California Audit Reveals SICPATRACE® Success
In 2005, the California Board of Equalization (BOE) determined it required a track and trace system for its cigarette excise tax program. With the state facing a significant annual revenue loss to illicit and illegally imported cigarettes and large quantities of unapproved products for sale being distributed within the state, SICPA and the BOE implemented the SICPATRACE® platform to combat these crimes.
The State of California recently presented an audit report to Governor Jerry Brown concerning the state’s cigarette tax and licensing programs, administered by the BOE. The report reviews the progress made by both programs and, in so doing, clearly shows the positive impact of the cigarette tax stamp program, which is implemented and serviced by SICPA Product Security, LLC and Meyercord Revenue, Inc. The report speaks specifically about how the 2005 shift from California’s heat transfer tax stamp to SICPATRACE®, an encrypted stamp program, has been extremely beneficial. In fact, the report states that “switching from a traditional paper stamp to a high-technology stamp with a hidden encrypted serial number has made authenticating cigarette tax stamps easier and more effective.”
Since the implementation of SICPATRACE® in 2005, SICPA has worked with California’s BOE to effectively track and trace approximately 10 billion packs of cigarettes—that’s roughly 900 million packs of cigarettes a year, representing more than $835 million in annual excise tax collections. The BOE has attributed the system to successfully helping the agency retain more than $91 million in annual tax revenues that was previously lost to illicit activity and a 94 percent reduction in the number of counterfeit stamps seized by the state at inspections.
The system has demonstrated its ability to scale to the needs of the BOE and currently supports more than 800 unique users and allows for more than 10,000 annual inspections conducted by BOE enforcement resources. In January of this year, the BOE extended its contract with SICPA through 2019 to continue to provide the SICPATRACE® track and trace solution for all cigarettes sold in California.
With more than 18 years of experience assisting state and local agencies in developing and adopting regulatory, policy and enterprise technology initiatives, Alex oversees SICPA’s relationships with more than 45 U.S. states and 160 municipalities, all of which use SICPA’s products for supply chain verification and control (including the SICPA track and trace program currently used by the State of California). As the Director of Business Development for Meyercord Revenue, a SICPA company, has developed new market opportunities for SICPA in emerging markets subject to excise tax including alcohol, OTP and medical marijuana. Prior to joining SICPA, Alex spent more than 12 years at Accenture and several years at Oracle.