Contraband tobacco consumes 30 to 50 per cent of the B.C. sales market

At first, Cory Holland thought government anti-smoking measures were working when he noticed tobacco sales at his British Columbia convenience store started to drop.

Holland said he recalled thinking that perhaps tax increases and the shift to plain packaging to deter young people from buying cigarettes actually convinced more people to quit smoking.

But losing half of sales over three years and observing the smoking habits of his own employees at his Kelowna-area store told him a darker story about organized crime and the growth of contraband tobacco in B.C., said Holland in an interview.

Retail organizations, merchants and tobacco industry officials estimate between 30 and 50 per cent of tobacco sales in B.C. are contraband products, and they are calling on governments and police to crack down on the organized crime groups that sell them.

“Unbeknownst to me, this illegal market of contraband tobacco was growing rapidly,” said Holland. “Our sales are down 50 per cent compared to three years ago. Last year, half of my staff were smoking (contraband cigarettes).”

Holland, whose Oyama General Store includes groceries and convenience items, a post office and liquor outlet, said the prevalence of contraband tobacco impacts his bottom line but it also hurts taxpayers and the health care system.

A pack of cigarettes at his store sells for between $17 and $21 and cartons of cigarette packs cost about $175, while contraband cigarettes sell for about $5 a pack and the cartons for about $50, said Holland.

“I’m down $200,000 in sales from three years ago,” he said. “I’m just a little store in B.C. You can imagine the lost tax dollars. There’s no money going back into the health care system. Worse than that, people are smoking those cigarettes and nobody’s inspecting them.”

The Convenience Retailers Alliance 4 Safe Communities says in a statement its most recent data and studies indicate “that illegal tobacco makes up more than 30 per cent of our province’s tobacco market, putting B.C. as one of the worst provinces when it comes to contraband in Canada.”

The organization called on B.C. Premier David Eby to ensure the government includes measures to combat illegal tobacco as part of its public safety agenda.

“Contraband tobacco invites criminal activity into our communities, puts contraband tobacco into the hands of children and youth, and hurts convenience store operators who follow the rules but are forced to compete with the black market,” says an alliance statement issued in November.

The B.C. government says contraband tobacco is not tolerated in the province and the Tobacco Tax Act includes stiff penalties for dealing in illegal tobacco.

B.C. says they generated $708 million in tobacco tax revenue in 2021-2022 and $711 million in the year before that.