As governments struggle with the cost-of-living crisis, the issue of contraband tobacco often goes unnoticed. But that comes at a major cost. Studies show the Government of British Columbia loses hundreds of millions in tax revenue – money that could be redirected to address pressing social needs rather than lining the pockets of organized crime groups.
“With contraband cigarettes, there’s a direct connection to organized crime,” says Danny Fournier, who heads up the illicit trade prevention division with Rothmans, Benson & Hedges (RBH). Fournier spent over 25 years in law enforcement specializing in organized crime investigations with the Quebec Provincial Police, where he oversaw drug and contraband tobacco enforcement operations. He joined RBH to train and educate officials on the dangers of contraband tobacco.
Earlier this year, the RCMP announced that a was set in Feb. 2024 when they seized $24 million worth of illegal cigarettes during a multi-year criminal gang investigation across the Lower Mainland. In a press release, RCMP Media Relations Officer, Cpl. Arash Seyed acknowledged the extent of the contraband problem.
“The illicit tobacco trade is a global phenomenon that contributes to the growth of transnational organized crime, and undermines public health objectives,” says Seyed.
It’s no surprise why this illegal industry continues to grow. The profit involved for organized crime groups is staggering; contraband tobacco is eight times more profitable to traffic than cocaine. Financial penalties, if given, are small and are not a deterrent to organized crime groups. “’It is a no-brainer for criminal organizations that contraband tobacco is high profit, low risk,” Fournier says.
Experts, like Fournier, urge the provincial government to recognize the problem so that British Columbians are not forced to deal with the effects of increased danger across communities and small businesses struggling to keep up, and not to mention lost tax revenue that could fund other government programs.
In an effort to reduce smoking rates, federal and provincial governments have increased taxes on legal tobacco products. Combined with increases in the cost-of-living, that has driven many smokers to seek out less expensive cigarettes on the illicit market. Low-cost cigarettes are generally manufactured in Ontario and Quebec then trafficked and sold without tax at a fraction of legal tobacco prices, according to a from Ernst and Young and the Convenience Industry Council of Canada.
Strategies such as increased fines to deter contraband activity, dedicated funding for specialized contraband task forces, ensuring full transparency of contraband seizures, and strengthened legal tobacco permits to protect small businesses, have already been shown to work in Ontario, Alberta and Quebec.
For the B.C. provincial government to combat smoking rates in a more meaningful way, Fournier says that dismantling the illicit market is just as important as regulating the legal one. “It’s like a house, you’re not going to only lock the front door and assume you’re safe,” Fournier says. “Unless you make sure all the windows and doors are locked too, someone will always be able to find their way in.”
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