A shocking amount of contraband tabacco is being sold online and shipped across Canada, a new report has found.
Commissioned by the Convenience Industry Council of Canada (CICC), the report by Ernst and Young even highlighted some online websites that openly advertise their product in direct violation of Canadian laws. Often the contraband includes pseudo-age and health warning labels to mimic legal standards.
Contraband tobacco represents anywhere between 39 to 50 percent of the market, in Ontario, meaning possibly half of every cigarette sold in the province are illegal. A 50% loss in tax revenue would have cost Ontario between $990 million and $1.7 billion in lost tax revenues between 2019 and 2022.
As per the report, “Sales of legal, tax-paid cigarettes fell quite dramatically from 2019 to 2023 in all five provinces [studied]. There has been a 44.8 percent decline in Alberta; a 33.3 percent decline in Manitoba; a 25.5 percent decline in Quebec; a 37.4 percent decline in New Brunswick; and a 28.4 percent decline in Nova Scotia.”
On Thursday, Kory McDonald, who leads External Affairs at Rothmans, Benson & Hedges Inc. (RBH), presented to Ontario’s Standing Committee on Finance and Economic Affairs where he outlined RBH’s proposals for the upcoming 2025 Budget, with a primary focus on banning the online promotion of illicit tobacco products.
“Banning the advertisement of illegal tobacco online is a common-sense step that can have a big impact in terms of slowing the continued growth of the contraband tobacco market and keeping Ontarians safe,” he said.
McDonald also promoted allowing for harm-reduced product categories within the Tobacco Tax Act to encourage potentially less harmful alternatives for smokers.
Business leaders in Alberta recently called on the federal government to address the spike in illegal contraband and organized crime.
Incoming US President Donald Trump has publicized his desire for Canada to strengthen its border security, threatening tariffs of 25% on all imports from Canada if the situation doesn’t improve.
Trump went further in recent weeks proposing an ambitious plan to annex Canada through economic pressure, however that was met with much bipartisan backlash in Ottawa.
Likely Canada’s next Prime Minister, Pierre Poilievre, has vowed for an ambitious crackdown on crime, something he said is necessary after the Liberals’ “soft on crime” approach.
