Commonwealth of Massachusetts
Annual Report of Multi-
Agency
Illegal Tobacco Task Force
02/28/2020
Report and update on the work of the Multi-Agency Illegal Tobacco Task Force to combat illegal
tobacco distribution and the resulting loss of revenue to the Commonwealth of Massachusetts
 Members of the Multi-Agency Illegal Tobacco Task Force
Marikae Grace Toye, Co-Chair
Department of Revenue Designee
Major Steven Fennessy, Co-Chair
Department of State Police Designee
Patricia Henley
Department of Public Health Designee
Michael Sweeney
Office of State Treasurer and Receiver General
Designee
Susan Terrey
Executive Office of Public Safety and Security
Designee
Amber Villa
Attorney General Designee
Jennifer Zalnasky
Attorney General Designee
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Table of Contents
I. Task Force Creation and Legislative Background...................................................................... 3
II. Results and Trends ...................................................................................................................... 4
III. Summary of Task Force Activities ............................................................................................. 8
IV. Legislative Proposals ................................................................................................................ 11
V. Anticipated Barriers .................................................................................................................. 13
VI. Conclusion and Next Steps ....................................................................................................... 13
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 I. Task Force Creation and Legislative Background
As part of the Fiscal Year 2014 General Appropriations Act1, the Massachusetts
Legislature created the Commission on Illegal Tobacco (Commission) to study the magnitude
and economic impact of the illegal tobacco market in the Commonwealth. On March 1, 2014, the
Commission issued its “Report of Commission on Illegal Tobacco,” which provided a general
overview of the illicit tobacco market in Massachusetts and contained a series of findings and
recommendations.2 Pertinently, one of the Commission’s primary recommendations was the
creation of a Multi-Agency Illegal Tobacco Task Force. The Commission recognized that
enforcement of the Commonwealth’s tobacco laws was spread across multiple agencies and
envisioned the Multi-Agency Illegal Tobacco Task Force as the vehicle by which information
and resources could be shared across agencies in order to maximize the effectiveness of
enforcement efforts.3 In addition to the formation of the Multi-Agency Illegal Tobacco Task
Force, the Commission recommended a number of statutory changes and updates as well as
process improvements designed to increase compliance as well as tobacco excise and sales tax
collections.
The Multi-Agency Illegal Tobacco Task Force (Task Force) was created pursuant to
section 71 of the Fiscal Year 2016 (FY16) General Appropriations Act.4 According to its
enabling statute, the Task Force is co-chaired by the Colonel of the State Police and the
Commissioner of Revenue or their designees and additionally consists of the Secretary of Public
Safety and Security, State Treasurer, Attorney General, and Commissioner of Public Health, or
their respective designees. The Task Force has been designated with the following
responsibilities:
The task force shall coordinate efforts to combat contraband tobacco distribution,
including efforts to foster compliance with the law and conduct targeted
investigations and enforcement actions against violators….
The task force shall: (i) facilitate timely information sharing among state agencies in
order to advise or refer matters of potential investigative interest; (ii) dedicate not
less than an aggregate of 20 personnel from member agencies to carry out
enforcement and investigative strategies; (iii) identify where illegal tobacco
distribution is most prevalent and target task force members’ investigative and
enforcement resources against those in violation of [chapter 64C] and chapter 62C,
including through the formation of joint investigative and enforcement teams; (iv)
assess existing investigative and enforcement methods in the commonwealth and in
1
St. 2013, c. 38, § 182.
2
https://old.taxadmin.org/fta/tobacco/papers/MAcommissionreportonillegaltobacco_030114%20copy.pdf
(accessed on February 14, 2020) (hereafter “Commission Report”).
3
Commission Report at pp. 5-6, 26-27.
4
St. 2015, c. 46, § 71; M.G.L. c. 64C, § 40.
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 other jurisdictions and develop and recommend strategies to improve those methods;
and (v) solicit the cooperation and participation of other relevant enforcement
agencies and establish procedures for referring cases to prosecuting authorities as
appropriate.
The Task Force is required to meet at times and places determined by the Co-Chairs as
“deemed necessary to carry out its mandate” and to submit a report by March 1 of each year “on
the results of its findings, activities and recommendations from the preceding year….”5
Specifically, the report shall include: (i) a description of the task force’s efforts and activities
during the year; (ii) identification of any administrative or legal barriers, including any barriers to
multi-agency action or enforcement efforts; and (iii) proposed legislative or regulatory changes
necessary to strengthen operations and enforcement efforts and reduce or eliminate any
impediments to those efforts.6 The report is to be filed with the clerks of the Senate and House of
Representatives, the Chairs of the Joint Committee on Revenue, the Chairs of the Senate and
House Committees on Ways and Means, and the Chairs of the Joint Committee on Public Safety
and Homeland Security. The Task Force is filing this Annual Report of the Multi-Agency Illegal
Tobacco Task Force (Annual Report) in compliance with its March 1, 2020, reporting
obligation.7
II. Results and Trends
Over the course of FY20, the Task Force has dealt with the significant expansion of the
scope of its investigations and some challenges as a result of restructuring its criminal
investigative teams in FY19. As a result of the restructuring, the Task Force has continued to rely
on its partnerships with federal officials and law enforcement agencies from neighboring states to
successfully disrupt and intercept sophisticated multi-state smuggling operations. While these
efforts have shown tangible results in the form of increased tobacco excise tax collections in the
segment of the market on which the Task Force has focused its efforts (so called “other tobacco
products” or “OTP”), 8 they have also exposed limitations in the Commonwealth’s regulatory
regime as it relates to OTP and electronic nicotine delivery systems commonly known as “vape”
or “vapor products,” as well as the need for a dedicated storage facility to allow for increased
investigations and seizures.
5
St. 2015, c. 46, § 71; M.G.L. c. 64C, § 40.
6
Id.
7
Id. For the Task Force’s prior reports, see https://www.mass.gov/info-details/dor-illegal-tobacco-task-force (tab
entitled “Reports”) (accessed on February 14, 2020). The FY19 Annual Report was filed on March 1, 2019, and the
FY18 Annual Report was filed on March 1, 2018.
8
Other tobacco products (OTP) include cigars, smoking tobacco (commonly used in pipes), and smokeless (chewing)
tobacco (commonly sold in hockey puck-shaped tins).
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 A. Excise Tax Data and Trends
As reported in the last several of its Annual Reports9, the Task Force’s enforcement actions
have revealed a disproportionate amount of smuggling activity involving OTP relative to OTP’s
share of the overall Massachusetts tobacco market. The Commonwealth’s high tax rates on OTP
relative to other states provide smugglers a strong incentive to import such products from other
low-tax states and sell them to in-state buyers willing to illegally evade payment of the applicable
Massachusetts tobacco excise.10 Figure 1 below demonstrates the amount of tobacco excise taxes
collected by the Commonwealth on cigarettes and OTP over the past several fiscal years.11
Measured as a share of overall revenue collections, OTP represented approximately 4.95% -
4.98% of total tobacco excise collections from FY14 through FY16. Significantly, however, that
percentage has risen in the past three years, to 6.32% in FY17, to 7.1% in FY18 and 8.03% in
FY19.
Figure 1: MA Tobacco Excise Collections on Cigarettes and OTP
Collections by Type (in Millions of Dollars) FY14 FY15 FY16 FY17 FY18 FY19
Cigarette 628.9 617.5 610.0 582.7 554.6 515.4
All Other Tobacco Products (OTP) 31.1 29.6 30.4 36.8 39.4 41.4
Total 660.0 647.1 640.4 619.5 594.0 556.8
Meanwhile, Figure 2 below breaks down the amount of tobacco excise collected on OTP based
on product type over the same period.
Figure 2: MA Tobacco OTP Excise Collections Broken Down By Product Category
Collections by Type (in Millions of Dollars) FY14 FY15 FY16 FY17 FY18 FY19
Cigar & Smoking Tobacco 14.1 14.1 13.7 15.0 16.5 18.2
Smokeless Tobacco Products 17.0 15.5 16.7 21.8 22.9 23.1
Total 31.1 29.6 30.4 36.8 39.4 41.3
Beginning with the revenue figures from FY17 and continuing throughout FY18 and
FY19, some trends emerge from excise tax data. First, the amount of tobacco excise collected in
FY19 from the sale of cigarettes experienced a significant ($39.2 million) decrease, representing
a 7.07% decline from the previous year. FY18 cigarette excise collection figures similarly
9
See, e.g. FY18 Annual Report at pp. 5-6; FY19 Annual Report at pp. 5-6.
10
The Massachusetts tobacco excise rate on smokeless tobacco products is 210% of wholesale price (highest in the
nation) and the rate on cigars and smoking tobacco is 40% of wholesale price. See
https://www.tobaccofreekids.org/us-resources/fact-sheet/state-excise-tax-rates-for-non-cigarette-tobacco-products
(accessed on February 14, 2020) (updated as of January 14, 2020).
11
It is important to note that all collections figures cited in this Annual Report exclude sales taxes collected on sales
of tobacco products. The Department of Revenue does not separately track sales taxes collected on sales of tobacco
products.
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 showed a decrease of $28.1 million (or 4.8%) decrease from FY17.12 These collection figures are
not surprising as they correspond with a broader national trend of declining cigarette sales13 and
decreasing numbers of smokers.14 In fact, the percentage of Massachusetts adults who currently
smoke cigarettes declined from 14.7% in 2014 to 13.4% in 2018.15
While excise collections from cigarette sales softened in FY18 and FY19, excise collected
from sales of OTP in FY17 through FY19 experienced a notable increase. In FY19, OTP excise
collections increased by $2 million (or 5%) compared to FY18. As noted in prior reports, in
FY18, OTP collection showed a $2.6 million (or 7%) increase over FY17, which showed a $6.4
million increase (or 21%) increase over FY16. See Figure 1. The total increase in OTP excise
collections from the past three fiscal years (FY17 through FY19) was predominantly attributable
to a higher volume of taxed sales of smokeless tobacco products (from $16.7 million in 2016 to
$23.1 million in FY19 – an increase of $6.4 million or 38.3%) over that period. The data also
showed a significant increase in excise collections from taxed sales of cigars and smoking
tobacco products over the last three fiscal years (from $13.7 million in 2016 to $18.2 million in
FY19 – an increase of $4.5 million or 32.84%). See Figure 2. Unlike with cigarettes, the excise
collection figures relating to OTP do not correspond with and are not explained by user or sales
trends. In fact, the latest available data show that smokeless tobacco usage in Massachusetts has
steadily remained near the lowest of all states for the past few years.16
Given the lack of a demographic explanation, the Task Force considers a likely reason for
the dramatic increase in OTP excise collections the increased tobacco enforcement activity
coordinated by the Task Force, based on the Task Force’s stepped up civil and criminal
enforcement activities. As a result of a robust enforcement model, the Task Force has suspended
tobacco licenses of retailers selling illegal (untaxed) tobacco products; seized and confiscated
illegal tobacco products; issued civil assessments for unpaid tobacco excise taxes and penalties;
and prosecuted large-scale smugglers for violations of the Commonwealth’s tobacco tax laws.
12
Massachusetts tobacco excise rates did not change during this period. In fact, they have remained the same since
July 31, 2013.
13
https://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/index.htm (citing Maxwell J.C., The
Maxwell Report: Year End & Fourth Quarter 2017 Cigarette Industry, Richmond, VA (2018) (accessed on February
14, 2020) (reporting a 3.5% decrease in the number of cigarettes sold in the United States from 2016 to 2017).
14
https://www.cdc.gov/mmwr/volumes/67/wr/mm6702a1.htm?s_cid=mm6702a1_w (Centers for Disease Control and
Prevention, Cigarette Smoking Among Adults – United States, 2016, Morbidity and Mortality Weekly Report; 67(2);
53-59 (dated January 19, 2018) (accessed on February 14, 2020) (reporting decline in current smokers nationwide
from 20.9% in 2005 to 15.5% in 2016).
15
https://nccd.cdc.gov/STATESystem/rdPage.aspx?rdReport=OSH_STATE.Highlights&rdRequestForwarding=Form
(citing Behavioral Risk Factor Surveillance System (BRFSS)) (accessed on February 14, 2020).
16
https://www.cdc.gov/tobacco/data_statistics/fact_sheets/smokeless/use_us/index.htm (citing Centers for Disease
Control and Prevention, Behavioral Risk Factor Surveillance System: Prevalence and Trends Data) (accessed on
February 14, 2020). In 2017, the rate of current adult smokeless tobacco use in Massachusetts was 2.3% while the
usage rate in the District of Columbia (the lowest in the nation) was 1.3% followed by Rhode Island (1.5%), Maryland
(1.6%) and California (1.7%). Conversely, the highest usage rate in the country was in Wyoming (9.8%) followed by
West Virginia (8.5%).
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 This has resulted in a spike in tobacco excise collections -- both from violators that have been
caught and punished by the Task Force and from an increase in voluntary compliance by those
who have not been apprehended by the Task Force but have previously illegally avoided paying
the required Massachusetts tobacco excise. Despite these notable successes, the illegal tobacco
market in Massachusetts continues to operate, which serves to deprive the Commonwealth of
millions of dollars of revenue in the form of tobacco excise taxes lost to the illegal market. The
Task Force concludes that the problem of illegal tobacco smuggling is widespread and requires
meaningful policy action at the state level to effectively control and ultimately defeat it.
B. Recent Laws Changes Concerning Tobacco Control
In its FY19 Annual Report, the Task Force noted particular concerns around the lack of
regulation of retailers selling “vape” or “vapor products.”17 On November 27, 2019, Governor
Charlie Baker signed “An Act Modernizing Tobacco Control” into law.18 The new law results in
several notable changes to the law governing tobacco products in Massachusetts, such as a ban
on the retail sale of flavored tobacco products, as well as imposing new regulatory requirements
and a 75% excise tax on the wholesale price of “vape” or “vapor products”, now defined as
“electronic nicotine delivery systems,” held in Massachusetts.
i. Flavored Tobacco Ban
As of June 1, 2020, flavored tobacco products, such as menthol cigarettes, flavored cigars
and flavored smokeless tobacco cannot be sold at retail. The sale of these products after June 1,
2020 in Massachusetts is restricted to sale at licensed smoking bars. The Task Force is in the
process of gathering information concerning the potential effect of this flavored tobacco ban on
retail sales of tobacco in Massachusetts. Specifically, the Task Force is considering the need for
increased enforcement efforts concerning flavored smokeless tobacco. As noted above, there is
currently strong motivation to smuggle such products from other low-tax states and sell them to
in-state buyers willing to illegally evade payment of the applicable Massachusetts tobacco excise
taxes. Now that the retail sale of flavored smokeless tobacco will be illegal in Massachusetts as
of June 1, 2020, the Task Force expects there will be an increase in smuggling activity and black
market sales.
ii. New Regulation of Electronic Nicotine Delivery Systems
The new law sets forth licensure requirements and imposes an excise tax, among other
things, concerning the sale of “electronic nicotine delivery systems” in Massachusetts, as defined
in M.G.L. c. 64C, § 7E(a) as follows:
“Electronic nicotine delivery system”, an electronic device, whether for 1-t