Smuggling and the Tobacco Industry: Learnings from Canada

The debate on the desirability of stricter tobacco control laws is on, as the Tobacco Control Bill (TCB) reaches the public hearing stage at the House of Representatives. Both the pros and the antis have been advancing their arguments based on the facts available to each group and most times, these arguments are prejudiced.

There is one underlining fact that is incontrovertible; tobacco consumption has grave health implications on users. In reaching a conclusion that is of utmost benefit to the people, the legislators must be dispassionate in looking at the pros and cons of the bill and be able to fashion out a balanced and evidence-based law.

The current debate, made me conduct a little media research to find out what is the situation in other countries with strict tobacco laws, Canada being my focus. The findings were quite interesting and they call for serious concern. In an article written by one Douglas Quan and published by the Edmonton Journal (http://www.edmontonjournal.com/news/national/About+contraband+tobacco+manufacturers+operating+First/8839766/story.html), it was reported that about 50 contraband tobacco manufacturers operate in First Nations reserves and this was revealed by a document, released under access-to-information legislation. According to the report, "combined taxes at least double the price of tobacco in every province and territory but Quebec, leading to why illicit tobacco is so appealing to Canadian consumers. The RCMP estimates about 50 contraband tobacco manufacturers are operating on First Nations territories in Ontario and Quebec, according to a briefing document sent to the federal public safety minister earlier this year.” The report further stated that states that dozens of organized crime groups — mostly in Central Canada — are involved in the distribution of illegal smokes and re-investing the profits they make into other crimes, including the trafficking of illicit drugs and firearms and human smuggling.

“In March, the Conservative government proposed new measures, including mandatory minimum penalties for repeat offenders involved in “high volume” trafficking and the creation of a 50-member RCMP anti-contraband force, to tackle the problem. We can’t speculate on upcoming legislation in the House of Commons, but our Government will continue to act on its commitment to keep communities safe, including finding ways to address contraband tobacco trafficking, Paloma Aguilar, press secretary for Justice Minister Peter MacKay, said in an email Tuesday,” the report further added.

Aguilar noted according to the report that, “the government previously invested $20 million into measures to disrupt the supply of and demand for contraband tobacco. However, the National Coalition Against Contraband Tobacco — a group representing convenience stores, tobacco manufacturers and growers — has expressed concerns that the illegal cigarette industry continues to thrive and is even expanding in Atlantic Canada. According to the briefing document, Mounties believe approximately 50 contraband manufacturers are operating in Quebec’s Kahnawake and Ontario’s Six Nations reserves.”

There are also an additional 10 manufacturers on the U.S. side of the Akwesasne Mohawk territory, which straddles the borders of Ontario, Quebec and New York State, “giving rise to jurisdictional and legal challenges between federal, provincial and state laws,” the document states. The document says that organized crime groups are exploiting these jurisdictional challenges and that a 2012 Criminal Intelligence Service Canada national threat assessment identified at least 58 organized crime groups involved in the illegal tobacco trade across the country — 35 of them in Central Canada.

“The manufacture and distribution of this illegal commodity fuels the growth of organized criminal networks, and the availability of this illegal commodity results in losses of federal and provincial taxes and excise duties and undermines significant government investment and public health objectives,” the document states.

But recent intelligence, the document said, shows a rise in counterfeit tobacco products entering the Canadian market, as well as the diversion of some raw leaf tobacco to illegal manufacturers in Ontario and Quebec. “These illegal products are then transported through a national pipeline for sale to consumers as a cheaper alternative to legitimate tobacco products, thereby making it more accessible to youth.”

Another report from Canada, on how harsh anti tobacco legislation backfired on the society was on the research conducted by Fraser institute and published on CBC News website (http://www.cbc.ca/news/politics/story/2013/05/07/pol-cp-contraband-tobacco-report.html) with the title, Contraband tobacco still a big problem, report says: Despite crackdown, bootleg smokes still on rise, especially in Eastern Canada. (CBC News is Canadian television station with offices in Montreal and Quebec.)

According to the report, “with the exception of Quebec, Alberta and the Northwest Territories, it is illegal to smoke in any vehicle that is carrying a child. No doubt the country has one of the strictest Anti Tobacco legislations. In many of the provinces, it is illegal to smoke in any public place or in a car carrying a child, even with tobacco tax policies that are ineffective.”

The report further stated that with all these laws and policies in place, “Tobacco business in Canada is today in the firm control of bootleggers. Besides that quality standard is not guaranteed, proceed from illicit trading in Tobacco has been traced to fund criminal gangs that operate out of Quebec. Sale of contraband cigarettes is supporting groups such as the Hells Angels and Hezbollah while tobacco tax policies are doing little to curtail smoking in Canada. The sale of contraband cigarettes originating from native reserves in Ontario and Quebec is fuelling organized crime. (Ryan Remiorz/Canadian Press) Smuggling and trafficking of contraband cigarettes is an unintended consequence of federal and provincial tobacco tax policies," said Diane Katz, a co-author of the report and the director of risk, environment and energy policy at the institute.

Looking at these two examples from Canada, it is of utmost importance that every issue must be properly put into consideration and addressed, before enacting a workable tobacco control law that the honourable members of the House of Representatives will be proud of. In the words of Robert E. Lee (1807 – 1870), “You have only always to do what is right. It will become easier by practice, and you enjoy in the midst of your trials the pleasure of an approving conscience.” Our legislators must get it right this time.