Profiting from Harm: How Governments Sell Cigarettes While Blocking Safer Alternatives

There is a profound contradiction in global tobacco control that rarely gets addressed directly: many governments charged with protecting public health continue to profit from the sale of the world’s deadliest consumer product, and simultaneously, in many of these same countries, safer nicotine alternatives are either restricted or completely banned. Around the world, at least 17 countries, plus Taiwan, retain ownership stakes in tobacco companies. In some cases, governments are majority owners; in others, they hold influential minority stakes. In several countries, tobacco operates as a formal state monopoly. These same governments are signatories to the World Health Organisation Framework Convention on Tobacco Control (FCTC), which is designed to protect health policy from the commercial interests of the tobacco industry. Yet, in practice, these governments profit directly from cigarette sales and often deny access to safer alternatives, such as modern e-cigarettes or oral nicotine products.

China is the clearest example of this structural paradox. China National Tobacco Corporation is the world's largest tobacco company, producing nearly half of all cigarettes globally. It operates as a state monopoly, integrated into government policy, employment programs, and fiscal planning. Tobacco revenue represents a significant component of national and local budgets. China is also a Party to the FCTC, which obliges it to protect health policies from commercial interference. Yet, legal access to safer nicotine alternatives is virtually nonexistent. E-cigarettes, oral nicotine pouches, and other modern harm-reduction tools are either heavily restricted or banned entirely. Combustible cigarettes remain the dominant legal product, reinforcing the state’s fiscal interest in maintaining high smoking rates.

Japan represents a partial exception, and even there, the model illustrates the limitations of state-linked tobacco policy. The Japanese government retains over one-third ownership of Japan Tobacco International, which allows it to collect dividends and exert influence over corporate decisions. In Japan, heated tobacco products (HTPs) are permitted and widely used, making the country the only state-linked market with a commercially significant alternative to cigarettes. However, other safer nicotine options, particularly modern e-cigarettes, remain largely restricted. The government has allowed HTPs partly because they are produced by existing tobacco companies in which the state has a vested interest, but it has resisted broader adoption of products that would compete with the established state-linked tobacco industry.

Vietnam, through the state-owned Vietnam National Tobacco Corporation (VINATABA), operates a monopoly controlling most domestic cigarette production. The government benefits from employment, export revenue, and domestic taxes, and it has no regulatory framework for alternative nicotine products. Egypt is similar: the government owns a stake in Eastern Company, the dominant domestic cigarette manufacturer, and there is no meaningful access to safer alternatives. Cuba’s tobacco industry, including entities like Habanos S.A., is entirely state-controlled, and alternatives are not permitted. Lebanon, Thailand, Laos, India, Bangladesh, Malaysia, Algeria, Iran, Iraq, Syria, Tunisia, and Indonesia also retain significant state influence over tobacco production, and in nearly all these countries, safer nicotine products are either legally prohibited or effectively inaccessible due to regulatory barriers.

The implications of this are significant. Global tracking shows that as of 2025, around 46–47 countries have imposed full bans on the sale and distribution of electronic cigarettes, with many of them overlapping with countries that maintain state-owned or state-linked tobacco monopolies. In India, for instance, the government reaffirmed its 2019 ban on e-cigarettes, effectively removing modern harm-reduction tools from the market even as combustible cigarettes continue to sell legally. In Vietnam, Thailand, and much of the Middle East and North Africa, the state’s financial stake in tobacco creates a de facto prohibition of any competing safer nicotine products. Even countries with partial access to heated products, like Japan, continue to block broader alternatives, prioritising the state-linked tobacco enterprise’s market dominance.

Most of these countries are Parties to the FCTC. Article 5.3 of the treaty requires governments to protect public health policies from the vested interests of the tobacco industry. Yet when the industry is part of the state apparatus, the conflict becomes institutional rather than external. Finance ministries collect dividends from tobacco companies, health ministries are expected to reduce smoking prevalence, and political leaders balance both incentives simultaneously. The line between regulator and industry collapses. It is no longer just a question of lobbying or influence; it is a question of structural self-interest, where the state directly profits from the product it also seeks to regulate.

This creates an uncomfortable paradox: in countries with state-linked tobacco enterprises, public health policy often appears on paper to pursue smoking reduction, yet the regulatory environment deliberately limits harm-reduction alternatives. In effect, governments enforce policies that protect existing cigarette revenues while making safer alternatives inaccessible. The classic framing of tobacco control — government versus industry does not apply here. The reality is that government equals industry.

Geographically, this structural conflict is concentrated in East Asia, Southeast Asia, North Africa, and parts of the Middle East. Some of these state-controlled models are legacies of earlier state-led economies; others reflect incomplete privatisation or deliberate retention of monopolies for fiscal purposes. Across these regions, access to safer nicotine alternatives remains the exception rather than the rule. Heated tobacco is a narrow exception in Japan, but in almost every other state-linked market, products like e-cigarettes, nicotine pouches, or oral nicotine lozenges are restricted or banned.

The consequences are stark. Tobacco kills more than 8 million people annually, and yet governments in these countries derive direct revenue from the continuation of that harm. Denying safer nicotine alternatives ensures that cigarette consumption remains dominant, reinforcing the government’s fiscal and political interests. From a public health perspective, this represents an enormous missed opportunity: millions of smokers could benefit from less harmful alternatives if they were legally accessible and regulated responsibly.

This structural conflict also undermines the FCTC’s intent. The treaty is premised on the idea that the tobacco industry is a separate commercial actor whose interests must be shielded from public health policy. When the industry is a state enterprise, that assumption fails. Governments cannot simultaneously be impartial regulators and profit-motivated shareholders. Article 5.3’s protections against industry interference become largely symbolic in these contexts.

The contradiction goes beyond economics; it shapes cultural and political attitudes toward smoking and nicotine. In countries with state-owned tobacco enterprises, smoking is normalised, alternatives are restricted, and public health campaigns often fail to address harm reduction comprehensively. The result is a policy environment that prioritises fiscal stability and state profit over the introduction of safer products, despite international obligations.

Until these contradictions are openly acknowledged, tobacco control at a global level will continue to operate under a profound tension. Governments may claim to implement strong anti-smoking policies, but where they own the very industries they regulate and simultaneously block safer alternatives, their incentives are fundamentally misaligned. Transparency, structural separation, and honest engagement with harm-reduction tools are essential if FCTC commitments are to have any real-world impact in these markets.

The paradox is undeniable: the state, which is supposed to protect its citizens’ health, profits from their illness and simultaneously limits access to tools that could reduce harm. Heated tobacco in Japan may offer a narrow exception, but in the vast majority of these state-linked tobacco markets, safer nicotine alternatives remain restricted, blocked, or invisible. Until this is confronted, global tobacco control will continue to be constrained not by lack of knowledge or willpower, but by the very governments entrusted to safeguard public health.