacity, which has led to an unusually low number of tobacco seizures," the report stated. "Due to this storage issue, most state police cases are currently conducted as historical investigations requiring the location of invoices of purchases by Massachusetts smugglers."
The report said state police are working on leasing a new storage facility and have requested funding as part of Gov. Charlie Baker's preliminary fiscal 2021 budget.
State police are also looking to see if they can destroy some of the stored untaxed tobacco products, which typically must be preserved as evidence, after cases have been prosecuted.
The task force, overseen by the Department of Revenue, has ramped up seizures in the past several years, contributing to the strain on storage facilities. The task force, created in 2016, has partnered with federal officials to dismantle major cross-border smuggling operations and recover millions of dollars in unpaid tobacco excise taxes.
In fiscal 2018, the task force broke up an operation estimated to be worth $10 million in untaxed, smokeless tobacco brought from New Hampshire into Massachusetts. The investigation resulted in the arrest of a licensed tobacco distributor and the recovery of unpaid tobacco taxes, officials said.
Another recent investigation resulted in the seizure of more than $80,000 worth of untaxed cigarettes and the dismantling of a smuggling operation based in Boston and Chicopee that evaded an estimated $1 million in excise taxes. Three people pleaded guilty to operating the smuggling operation, according to the task force's report.
Many cases result in the collection of unpaid taxes on cigarettes and other tobacco products, and retailers having their licenses revoked for violating state tax laws.
But the task force warns that smuggling remains a major problem that deprives Massachusetts of millions of dollars in lost taxes.
"The problem of illegal tobacco smuggling is widespread and requires meaningful policy action at the state level to effectively control and ultimately defeat it," the report noted.
The state has raised taxes on cigarettes and other tobacco products in recent years, which has increased cross-border smuggling activities, according to the task force's report.
Massachusetts’ cigarette taxes — second highest in the country behind New York’s — already drive many smokers to New Hampshire. The Granite State charges $1.78 in taxes per pack, compared with the Bay State’s $3.51. That doesn't include the 6.25% sales tax in Massachusetts.
The state collected more than $515 million in cigarette taxes alone in its last budget year, according to the Department of Revenue. An additional $41 million was collected from excise taxes on cigars, pipe tobacco, chew and other smokeless tobacco products.
Overall, the state's cigarette tax collections have declined, from a high of nearly $630 million in fiscal 2014, as more smokers kick the habit.
A new law signed by Baker in November banned flavored tobacco products and imposed a new 75% excise tax on the wholesale price of e-cigarettes and vaping products.
Under the new law, anyone caught bringing untaxed e-cigarettes or vaping products into the state can be fined $5,000 for a first offense and up to $25,000 for multiple violations. The provisions also allow police to seize untaxed vaping products as well as vehicles, boats and airplanes.
In its latest report, the task force acknowledged that the new mandate will likely increase the number of criminals attempting to avoid paying the state's new excise tax.
"Now that the retail sale of flavored smokeless tobacco will be illegal in Massachusetts ... there will be an increase in smuggling activity and black market sales," it noted.
Christian M. Wade covers the Massachusetts Statehouse for North of Boston Media Group’s newspapers and websites.