Courtesy of National Post
In its final report, the federal Task Force on Cannabis Legalization and Regulation offered its best advice for “keeping cannabis out of the hands of children and youth and keeping profits out of the hands of organized crime.” But it warned, “we may not anticipate every nuance.”
“After all,” it observed, “our society is still working out issues related to the regulation of … tobacco.”
That’s certainly true in Ontario. On Monday, the National Coalition Against Contraband Tobacco (NCACT) released its latest read on the market: provincewide, it reckons 32 per cent of cigarettes sold in the fourth quarter of 2016 were contraband; in Northern Ontario, it was a remarkable 51 per cent.
The problem is not new. And while it is complex, it is hardly mysterious. In Ontario, roughly 65 per cent of the cost of a carton is tax. That allows for huge profit margins on the black market, and the province could hardly be set up better to supply it.
First Nations businesses can legally sell cigarettes tax-free to their residents — but in practice, all are welcome. From the finance minister’s perspective, that’s a huge revenue loss: a decade ago, more than one-quarter of Ontario smokers reported having bought cigarettes on reserve.
Uniquely in Canada, Southwestern Ontario farmers grow tobacco. Controls over where their crops end up are, shall we say, less than ironclad. So there’s a ready supply for producers, legitimate and otherwise, in the area. Further afield there’s the Akwesasne First Nation, which straddles the Canada-U.S. border near Cornwall. Large quantities of American tobacco find their way to the U.S. side, and then north across the St. Lawrence River, to be made into cigarettes and either sold on-site or distributed.
That’s illegal, needless to say, and a problem for the public safety minister. In a Macdonald Laurier Institute report last year, Royal Military College and Queen’s University political scientist Christian Leuprecht documented 22 contraband cigarette busts between 2006 and 2014. Among the non-tobacco items seized were cocaine, crack, ecstasy, oxycodone, the methamphetamine precursor phenylacetone, and 141 firearms, including several assault rifles.
Yet this problem has festered, largely unaddressed, for years. “(People) think it’s a victimless crime, like someone cheating on their taxes,” says NCACT spokesman Gary Grant. “They don’t realize … that organized crime is so deeply involved.”
“People reduce it either to a revenue problem (or they think) people do this in their basement, produce a few cigarettes on the side and it’s all good,” said Leuprecht. “(But) the amounts are astonishing. (My) report came out on the eve of a 50-tonne seizure of illegal tobacco in Montreal.”
Quebec has chopped its problem in half over the past 15 years. For this, both Grant and Leuprecht credit a concerted effort to empower police, boost penalties and roll fines back into enforcement. Among other solutions for Ontario, Leuprecht’s report proposes an agreement with First Nations that would boost their revenues while providing a disincentive to sell to non-native smokers.
In the meantime, however, it’s something like the Wild West. Proponents of marijuana legalization, me included, like to use alcohol as proof of concept: prohibition didn’t stop people from drinking and enriched gangsters; legalization and regulation put them out of business. But in Ontario, tobacco enjoys roughly the legal status the federal government intends to bestow upon marijuana and the black market is flourishing, with all the negative effects that come with it.