Jalisco Cartel Profits From Mexico’s Illegal Cigarette Market

The powerful Jalisco Cartel is reportedly taking action to control the production of illicit cigarettes in Mexico, controlling a key criminal group behind the trade and fending off competitors.

The Jalisco Cartel New Generation (Cartel de Jalisco Nueva Generación – CJNG) has ramped up the production and sale of illegal cigarettes in Mexico through a group known as the Tobacco Cartel (Cártel del Tabaco), according to a recent report by the Mexican newspaper Milenio. .

The tobacco cartel, a network that allegedly manufactures cigarettes and compels sellers to sell them, is believed to be run by three brothers who own three cigarette factories in the state of Mexico, Jalisco and Campeche, the report said. Production is carried out by three registered companies, Sijara International Manufacturing, Braxico Manufacturing and Burley & Virginia Tabaco Company. The first two are subsidiaries of another legal entity, Tobacco International Holdings (TIH), according to Milenio.

SEE ALSO: The tobacco cartel could mark a change in the Mexican underworld

Although the companies and factories are legitimate, some of the cigarettes produced do not have safety codes proving compliance with the country’s tax agency (Servicio de Administración Tributaria – SAT), meaning they “fall into the realm of illegality,” the newspaper noted. InSight Crime wrote to these companies for comment, but received no response.

The absence of a security code, which all tobacco products sold in Mexico must have, suggests that they do not comply with SAT requirements. According to SAT guidelines, products without code must be destroyed. Milenio also found that Braxico no longer had a valid health certificate with the Mexican Federal Commission for Protection against Sanitary Risks (Comisión Federal para la Protección contra Riesgos Sanitarios – COFEPRIS).

The cigarettes made by the so-called tobacco cartel are then pushed to the vendors, who are forced to sell them. As InSight Crime previously reported, the Jalisco cartel supported the tobacco cartel by forcing vendors to sell only TIH products. Since 2017, inventory belonging to other cigarette brands has been destroyed and sellers have reportedly been threatened, tortured and shot for non-compliance.

The tobacco cartel’s sphere of influence has expanded to include ten states, Milenio said. The gang produces over 30 brands of cigarettes, with prices as low as 35 pesos (about $1.79). The price of regular cigarettes is between 62 and 70 pesos (about $3.17 to $3.58), according to El Economista.

Suspected tobacco cartel leaders have come under pressure from the authorities. The three brothers named as being at the center of the trade had their bank accounts frozen last year, although they were later released. According to investigative platform Emequis, the brothers are former federal agents with the Attorney General’s Office and receive support from current investigators.

TIH’s registered owner, José Guadalupe Varela González, was investigated for drug trafficking in 2006, according to Proceso.

This expansion of CJNG into the illegal tobacco trade comes as illegal cigarettes made in Mexico are becoming increasingly popular. About 19% of cigarettes consumed in Mexico are produced illegally, up from 2% in 2011, according to a report.

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Although the CJNG’s relationship with the so-called tobacco cartel dates back several years, pursuing the illicit cigarette market is unlikely to be a central part of the group’s plans.

Jaime López Aranda, a security and justice expert, told InSight Crime that the demise of the marijuana market, the lack of strong growth in cocaine demand around the world, and the ongoing CJNG wars have led local groups within the cartel to assert themselves. economic activities suspended”. Other such examples include the extortion of avocado growers or illegal fishing.

“I don’t think it’s a cartel-level strategy,” Aranda said. “It’s so easy to traffic cigarettes that I don’t think the people involved in this effort are major players; it’s more likely a grassroots franchise strategy,” he said.

The financial reward is relatively meager. “We are not talking about money from drug trafficking. Not by far,” Aranda explained.

But the business plan makes sense for local players. Although not as profitable as drug trafficking, the tobacco market remains significant: Oxford Economics found that illicit cigarettes accounted for 18.7% of all cigarettes consumed in Mexico in the first six months of 2021 , or more than 7 billion cigarettes in total. This has certainly been enough for CJNG network nodes to make money selling through retailers they control as well as through social media, Milenio’s report notes.

SEE ALSO: Smuggled Chinese cigarettes are taking Latin America by storm

And with the support of the CJNG, the demands of the tobacco cartel are likely to be met.

“The reputation of the CJNG is so frightening, and its links to all forms of criminal activity in Mexico are so obvious, that few people will question anyone who claims to be part of the cartel,” said Cecilia Farfán-Méndez, member of the organized crime. expert and head of security research programs at the Center for Mexican-American Studies at the University of California, San Diego.

Moreover, it happened amid changes in the logistics of illicit cigarette manufacturing. In the past, Mexico has sourced illegal cigarettes from various countries, including China and Paraguay. Yet cigarettes produced in Mexico dominate this criminal economy. This may have been helped by government efforts to reduce contraband entering Mexico through the seaport, the usual route for cigarettes.

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