Chapter 42: Tobacco
_
“This is the first batch of goods you’re going to sell!” In a warehouse in the suburbs of Chicago, Josh pointed at the wooden crates around and said to Lyndon Schneider and Dix, then pointed at a box next to him, “Dix, open it.”
Dix walked up and opened the box as instructed.
Seeing what was inside, Dix’s eyes lit up, and Lyndon Schneider also widened his eyes.
“High-quality tobacco!” Lyndon Schneider exclaimed, “Is everything in this warehouse tobacco?”
“Yes, all of them are rough processed dry tobacco. Your task is to figure out how to sell them, whether selling the tobacco leaves directly or making them into cigarettes and then selling them. After you sell them, you’ll get 10% of the profit, and the others will share another 10% between them. The remaining will be handed over to me, and the other handed over to me can also be some other things I need, such as munitions, weapons, steel, cloth, food, etc. If you can find something more cost-effective, please let me know. How about it? Any questions?” Josh asked Lyndon Schneider.
In later times, when it came to illegal and lucrative industries, most people’s first reaction was that of gambling and drug addicts, whom they considered to be intolerable. Or it may be weapons trafficking. Especially drugs, which can yield profits hundreds of times
But many people don’t know that drugs have never been the most profitable illegal industry in the United States.
By the 21st century, even though the annual sales of these harmful substances in the United States exceeded 100 billion dollars and the industry was of a large scale, experts have calculated that due to various reasons such as high processing difficulty, dispersed market, and high transportation costs caused by high risks, its net profit margin is actually not high, less than 20%. It only gives people the feeling of being lucrative because of the multiple layers of diffusion and dilution in the middle links.
In fact, compared to other illegal industries, it is not as profitable as health supplements.
For example, bird’s nest soup, which contains only 0.001% bird’s nest, and the rest is sugar water, can be sold for 30 dollars for a small bottle that costs at most 3 dollars to make, resulting in a return of 1000%.
As for weapons, real money is always in the legal transactions of large arms dealers, and illegal transactions can only be regarded as fragmentary. Even the so-called king of arms smuggling can earn, at most, a little over a billion dollars.
So what is the most profitable illegal industry in the United States?
From 1919 to the 1950s, the highest profit margin was in alcohol due to Prohibition.
After 1950, it was tobacco, specifically black-market cigarettes.
Yes, legal cigarettes were already a highly profitable industry, and illegal cigarettes were even more profitable.
Take New York in 2021 as an example. Due to the highest cigarette tax in the country, the average retail price of a pack of legal cigarettes is 13 dollars, with a wholesale price of 12.5 dollars and a profit of only 50 cents per pack.
But what about illegal cigarettes? The wholesale cost for smugglers is less than 1 dollar per pack, including transportation costs, and is no more than 3 dollars. They sell it to retailers for 5-6 dollars, with a profit margin of at least 200%.
Even retailers who sell at a lower market price of 12 dollars can still earn 5-6 dollars, with a profit margin of over 100%.
While cigarettes are not as expensive in other regions, the average retail price is still over 7 dollars…
This kind of huge profit led to the fact that more than 60% of cigarettes in the US market are black market or counterfeit.
The key is the high risks of drugs and cigarettes. Selling or using drugs can result in heavy sentences, and citizens’ legal rights can be revoked. However, selling cigarettes is a different story. A simple fine can easily resolve most issues unless caught by the IRS.
The risks are not on the same level at all.
Therefore, starting from the 1950s, the Mafia, with its well-organized structure, high efficiency, and highly informed and advanced supply chain management, has already shifted its focus to selling cigarettes.
As for drugs, let the yokels in Mexico and Colombia play with them.
In addition, starting from the 1990s, 90% of the black market cigarettes in the US market were made in China.
The only problem is that the upstream of making black-market cigarettes requires high management skills.
This is also why Josh values Lyndon Schneider so much. He is known as a pro-criminal not only because of his high IQ but also because he has engaged in smuggling. Moreover, this guy is a real “doctor,” a doctoral candidate at the National School of Economics at the University of Munich…
Who knows how this talent ended up stealing things.
But thinking about Germany’s fate in World War I…it’s not that strange.
“How many goods are there in total here?” Lyndon Schneider asked solemnly as he looked at the full warehouse.
“40 tons!” Josh smiled.
40 tons??? Lyndon Schneider couldn’t help but take a deep breath, and his hands were a little trembling.
Due to differences in purchasing power, the price of cigarettes at this time was different.
A pack of cigarettes was basically around 10 dollars.
This price may seem low, but if calculated according to purchasing power parity, it is actually more expensive than the future; after all, according to the price of gold, the US dollar in 2021 has depreciated by nearly 40 times.
40 tons of tobacco, if we are being conscientious, would amount to 40 million cigarettes, 2 million packs, and 200,000 cartons, assuming one gram of tobacco per cigarette. The total value would be 4 million US dollars.
But for those who make illegal cigarettes, who cares about a conscience? If you loosen the rolling or add some dry straw, the production will double, which is 8 million dollars.
You can still earn at least 2 million even if you subtract the downstream profit.
Even if they can only keep 20%, that is still $400,000.
Isn’t this better than stealing gems?
After all, even if they can make a profit of 30% from million-dollar jewelry, it’s still not as good.
Moreover, selling cigarettes has lower risks.
“I can! Of course, I can!” Lyndon Schneider’s eyes were a little red.
Selling illegal cigarettes is not just about high profits and low risks.
Many times, cigarettes can be exchanged for things that money can’t buy.
Especially in those chaotic areas, such as Europe now…
If they can get this tobacco to today’s Europe, Lyndon Schneider can even exchange it for a gold mine!
“But Mr. Kahn, if we want to sell so much tobacco smoothly, I need some startup capital and more weapons and manpower!” Lyndon Schneider said after calming down for a moment.
“For manpower and weapons, Dix is already prepared. As for money, here’s $50,000. Also, I’ll introduce you to someone. Come out, Lieutenant Dietrich!” Josh clapped his hands.
Then a plain-clothed man came out of the warehouse.
It was none other than Sheriff Dietrich, who had appeared several times before.
“Mr. Kahn! Long time no see, Mr. Schneider!” Sheriff Dietrich first respectfully greeted Josh, then turned his head and greeted Schneider with a hint of pride.
“It turns out to be Sheriff Dietrich!” Lyndon Schneider greeted him with a strange expression and instantly understood why Josh had introduced this sheriff.
The double profit of tobacco is the carrot, and the existence of this sheriff is the stick.
But with the help of this sheriff, the sale of tobacco will be much easier.
“Speaking of which, Schneider, you can come out so early, and Sheriff Dietrich deserves a lot of credit. In addition, the profit from tobacco will also be shared with the sheriff and his colleagues. You guys have to cooperate more in the future.” Josh said with a smile. “Everyone is smart and should understand the significance of this business. And this is only the first batch of goods. As long as you work hard, I guarantee everyone can become rich. But if anyone has other ideas, I advise him to consider the consequences beforehand!”
Several people quickly agreed.
“Okay, the rest is up to you. I have something else to do, so I’ll leave first!” After finishing the matter, Josh didn’t stay much longer and left on his own.
As for whether these tobacco batches will be sabotaged by Lyndon Schneider, Josh is not worried at all.
He had prepared two safeguards.
Dix’s men are all cowboys he recruited from his hometown of Kentucky, all with families to support. Even Dix himself is bound by Louis’s widow.
Whether or not Lyndon Schneider can sabotage this batch of tobacco depends on whether these people agree or not.
Another guarantee is Dietrich.
This guy is a real corrupt cop. When Josh was trying to help Lyndon Schneider and Dix get away with it, he unexpectedly got a lot of evidence from this police officer. Moreover, as a police officer, he also has a family to care for.
So under the threat and temptation, this corrupt cop easily joined Josh’s side.
Especially with a profit of tens of millions of dollars from tobacco, under normal circumstances, it is enough for Dietrich to collect black money for more than ten years.
As for being bitten back? Josh didn’t care at all.
As mentioned earlier, buying and selling illegal cigarettes is not a big crime. As long as Josh is willing to spend money, even if the probability of losing a lawsuit is very low, he can still come out if he pays Margaret some money.
But these guys… heh, heh.
The only thing to worry about is that these people are fearless and will fight back against any threat.
But this possibility is too low. Knowing that as long as they work hard for Josh, they can continue to make money, who would be foolish enough to do something else?
Unless they could bypass Josh and get the source directly.
But where is Josh’s source?
Westeros!
Take it if you can!
Yes, except for the more legitimate trades before, tobacco was a new lucrative business found in the exchange between Josh and Daenerys.
However, tobacco is chewed like betel nut in Westeros, not for smoking. In fact, this was the earliest way humans used tobacco. Because of its sour taste, it was called sour grass leaves; the finished tobacco is not sour and is alkaline due to being mainly roasted. Still, fresh tobacco leaves contain many organic acids, such as citric acid and malic acid, extracted during the roasting process to form a white powder.
Because tobacco has great medicinal value and highly addictive properties, it is popular among the nobility. Hence, the cultivation of tobacco in Westeroes is large.
There is more on Daenerys’s territory; after all, it is Slaver’s Bay, and the cost of human labor is free, so the cost is very low.
But obviously, this thing is useless for Daenerys, a queen with a single-minded pursuit of power.
So she sold it to Josh at a very low price, giving him another big surprise.
Chapter 42: Tobacco
_
“This is the first batch of goods you’re going to sell!” In a warehouse in the suburbs of Chicago, Josh pointed at the wooden crates around and said to Lyndon Schneider and Dix, then pointed at a box next to him, “Dix, open it.”
Dix walked up and opened the box as instructed.
Seeing what was inside, Dix’s eyes lit up, and Lyndon Schneider also widened his eyes.
“High-quality tobacco!” Lyndon Schneider exclaimed, “Is everything in this warehouse tobacco?”
“Yes, all of them are rough processed dry tobacco. Your task is to figure out how to sell them, whether selling the tobacco leaves directly or making them into cigarettes and then selling them. After you sell them, you’ll get 10% of the profit, and the others will share another 10% between them. The remaining will be handed over to me, and the other handed over to me can also be some other things I need, such as munitions, weapons, steel, cloth, food, etc. If you can find something more cost-effective, please let me know. How about it? Any questions?” Josh asked Lyndon Schneider.
In later times, when it came to illegal and lucrative industries, most people’s first reaction was that of gambling and drug addicts, whom they considered to be intolerable. Or it may be weapons trafficking. Especially drugs, which can yield profits hundreds of times
But many people don’t know that drugs have never been the most profitable illegal industry in the United States.
By the 21st century, even though the annual sales of these harmful substances in the United States exceeded 100 billion dollars and the industry was of a large scale, experts have calculated that due to various reasons such as high processing difficulty, dispersed market, and high transportation costs caused by high risks, its net profit margin is actually not high, less than 20%. It only gives people the feeling of being lucrative because of the multiple layers of diffusion and dilution in the middle links.
In fact, compared to other illegal industries, it is not as profitable as health supplements.
For example, bird’s nest soup, which contains only 0.001% bird’s nest, and the rest is sugar water, can be sold for 30 dollars for a small bottle that costs at most 3 dollars to make, resulting in a return of 1000%.
As for weapons, real money is always in the legal transactions of large arms dealers, and illegal transactions can only be regarded as fragmentary. Even the so-called king of arms smuggling can earn, at most, a little over a billion dollars.
So what is the most profitable illegal industry in the United States?
From 1919 to the 1950s, the highest profit margin was in alcohol due to Prohibition.
After 1950, it was tobacco, specifically black-market cigarettes.
Yes, legal cigarettes were already a highly profitable industry, and illegal cigarettes were even more profitable.
Take New York in 2021 as an example. Due to the highest cigarette tax in the country, the average retail price of a pack of legal cigarettes is 13 dollars, with a wholesale price of 12.5 dollars and a profit of only 50 cents per pack.
But what about illegal cigarettes? The wholesale cost for smugglers is less than 1 dollar per pack, including transportation costs, and is no more than 3 dollars. They sell it to retailers for 5-6 dollars, with a profit margin of at least 200%.
Even retailers who sell at a lower market price of 12 dollars can still earn 5-6 dollars, with a profit margin of over 100%.
While cigarettes are not as expensive in other regions, the average retail price is still over 7 dollars…
This kind of huge profit led to the fact that more than 60% of cigarettes in the US market are black market or counterfeit.
The key is the high risks of drugs and cigarettes. Selling or using drugs can result in heavy sentences, and citizens’ legal rights can be revoked. However, selling cigarettes is a different story. A simple fine can easily resolve most issues unless caught by the IRS.
The risks are not on the same level at all.
Therefore, starting from the 1950s, the Mafia, with its well-organized structure, high efficiency, and highly informed and advanced supply chain management, has already shifted its focus to selling cigarettes.
As for drugs, let the yokels in Mexico and Colombia play with them.
In addition, starting from the 1990s, 90% of the black market cigarettes in the US market were made in China.
The only problem is that the upstream of making black-market cigarettes requires high management skills.
This is also why Josh values Lyndon Schneider so much. He is known as a pro-criminal not only because of his high IQ but also because he has engaged in smuggling. Moreover, this guy is a real “doctor,” a doctoral candidate at the National School of Economics at the University of Munich…
Who knows how this talent ended up stealing things.
But thinking about Germany’s fate in World War I…it’s not that strange.
“How many goods are there in total here?” Lyndon Schneider asked solemnly as he looked at the full warehouse.
“40 tons!” Josh smiled.
40 tons??? Lyndon Schneider couldn’t help but take a deep breath, and his hands were a little trembling.
Due to differences in purchasing power, the price of cigarettes at this time was different.
A pack of cigarettes was basically around 10 dollars.
This price may seem low, but if calculated according to purchasing power parity, it is actually more expensive than the future; after all, according to the price of gold, the US dollar in 2021 has depreciated by nearly 40 times.
40 tons of tobacco, if we are being conscientious, would amount to 40 million cigarettes, 2 million packs, and 200,000 cartons, assuming one gram of tobacco per cigarette. The total value would be 4 million US dollars.
But for those who make illegal cigarettes, who cares about a conscience? If you loosen the rolling or add some dry straw, the production will double, which is 8 million dollars.
You can still earn at least 2 million even if you subtract the downstream profit.
Even if they can only keep 20%, that is still $400,000.
Isn’t this better than stealing gems?
After all, even if they can make a profit of 30% from million-dollar jewelry, it’s still not as good.
Moreover, selling cigarettes has lower risks.
“I can! Of course, I can!” Lyndon Schneider’s eyes were a little red.
Selling illegal cigarettes is not just about high profits and low risks.
Many times, cigarettes can be exchanged for things that money can’t buy.
Especially in those chaotic areas, such as Europe now…
If they can get this tobacco to today’s Europe, Lyndon Schneider can even exchange it for a gold mine!
“But Mr. Kahn, if we want to sell so much tobacco smoothly, I need some startup capital and more weapons and manpower!” Lyndon Schneider said after calming down for a moment.
“For manpower and weapons, Dix is already prepared. As for money, here’s $50,000. Also, I’ll introduce you to someone. Come out, Lieutenant Dietrich!” Josh clapped his hands.
Then a plain-clothed man came out of the warehouse.
It was none other than Sheriff Dietrich, who had appeared several times before.
“Mr. Kahn! Long time no see, Mr. Schneider!” Sheriff Dietrich first respectfully greeted Josh, then turned his head and greeted Schneider with a hint of pride.
“It turns out to be Sheriff Dietrich!” Lyndon Schneider greeted him with a strange expression and instantly understood why Josh had introduced this sheriff.
The double profit of tobacco is the carrot, and the existence of this sheriff is the stick.
But with the help of this sheriff, the sale of tobacco will be much easier.
“Speaking of which, Schneider, you can come out so early, and Sheriff Dietrich deserves a lot of credit. In addition, the profit from tobacco will also be shared with the sheriff and his colleagues. You guys have to cooperate more in the future.” Josh said with a smile. “Everyone is smart and should understand the significance of this business. And this is only the first batch of goods. As long as you work hard, I guarantee everyone can become rich. But if anyone has other ideas, I advise him to consider the consequences beforehand!”
Several people quickly agreed.
“Okay, the rest is up to you. I have something else to do, so I’ll leave first!” After finishing the matter, Josh didn’t stay much longer and left on his own.
As for whether these tobacco batches will be sabotaged by Lyndon Schneider, Josh is not worried at all.
He had prepared two safeguards.
Dix’s men are all cowboys he recruited from his hometown of Kentucky, all with families to support. Even Dix himself is bound by Louis’s widow.
Whether or not Lyndon Schneider can sabotage this batch of tobacco depends on whether these people agree or not.
Another guarantee is Dietrich.
This guy is a real corrupt cop. When Josh was trying to help Lyndon Schneider and Dix get away with it, he unexpectedly got a lot of evidence from this police officer. Moreover, as a police officer, he also has a family to care for.
So under the threat and temptation, this corrupt cop easily joined Josh’s side.
Especially with a profit of tens of millions of dollars from tobacco, under normal circumstances, it is enough for Dietrich to collect black money for more than ten years.
As for being bitten back? Josh didn’t care at all.
As mentioned earlier, buying and selling illegal cigarettes is not a big crime. As long as Josh is willing to spend money, even if the probability of losing a lawsuit is very low, he can still come out if he pays Margaret some money.
But these guys… heh, heh.
The only thing to worry about is that these people are fearless and will fight back against any threat.
But this possibility is too low. Knowing that as long as they work hard for Josh, they can continue to make money, who would be foolish enough to do something else?
Unless they could bypass Josh and get the source directly.
But where is Josh’s source?
Westeros!
Take it if you can!
Yes, except for the more legitimate trades before, tobacco was a new lucrative business found in the exchange between Josh and Daenerys.
However, tobacco is chewed like betel nut in Westeros, not for smoking. In fact, this was the earliest way humans used tobacco. Because of its sour taste, it was called sour grass leaves; the finished tobacco is not sour and is alkaline due to being mainly roasted. Still, fresh tobacco leaves contain many organic acids, such as citric acid and malic acid, extracted during the roasting process to form a white powder.
Because tobacco has great medicinal value and highly addictive properties, it is popular among the nobility. Hence, the cultivation of tobacco in Westeroes is large.
There is more on Daenerys’s territory; after all, it is Slaver’s Bay, and the cost of human labor is free, so the cost is very low.
But obviously, this thing is useless for Daenerys, a queen with a single-minded pursuit of power.
So she sold it to Josh at a very low price, giving him another big surprise.
