Cigarette black market on the rise

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Smugglers are buying cigarettes for cheap and then sneaking them into Mexico or back into the U.S. to sell on the black market. (Source: CBS 5) Smugglers are buying cigarettes for cheap and then sneaking them into Mexico or back into the U.S. to sell on the black market. (Source: CBS 5)
NOGALES, MEXICO (3TV/CBS 5) -

Mexican drug gangs are using cigarette sales to launder profits from drug and human smuggling, according to a report released Monday by the Government Accountability Office.

"ICE officials say that the same transnational criminal organizations that smuggle narcotics and humans into the United States generate additional revenue streams by legitimately purchasing low-cost duty-free cigarettes and other items in the United States and smuggling them into Mexico, and sometimes back into the United States, for black market resale," reads the report, which is titled, "Tobacco Trade, Duty-Free Cigarettes Sold in Unlimited Quantities on the U.S.-Mexico Border Pose Customs Challenges."

According to the report, criminal organizations purchase the cigarettes at duty-free stores, located along the border. These are stores where shoppers are allowed to buy a limited number of items, such as booze and cigarettes, tax-free, as long as they are leaving the country. It's common for U.S. residents traveling to Mexico to buy some of these items at duty-free stores, before leaving the country. But the GAO report indicates that criminal gangs have found a way to make money off of the arrangement.

The report says that duty-free stores are failing to report high-volume customers, which would alert federal agencies. Investigators found the number of high-volume sales at Nogales duty-free stores rose from 66 in 2010 to 338 in 2015.

You can find the GAO report here.

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Morgan  LoewMorgan Loew is an investigative reporter at CBS 5 News. His career has taken him to every corner of the state, lots of corners in the United States, and some far-flung corners of the globe.

Click to learn more about Morgan .

Morgan Loew
CBS 5 Investigates

Morgan’s past assignments include covering the invasion of Iraq, human smuggling in Mexico, vigilantes on the border and Sheriff Arpaio in Maricopa County. His reports have appeared or been featured on CBS News, CNN, NBC News, MSNBC and NPR.

Morgan’s peers have recognized his work with 11 Rocky Mountain Emmy Awards , two regional Edward R. Murrow Awards for investigative reporting, an SPJ First Amendment Award and a commendation from the Humane Society of the United States. Last fall, Morgan was inducted into the National Academy of Television Arts and Sciences Silver Circle, in recognition of 25 years of contribution to the television industry in Arizona.

Morgan is a graduate of the University of Arizona journalism school and Concord Law School. He is the president of the Arizona First Amendment Coalition and teaches media law and TV news reporting at ASU’s Walter Cronkite School of Journalism and Mass Communication.

When he’s not out looking for the next big news story, Morgan enjoys hiking, camping, cheering for the Arizona Wildcats and spending time with his family at their southern Arizona ranch.

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