HomeNewsAnalysisTobacco Cartel May Mark Shift in Mexico Underworld
ANALYSIS

Tobacco Cartel May Mark Shift in Mexico Underworld

CONTRABAND / 7 NOV 2018 BY CHRIS DALBY EN

The rise of a new cartel that strong-arms vendors to sell homegrown cigarette brands in large parts of Mexico has sparked concern about criminal organizations seeking fresh income streams amidst a fall in their traditional businesses.

Since late 2017, the Tobacco Cartel (Cártel del Tabaco) has forced cigarette vendors in at least eight Mexican states to sell only specific brands, threatening to kill those who do not comply.

The group’s operatives first pose as representatives of Mexican government institutions, visiting shops and identifying “forbidden” brands. They then seize or destroy this merchandise, according to a lengthy investigation by Mexican newspaper Milenio.

Vendors later receive documents, stamped with logos of the fake institutions and bearing a list of approved cigarettes. These documents claim that only brands manufactured by Tobacco International Holdings (TIH) have been approved for sale in Mexico.

On one occasion, a vendor was shot and wounded in the northern state of Sonora after he refused to comply with the cartel’s demands. Other vendors have reported being tortured, beaten with wooden planks or having their feet burned.

SEE ALSO: Coverage of Contraband

The Tobacco Cartel appears to be supported by, or be an arm of, the Jalisco Cartel (Cartel Jalisco Nueva Generación – CJNG). Vendors stated they received letters indicating they were now under the protection of the powerful and violent CJNG, once they accepted to sell only TIH cigarettes.

Authorities have also noted the involvement of active Mexican officials in the leadership structure of the Tobacco Cartel.

InSight Crime Analysis

There are a few possible reasons for a large criminal group like the CJNG to enter this market. First, Mexico has long seen a brisk trade in illegal and smuggled cigarettes. Hundreds of millions of cigarettes regularly flow through the country’s ports and border crossings, costing significant losses of tax revenue to authorities.

And while this trade has traditionally been controlled by local gangs, larger groups like the Zetas have participated as well.

Second, large criminal groups may be pivoting to access new income streams as other income streams are closed off or disrupted, Dr. David Shirk, an expert on Mexican politics and national security at the University of San Diego, told InSight Crime.

“The shift to cigarettes suggests that it has become more difficult for groups to operate in certain illicit industries,” he said. “The government crackdowns on large criminal organizations have also had an effect.”

The legalization of marijuana in the United States, Canada and parts of Mexico affects the bottom line of criminal groups. A drop in heroin revenue and production, due to the growing popularity of synthetic drugs like fentanyl, has also made controlling the tobacco trade more valuable.

      SEE ALSO: Coverage of Heroin

“Drug cartels wouldn’t even bother with tobacco if they were still making huge profits from drugs like heroin. People point to marijuana, but the most important shift in the drug trade is fentanyl,” explained Shirk.

Important seizures of fentanyl and other drugs, such as methamphetamine, have taken place, putting further pressure on criminal groups.

What is arguably the most troubling aspect of this story is that the illegal cigarettes peddled by the Tobacco Cartel contain Mexican-grown tobacco instead of being smuggled from abroad.

Contraband cigarettes smuggled into Mexico have traditionally come from Turkey or a number of countries in Africa. The cigarettes are then moved through the Tri-Border area, where Paraguay, Brazil and Argentina meet, and brought north, said Gerardo Rodríguez Sánchez Lara, former general coordinator of education and reporting at PROFECO, the Mexican consumer protection office.

“Producing illegal tobacco in Mexico to compete with the market is a new phenomenon,” he said.

But it’s not surprising, given that certain states -- such as Veracruz, Chiapas and Nayarit -- are cultivating large amounts of tobacco. Important tax hikes on cigarette sales have also likely pushed tobacco growers and cartels to collaborate, according to Rodríguez Sánchez Lara.

This also points to criminal groups being mindful of costs -- sourcing cigarettes locally instead of getting involved in complex international smuggling rings and risking discovery.

This power play by criminal groups will likely spark a similar shift in strategies by authorities, something they have been late to do in the past. A few years ago, when the Zetas were active, the federal government dismissed them as not being “a threat” in this illicit business. Already, the new administration, set to take power on December 1, has announced it is seeking further intelligence into the Tobacco Cartel.

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