Illegal tobacco and e-cigarette market in Latvia reaches security crisis levels
In Latvia, 42.4% of e-cigarettes have reached the market illegally, and drugs are increasingly found in liquids. Counterfeit cigarettes have for the first time exceeded the volume of contraband.
Illegal nicotine market escalates into state security threat
In Latvia, drugs are increasingly being detected in illegally available e-cigarette liquids — according to information compiled by the Tax and Customs Police, presented on 30 September in Daugavpils at a seminar organised by the Latvian Merchants Association (LTA). Tv3.lv reports that law enforcement agencies are observing significant changes in the illegal tobacco and nicotine products market, which can no longer be assessed merely as a loss of tax revenue.
E-cigarettes as a drug distribution channel
The Tax and Customs Police emphasise that illegal e-cigarette trading mainly takes place online, which complicates control. A study of Latvia's tobacco-free nicotine products sector shows that 42.4% of e-cigarettes reached the market illegally. Meanwhile, data from the Revenue Service shows that in 2025, the volume of electronic cigarette liquid released for legal consumption decreased by 42.5% — yet demand has not disappeared, it has simply shifted to the illegal segment.
Organised crime expands its operations
Organised crime groups involved in cigarette smuggling are diversifying their activities and engaging in other criminal offences, according to the Tax and Customs Police. The same criminal networks and illegally obtained financial resources can be used to carry out various types of crimes — from illegal circulation of excisable goods to human trafficking, illegal immigration and human trafficking.
The Revenue Service, Tax and Customs Police, State Police, State Border Guard, and industry experts identified the flavour ban introduced last year, nicotine content restrictions and increased excise tax as the main factors driving illegal market growth in their discussion. Experts concluded that the impact of future restrictions on illegal circulation should be assessed much more carefully.
LTA President Henriks Danusēvičs states: "The situation has changed significantly — we are no longer just talking about cigarettes being imported across the border via smuggling routes. Illegal manufacturing and the share of counterfeit cigarettes are increasing, and risks associated with narcotic substances are appearing in illegal e-cigarette circulation. At the same time, organised crime groups are diversifying their operations." Danusēvičs adds that following the introduction of new restrictions, sales volumes in the legal market are shrinking, yet consumer demand has not disappeared — part of consumption has shifted to online trading. "As a result, the state budget loses out, while the winners are the illegal market and organised crime," he says.
Counterfeits for the first time outpace smuggling
Law enforcement data reveal structural changes in the illegal market. Cigarette smuggling from third countries is decreasing, while the production of counterfeit cigarettes on European Union territory is growing rapidly. The Revenue Service Customs Administration has identified the same trend, pointing to the growing importance of illegal manufacturing within the EU.
A KPMG 2026 study presented at the seminar shows that total cigarette consumption in Latvia decreased by 7% in 2025, driven by a fall in legal consumption. The illegal market share in the same period reached 18.7%. Most significantly: for the first time, the volume of counterfeit cigarettes in the illegal market has exceeded the volume of smuggled cigarettes — counterfeits make up 67% of Latvia's illegal cigarette market.
Resources to fight organised crime — insufficient
The Tax and Customs Police identify as one of their priority challenges the need to use available resources more effectively and attract additional funding to strengthen the state's ability to combat organised crime in the long term. The agency notes that profits generated by the illegal market and the criminal networks established can also be used to carry out other criminal activities, which is why the illegal tobacco market is increasingly viewed in the context of state internal security.
Source: Google News LV — Crime (lv)