The illicit tobacco trade is a growing phenomenon – growing globally but, more crucially, growing in Canada too. Contraband tobacco accounts for roughly 20 percent of tobacco consumption in our country. Canada is also an active player in the manufacturing and distribution of contraband cigarettes. Conservative estimates suggest that roughly six billion contraband cigarettes are sold each year, and more than $2 billion annually is lost by federal and provincial governments – money that could be used to fund important initiatives across education and infrastructure.
While the legal cigarette market is declining annually – which is something that Rothmans, Benson & Hedges applauds as we transform our organization and work to create a smoke-free future – the decline in volume cannot, solely, be attributed to adult Canadians deciding to quit smoking. Cessation programs and smoke-free alternatives are playing a role, but what is more problematic is that evidence is pointing to a steep rise in the sale of contraband tobacco products alongside the decline in legal cigarette sales.
This is concerning. While tax increases on cigarettes can act as a deterrent, they are not disincentivizing away from buying and helping adults either stop or move away from cigarettes. In Ontario, a carton of 200 contraband cigarettes can sell for as little as $35-$40. In contrast, the same carton purchased legally in Ontario would cost a consumer roughly $100. Instead of reducing the prevalence of smoking, higher costs are making consumers turn to cheaper, illicit products – contraband cigarettes can pose a public safety concern because they do not have the regulated safety band stopping the cigarette from burning after being left unattended.
To add to this, the illicit tobacco market is controlled by organized crime. Criminal groups involved in contraband tobacco use profits generated from the contraband tobacco trade to fund other illegal activities, including guns and drug trafficking. When organized crime is involved in any form of illicit commerce, violence always follows and there is a very real human cost. There are ample recent examples across the country that serve as a grim reminder that contraband tobacco brings violence and criminality to our doorsteps.
This is a problem that needs to be addressed urgently and is one every Canadian should care about. It is also a problem that every Canadian can do something about.
Governments, both provincially and federally, have to recognize that contraband tobacco is not a victimless crime – it has serious implications. We continue to urge all levels of government to work together with provincial law enforcement agencies to take decisive action to combat the problem. Quebec was able to reduce illegal sales from roughly 33 percent to around 12 percent by moving in this direction and enacting legislation that empowered police officers. Governments can also take action by targeting the supply side of the equation. In most cases, the factories producing illegal cigarettes are known to law enforcement. Tackling the supply at the source would materially move the needle and help keep Canadians safe.
On a more individual level, Canadians can take immediate action and play a role in reducing the demand for illegal tobacco products. Canadians need to stand behind their local retail and convenience stores. By choosing to purchase only legally regulated tobacco products, Canadians can help to eliminate the demand for contraband tobacco and reduce the profits made by criminal organizations. Also, with illegal product sales putting downward pressure on local establishments, this will go a long way to supporting and sustaining small businesses across the country.
Illicit cigarettes are a threat to public finances and public safety. It is a complex problem that some Canadians consumers are financially supporting every day. We need to do better. We need to work together to reduce the demand for illegal tobacco products and increase enforcement efforts. Only then will we be able to reduce the influence of organized crime and, crucially, reduce the prevalence of smoking in Canada and keep our communities safe.
Source: Rothmans, Benson & Hedges
