Step out of the shadows: how new tobacco trade rules will change Russian retail

The introduction of mandatory licensing of retail trade in tobacco products will be a key factor in the legalization of the industry, however, the successful implementation of changes requires prompt preparation, both from business and from regional authorities. It takes only five months to carry out all necessary inspections of small businesses, and in parallel with administrative control, the state will have to solve the problem of fiscal pressure on the industry, as a sharp increase in excise rates may stimulate demand for shady products. These issues were the focus of discussion by representatives of departments and industry analysts during the expert session "Turning Point in the Tobacco Market", held as part of the XII International Business Forum "Russian Retail Week". For more information, see the Izvestia article.

Infrastructure limits

The licensing process for the retail sale of tobacco and nicotine-containing products is strictly time-limited: the campaign will take place from October 1, 2026 to March 1, 2027. The expert community draws attention to the scale of the task facing the administrative apparatus. According to the Association of Small Format Trade (AMT), it is estimated that today in the Russian Federation there are from 250 thousand to 300 thousand retail outlets selling these products. A significant share in this segment is occupied by convenience stores and specialized pavilions that do not have experience working with complex licensing regimes.

Artem Kiryanov, Deputy Chairman of the State Duma Committee on Economic Policy, stressed that the adopted law on the regulation of tobacco turnover and amendments introducing licensing of wholesale and retail will have the greatest impact on the legalization of the market. In turn, Alexey Vorobyov, Director of Public Relations at JTI Russia, noted that the industry is at a turning point, and the further course towards whitewashing directly depends on the quality of the practical implementation of the campaign.

— The regions need to start preparatory work today and think about allocating resources. Many retail outlets are located in remote areas, where it is necessary to travel to verify compliance with licensing requirements. There is a risk of a bottleneck if the actual acceptance of documents opens not on October 1, but on November 1 or even December 1," Vorobyov warned.

Vladlen Maksimov, President of the Small Format Trade Association, also stressed the need to support microenterprises. In his opinion, the authorities should actively inform businesses and introduce online point survey formats. He stressed that small retailers with limited resources find it more difficult for others to adapt to the changes.

Zoning of territories

Special attention needs to be paid to synchronizing licensing requirements with municipal spatial zoning regulations. In accordance with the law approved by the Federal Assembly and signed by the President of the Russian Federation, municipalities are required to independently establish the boundaries of territories around educational institutions within which the sale of nicotine-containing products is prohibited. According to the position of the legislator, this mechanism is intended to replace the ineffective norm on the 100-meter zone, the observance of which was accompanied by numerous law enforcement difficulties.

The new rules for defining forbidden territories have yet to be approved by the Government. The problem is that this process will run in parallel with the licensing campaign, which creates risks of late receipt of documents by a bona fide business.

To optimize procedures, local governments could synchronize tobacco zones with the already established boundaries for the retail sale of alcohol. Alexey Vorobyov also considers it advisable to provide for automatic equalization of such territories near schools at the level of federal bylaws.

"This approach will make it easier for regions to make decisions where no—go zones can be established, and will make the process transparent. In general, the approach to tobacco zones may be more lenient, since, unlike alcohol, open display is prohibited for cigarettes, which is already an additional restriction," the expert noted.

Fiscal statistics and digital control

The introduction of licensing is a logical continuation of the government's strategy to combat illegal trafficking, which has already proved its effectiveness. According to Vladislav Zaslavsky, director of the Department of digital labeling of goods and product turnover Legalization at the Russian Ministry of Industry and Trade, six years ago the shadow share in the tobacco market exceeded 15%. The introduction of mandatory labeling has significantly improved the situation. According to statistics from the National Scientific Competence Center (NSCC), by the end of 2025, the share of illicit trafficking had decreased to 9.1% (in terms of the population of the Russian Federation). The total fiscal effect in the period from 2019 to 2025 exceeded 858 billion rubles.

Nikita Zolkin, Director of the Department of Customs Policy and Regulation of Alcohol and Tobacco Markets at the Ministry of Finance of the Russian Federation, states that it is the combination of the Honest Sign system and retail licensing that is the main driver of reducing the shadow sector. Additional government measures are designed to enhance the effect: tracking the movement of products, control over raw materials and the introduction of a mechanism for "auto fines" (about 70% of such sanctions today are issued for the sale of tobacco below the minimum price set by the state).

—The legal mechanisms for regulating the tobacco and nicotine—containing products market, constructive interagency cooperation, and applied digital technologies combine licensing and labeling into a single closed loop that effectively counteracts the illegal trafficking of such products," emphasizes Zolkin.

Excise imbalance

Despite the effectiveness of administrative and digital barriers, analysts warn of the risks of a reversal of the positive trend in the event of excessive tax pressure on the industry. In particular, there are concerns that legalization efforts may be offset by a disproportionate increase in excise taxes.

Thus, Vladlen Maksimov, President of the Small Format Trade Association, emphasized a direct correlation: the most noticeable successes in reducing illegal trafficking were recorded during periods of moderate excise policy. A sharp surge in rates, he said, automatically leads to an expansion of the shadow segment.

Parliamentarian Artyom Kiryanov shared this position, noting the need to deprive the shadow sector and organized crime of economic motivation. According to him, the use of excise taxes as a tool of pressure on industry groups should be stopped.

— A moderate approach to indexation of excise tax rates is needed. The economic component is one of the important criteria for market formation: the lower the disposable incomes of the population, the higher the demand for affordable illegal products," concluded Alexey Vorobyov.