(Via Volokh)  This article in US News details the rising tide of Cigarette smuggling.

Cigarettes are, in many ways, made for smuggling: They're legal, expensive relative to their weight, easy to ship. Contraband smokes now claim between 2 percent and 6 percent of the U.S. market ... Counterfeits are pouring in from China and Russia.

...the strategy of more than two dozen men who bought cigarettes in North Carolina, where the tax was 50 cents a carton, and sold them in Michigan, where the tax was $7.50. The group then shipped some of its illicit profits overseas to agents for Hezbollah, a terrorist organization.

...You can fit 800,000 packs of cigarettes on a New York-bound 18-wheel truck. If the smuggler keeps only a quarter of the tax savings, he can pocket $600,000 per truckload. ... "If you're going to be a smuggler, what would you rather be caught with, a truckload of cigarettes, or heroin?" asks Adelman.

...For those who track cigarette smuggling, the situation is grimly familiar. In the early 1990s, Canada raised its cigarette taxes to bring per-pack costs $3 above U.S. prices. The result: Roughly a third of all cigarettes in Canada were imported illegally. When Canada cut its taxes, cigarette smuggling stopped...

Of course, one of the classic solutions that Liberals propose to stuff like this is bigger and bigger government (Fed govt to stop cross-state smuggling and the UN to stop cross-nation smuggling).