Montenegro’s recently adopted Law on Free Zones has introduced sweeping changes to how free zones operate, including a complete prohibition on activities involving cigarettes and tobacco products — from storage and processing to transit and transshipment. The government says this measure is designed to prevent the use of free zones as conduits for cigarette smuggling, which for years plagued the Port of Bar and other facilities where tobacco products could be stashed and moved outside normal customs controls.
Under the new legal framework, any handling of tobacco and related goods in free zones is forbidden and subject to state enforcement. According to senior government officials, this represents a clear break with the past, illustrating Montenegro’s determination to end illegal tobacco trafficking and strengthen institutional oversight. They argue that removing cigarettes from free-zone activities eliminates a long-standing channel for contraband and aligns Montenegro with international anti-smuggling expectations.
Not all stakeholders share this assessment. Some industry representatives and chambers of commerce have warned that the blanket ban could have unintended consequences for the markets for legal cigarettes and tobacco products. These critics argue that completely barring all tobacco product flows through zones — rather than strictly regulating them — may disrupt lawful trade, create logistical bottlenecks, and disadvantage companies that previously used free zones for legitimate storage and transit under controlled conditions. They suggest alternative approaches, such as enhanced customs oversight or compliance mechanisms, that could preserve free-zone utility without opening the door to smuggling abuses.
The government, however, has rejected these objections, defending the broad prohibitions as necessary given past abuses. Officials stress that previous attempts at tighter monitoring — without an outright ban — failed to stem illicit cigarette trade, and that robust state control is essential for both domestic law enforcement and Montenegro’s international obligations. They point to earlier actions, including the destruction of large quantities of seized tobacco products and the permanent closure of tobacco activities in certain free zones, as evidence of the state’s commitment to curbing smuggling.
As the law is now in force, businesses involved in legal trade of cigarettes and tobacco are adjusting to the new regime. The near-complete removal of tobacco from free-zone operations is expected to reshape supply chains and may shift legal flows into tightly controlled customs territory. How this will affect prices, distribution efficiency, and competitiveness within the regional tobacco market remains an open question, especially as enforcement practices and supporting regulations continue to evolve under the new free zones framework.
