Federal Cabinet urge action against illegal cigarette factories

MONTREAL — Imperial Tobacco Canada (ITCAN) congratulates the new federal Cabinet while urging quick and decisive action directed at the expanding illegal tobacco crisis, which it estimates costs over $2.5 billion in lost federal and provincial tax revenues every year.

“Our industry touches many cabinet portfolios, from health to finance and public safety to economic development. Every shuffle brings with it the hope that the new ministers will recognize the urgency to tackle the very complex problem of illegal tobacco sales. It cannot be swept under the rug for much longer,” said Eric Gagnon, Vice-President Legal and External Affairs of ITCAN. “Expert studies and reports estimate that 32 percent of all cigarettes sold in Canadaare illegal. This multi-billion-dollar industry costs billions in lost tax revenue, makes our communities more dangerous, and gives young people – especially Indigenous youth who suffer at least three times the smoking rate of their non-Indigenous counterparts1 – easy access to products that should be only consumed by adults.”

Since 2006, it is estimated that over $34 billion in tobacco tax revenue has been diverted from federal and provincial governments into the pockets of organized crime groups. This, in turn, is used to fund other criminal activities, including gun and drug smuggling, money laundering, human trafficking, and even terrorist financing.

According to the Royal Canadian Mounted Police (RCMP), there are over 50 illegal cigarette factories and over 350 smoke shacks in Ontario and Quebec, including the addition of 50 smoke shacks in British Colombia over the past 18 months. Concurrently, it has been identified that upwards of 175 entities associated with organized crime are reaping financial benefits from the trafficking of illicit tobacco.

“It is the price difference between illegal and regulated products that drives the large and ever-expanding illicit market. The problem is growing in every province except for Quebec, which has put in place a robust enforcement model to contain the problem despite having countless smoke shacks distributing illegal products,” added Mr. Gagnon.

Working with the Government of Ontario to contain the problem. Ontario is the epicentre of the crisis with illegal manufacturers increasing their distribution to other provinces, especially to Western Canada.

“We know that solving this issue is challenging and will require the concerted efforts of multiple ministries and levels of government. But we believe it can be done. We stand ready and committed to collaborate with anyone who has a good faith interest in making a difference. We would be pleased to brief any new ministers and reiterate that our door is open to find the best solution to counter this issue,” said Gagnon.