In a pressrelease, the Finnish Customs Authority reports a drastic decrease in snus smuggling cases this year. From January to September, approximately 700 kilograms of snus were seized, marking a stark contrast to the 3,500 kilograms confiscated during the same period last year. What’s intriguing is that this drop in illegal snus imports appears to coincide with the Finnish deregulation of nicotine pouch sales we have written about on pouchforum before. This change in policy, which saw the ban on importing nicotine pouches lifted in April 2023, seems to have had a ripple effect on snus smuggling. The evidence suggests that as legal alternatives became more readily available, the incentive for smuggling diminished.
Customs officials have been quick to point out that their surveillance efforts remain as vigilant and comprehensive as ever. However, despite maintaining the same level of control, instances of snus smuggling have dwindled to a fraction of what they once were. Hannu Sinkkonen, Director of Customs Surveillance, shed light on this remarkable shift. “… The figures for January to September also reveal a substantial difference between last year and this year. Customs snus seizures have notably decreased during the current year.”
Tuomo Kunnari, head of the investigative unit in Torneå says:” From our vantage point here in Torneå, it appears that only professional actors are currently engaged in snus smuggling. The number of individuals attempting occasional smuggling has, on the other hand, decreased,”
From our view at pouchforum.eu it appears that the decision to open the legal market for nicotine pouch sales has had a profound and positive impact on the issue of snus smuggling. The remarkable reduction in seizures suggests that as legal avenues for obtaining similar products became available, the competitiveness of the black market faded. The sales are now happening through a taxed and orderly controlled market with rules that benefit of consumers and responsible retailers and (we assume) to the delight of the Ministry of Finance.
While the situation will continue to be monitored, this shift in dynamics offers a compelling case for the effectiveness of the deregulation policy. However, I doubt this is the last time we will come back to the Finnish market example. A recent request for comments on the draft government proposal amendments to the Tobacco Excise Act discussed tax levels several times higher than the neighboring countries. When the contrast in price or taxation between neighboring countries passes the threshold and illicit trade becomes considered profitable, it is likely that the illegal market will grow.
Regulating a product is the most effective way for a country to take control and to make an impact on the products sold in its territory. Nicotine pouches contain nicotine and should be regulated and taxed, but finding the optimal set of rules is also a balancing act where you have to take into account external criteria in order to avoid creating situations when average consumers feel that taxation is excessive, in particular when you can access the same product at a significantly lower price by crossing a border or buying it from “under the desk”. This kind of situation will distort trade, deprive the country of consumption of due taxes and create openings for counterfeit products and smuggling. In Finland, as the data provided by the Customs Authority suggests, there was a significant trade of illicit products that now has been re-directed to a legal alternative. We hope that the upcoming changes in the acquis will not revert this positive trend.