From drug trafficking to tobacco: cigarettes, the new 'business' vein of the cartels in Mexico

Among shipments of textiles and footwear, dozens of containers with illegal cigarettes in the port of Colón, in Panama, circumvent customs controls every month to infiltrate their route to the internal market and to be re-exported to other countries. In parallel with drug and weapons trafficking, tobacco smuggling by drug trafficking groups has gained strength in recent years, port authorities and groups in Latin America warn. Juan Carlos Buitrago Arias, retired general of the Colombian police and leader of the public-private alliance between Colombia, Ecuador and Panama (Coepa) to stop this crime, assures that tobacco has become a business vein for criminal organizations. Mexicans like the Sinaloa Cartel. According to their investigations, cocaine, methamphetamine and fentanyl cartels in the Latin American region use the same networks and routes to smuggle packs of illegal cigarettes—mostly from Asia—to grow the black market for this product and launder profits. of drug trafficking.

Buitrago Arias mentions that smuggling in Mexico is valued at about 25,000 million dollars a year, of this amount, 30%, equivalent to about 7,500 million dollars, corresponds to the black market for 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 the money from the profits of drug trafficking,” he says.

The retired general relates that in 2019, while still an active general of 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 dollars from the Joaquín cartel El Chapo Guzmán in Los Angeles, USA. Buitrago Arias assures 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 Tepito neighborhood, in Mexico City.

The movement of illegal tobacco, mostly from Asia, he affirms, has permeated most Latin American countries, with Panama being one of the main access points. According to these investigations, criminal groups use Panama's ports to re-export, without paying taxes, thousands of cigarettes in the same containers where they return with contraband drugs, weapons and minerals. One of the most vulnerable points for smuggling is the Colon Free Zone in Panama, with an area of ​​more than a thousand hectares, a point whose tax exemption mechanism for private companies made it the main port for re-exportation of licit and illicit merchandise. of Latin America and the Caribbean.

Packs without pictograms and with legends in Chinese or English from brands such as Gold City, Time or Bright, enter Latin American countries for up to a dollar per package, an absurd price compared to the almost 5 dollars for which a pack is sold. legal pack. Illicit tobacco, which does not follow health or quality controls, enters Panama through smuggling and continues to the north of the continent by sea or land. The majority of this merchandise comes from production centers in China, South Korea, India and Cambodia, according to Coepa. The international organization details that only in Panama, the hub logistics par excellence in Latin America, 90.2% of the tobacco market is illegal, followed by Ecuador with 90% and Colombia with 40%.

According to Coepa analyses, in 2023 the Government of Panama stopped receiving more than 300 million dollars in taxes from the tobacco black market valued, in that country alone, at 8.5 billion illegal cigarettes per year. In Latin America, the amount of taxes lost due to cigarette smuggling amounts to more than 6 billion dollars. The public-private cooperation platform has identified and analyzed more than 80 companies, 29 maritime, land and air routes of illicit trade and 14 criminal groups related to tobacco smuggling.

Lucrative profits, combined with minimal penalties, make cigarette smuggling a thriving 'business' vein for drug trafficking groups in Mexico, Colombia, Ecuador and other Latin American countries. Gregoire Verdeaux, senior vice president of the American tobacco company Phillip Morris International and part of Copea, says that his goal is to replicate in Latin America the decrease in pack smuggling achieved in countries such as Greece and Italy, in Latin America. “Many governments think that cigarette trafficking is not so important, but this is wrong, it is part of the criminal system and the system is growing very quickly,” he asserts.

Panama is not only a destination, but also a means of passage. Cigarettes are made generic in Asian factories, specifically to be smuggled because they are made generically and take advantage of the fiscal benefits of the free and logistical zones of Panama to be distributed to the rest of Latin America. On the land route, the contraband goes from Puerto Colón or Puerto Manzanillo in Panama to Paso Canoas (Costa Rica) and from there it spreads to the rest of the 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 is dedicated to drug trafficking, arms trafficking, people and merchandise and places, routes and criminal groups coincide. Specifically, this organization works in Belize and Guatemala to prevent the transfer of cigarettes to Mexico. “In Guatemala, in the entire Petén area, the Zetas area, but also the Barrio 18 gang controls that border crossing and in the end there is an illegal trade not only in cigarettes but also in many products and what we are trying to do “It is to contain the problem from Guatemala, destroying the product in that country and with that we ensure that they do not go to Mexico,” he asserts.

The authorities and groups agree that the lack of resources in customs to invest in more technology and controls, as well as corruption and lax legislation, con
tribute to cigarette smuggling gaining ground year after year. “It is necessary to create more effective laws that prevent, prosecute and punish this crime; and that also offer alternatives to the tobacco-consuming public,” says Campos.

From the tobacco factories in China, Cambodia or India to the Colón free zone in Panama, one of the most important free zones in Latin America. Thousands of generic cigarettes, produced legally in their countries of origin, travel thousands of kilometers to be repackaged and re-entered at other destination points clandestinely, without paying taxes and without meeting the health standards of the final markets. Clandestine tobacco routes have become another branch of profits to be exploited by drug trafficking networks.

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