STATISTICS Since inception (July 1985)
Tips Received 4688 Arrests Made 1041 Cases Cleared 1544 # of Rewards Approved 819 Rewards Approved $119,080 Property Recovered $964,966 Narcotics Seized $613,988
Contraband tobacco has overtaken legal cigarette sales in several Canadian provinces, becoming a lucrative source of revenue for organized crime. A new study by the Convenience Industry Council of Canada (CICC) reveals the growing dominance of illicit tobacco, accounting for over half the market in provinces like New Brunswick (52%) and nearly half in Manitoba (45%).
Alarming Statistics and Revenue Loss
The study estimates that in 2023 alone, provincial governments lost $316 million in tax revenue due to contraband tobacco sales, with losses over the past three years exceeding $760 million. Meanwhile, illegal tobacco sales generated over $1.3 billion in revenue for organized crime in Alberta, Nova Scotia, Manitoba, New Brunswick, and Quebec.
Provinces like British Columbia, Ontario, and Newfoundland and Labrador also report contraband rates as high as 50%, with billions lost annually to this black market. Only Quebec, which has implemented strict measures to combat tax evasion in the tobacco industry, maintains a relatively low contraband rate of 11.9%.
Organized Crime’s Role
Contraband cigarettes are now considered more profitable than cocaine, fueling other illegal activities linked to organized crime. Rick Barnum, executive director of the National Coalition for Contraband Tobacco, emphasized that these operations are driven by partnerships between criminal organizations and certain individuals on First Nations reserves.
“It’s no longer just about individuals buying cigarettes for personal use,” Barnum explained. “It’s a billion-dollar industry tied to violence, extortion, and gangsterism.”
Impact on Retailers and Communities
The surge in contraband tobacco has had devastating effects on legal retailers, particularly in rural areas. Convenience stores struggle to compete with illegal cigarettes sold at a fraction of the price, leading to widespread closures.
Sara MacIntyre, CICC’s vice-president for Western Canada, called for coordinated federal and provincial action, including stricter enforcement, increased penalties, and a halt on further tobacco tax hikes.
Pandemic Insights and Possible Solutions
The onset of the COVID-19 pandemic in 2020 provided a glimpse into the scale of the illegal tobacco trade. When manufacturing operations on First Nations reserves temporarily shut down, legal tobacco sales surged by 44-47% in Atlantic Canada. Once illegal factories resumed operations, legal sales plummeted back to pre-pandemic levels.
MacIntyre and Barnum stress the importance of public awareness, emphasizing that contraband cigarette buyers may unknowingly fund organized crime. “People need to understand how their purchases fuel violence and illegal activities,” Barnum said.
Addressing this growing issue will require a multi-faceted approach, including enhanced law enforcement coordination, tougher penalties for traffickers, and efforts to educate the public about the broader consequences of contraband tobacco.