Criminal Risks and Judicial Determination of Illegal Operation of Tobacco Monopoly Products: A Legal Interpretation with the Crime of Illegal Operation as the Core

1、 Question raised: Why does unlicensed operation of genuine cigarettes constitute a crime?

Tobacco products belong to the state monopoly goods in China. Article 3 of the Tobacco Monopoly Law clearly stipulates that tobacco monopoly products shall be subject to a licensing system, and the production, sale, import and export of such products shall be prohibited without a license. In practice, some operators mistakenly believe that "as long as the tobacco sold is genuine, it is not illegal", but judicial cases have shown that operating without a license, regardless of the authenticity of the tobacco, may constitute the crime of illegal operation.

2、 The elements for criminalization of illegal tobacco business
According to Article 225 of the Criminal Law, the crime of illegal business operation must simultaneously meet the following conditions:
1. Violation of national regulations: mainly refers to the violation of the Tobacco Monopoly Law and its implementing regulations;
2. Without administrative permission: Without obtaining a tobacco monopoly production enterprise/wholesale/retail license;
3. Serious circumstances: According to judicial interpretations, the amount of illegal tobacco business involved is ≥ 50000 yuan or the illegal gains are ≥ 20000 yuan, which meets the criteria for criminalization.

3、 Key Disputes and Judgment Rules in Judicial Determination

1. Qualitative analysis of "operating under license"
Borrowing someone else's license to actually operate tobacco, there are differences in judicial practice:
Viewpoint 1: It is an administrative violation rather than a crime (because the monopoly system has not been substantially damaged);
Viewpoint 2: Constitutes the crime of illegal business operation (with a specific license subject, borrowing violates the principle of non transferable administrative licenses).
Adjudication tendency: Most cases are deemed as administrative violations, but if there are cases of operating beyond the scope or selling counterfeit cigarettes, it may constitute a crime.
2. Crimes and non crimes of operating beyond the scope
Holding a retail license but engaging in wholesale business constitutes the crime of illegal operation. The Supreme People's Court approved in 2011 that retail certificates cannot be used for wholesale.
Exception: Purchasing goods beyond the geographical scope (such as "collusion") is usually not considered a criminal offense.
3. Competition of charges related to counterfeit cigarettes
When selling counterfeit and inferior cigarettes without a license, one also commits the crimes of illegal business operation, selling counterfeit and inferior products, and selling counterfeit registered trademark goods.
Judgment rules: Conviction is based on the more severe charges (imaginative competition is judged from the first instance), and in practice, it is often punished for the crime of illegal business operation.

4、 Sentencing and defense points
1. Sentencing gradient
(1) If the operating amount is ≥ 50000 or the illegal income is ≥ 20000, the offender shall be sentenced to imprisonment for not more than 5 years or detention, and shall be fined 1-5 times the illegal income
(2) If the operating amount is ≥ 250000 or the illegal income is ≥ 100000, the offender shall be sentenced to imprisonment for more than 5 years, and shall be fined 1-5 times the illegal income or have their property confiscated
2. Effective defense path
• Amount defense: questioning the method of determining the value of tobacco (if the administrative department overestimates it, it can be re evaluated according to the quantity standard);
Subjective knowledge defense: In cases of selling counterfeit cigarettes, if there is no evidence to prove that the perpetrator knowingly purchased and sold counterfeit products, it does not constitute the crime of selling counterfeit products;
The boundary between administrative violations and criminal offenses: For behaviors such as "operating under license" and "operating beyond the scope", it is advocated to regulate them through administrative penalties rather than criminal penalties.

5、 Risk prevention suggestions
1. Before operation: It is necessary to apply for the corresponding level of tobacco monopoly license (retail/wholesale/production);
2. When purchasing, only purchase from local tobacco wholesale enterprises, and cross regional purchases or cross selling are prohibited;
3. In sales: Retail merchants are not allowed to sell multiple items at once (to avoid being identified as wholesale behavior).

Lawyer Introduction

Tang Jie
Phone: 18501792506
Email: tangjielaw@vip.163.com

Lawyer Tang Jie has served in the medical industry, providing legal advisory services to multiple units. His main practice areas include civil and commercial litigation services as well as corporate advisory services. I have participated in multiple corporate commercial disputes, insurance disputes, company resource integration, and equity projects.