How do illicit markets for vapes and cigarettes expand in regulated environments?

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Illicit Market Expansion in Regulated Environments Stems from Prohibition and High Taxation

Illicit markets for vapes and cigarettes expand in regulated environments primarily due to the unintended consequences of strict prohibitions and excessive taxation. When legal products are made inaccessible or prohibitively expensive, consumer demand does not disappear but rather shifts to unregulated channels. This phenomenon is evident in countries like Singapore and Brazil, where vaping persists despite stringent bans, and in Malaysia, where the illicit cigarette market has grown significantly. These shifts create an environment where products are sold without quality controls, age verification, or regulatory oversight, posing a greater public health challenge.
Prohibition Fails to Eliminate Demand, Driving it Underground

Strict bans on products like vapes do not eliminate consumer demand; instead, they push it into informal and unregulated channels. Singapore, despite having one of the world's strictest prohibitions on vape products, continues to conduct enforcement operations, acknowledging that vaping remains present among its population. Similarly, Brazil has seen a dramatic 600 per cent increase in e-cigarette use between 2018 and 2023, even though e-cigarettes remain prohibited. These examples illustrate that banning a product does not suppress demand but rather redirects it towards markets where products are sold without essential safety and regulatory checks.
Excessive Taxation Incentivizes Shifts to Illicit Alternatives

High tobacco taxation, while intended to reduce consumption, can lead to a significant expansion of the illicit tobacco market when tax increases outpace enforcement capabilities. Australia serves as a cautionary example, where aggressive tobacco tax increases have coincided with a substantial expansion of the illicit market and a fall in tobacco tax revenues. In Malaysia, illicit cigarettes already accounted for 56.7 per cent of total cigarette consumption in early 2026. When legal products become considerably more expensive and illicit alternatives are readily available, consumers are often motivated to switch to the cheaper, illegal options rather than quit.
Criminal Misuse of Products is an Enforcement Issue, Not a Product Ban Justification

Incidents involving synthetic drugs found in vape devices are often cited as reasons for a complete ban on vaping. However, this conflates a criminal enforcement issue with the broader regulatory framework for nicotine products. The problem lies not with the existence of vape devices themselves but with criminal actors using them to distribute illegal substances. Addressing this requires targeted law enforcement efforts, such as stronger border controls, intelligence gathering, and action against organised criminal networks, rather than a blanket ban that punishes legitimate consumers and fails to resolve underlying enforcement weaknesses.
Socioeconomic Factors Influence Nicotine Use and Youth Behaviour

Nicotine use and vaping behaviours are not solely determined by price or product availability; socioeconomic factors play a crucial role. Many nicotine users come from lower-income households facing financial stress, economic uncertainty, and limited access to healthcare. Similarly, concerns about youth vaping are intrinsically linked to broader social realities, including family environments, parental supervision, educational opportunities, and mental health challenges. Addressing youth nicotine use effectively requires a multifaceted approach involving educational interventions, parental engagement, enforcement of age restrictions, and targeted support for vulnerable communities, rather than solely focusing on product regulation or prohibition.

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How do illicit markets for vapes and cigarettes expand in regulated environments?

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