Flavoured vape products are set to be banned in Quebec, a move the tobacco industry warns will likely lead to a further spike in black market illicit tobacco activity.
“It’s a big business, especially for organized crime,” said illicit trade prevention manager Danny Fournier, with Philip Morris International in an exclusive interview with True North.
“We’re expecting to see a shift from physical to online illegal sales.”
Around six billion illegal cigarettes circulate through Canada annually. The underground trade costs the province of Ontario roughly $1 billion in lost tax dollars alone per year.
The tobacco is purchased from legal distributors, predominantly in North Carolina and Virginia. It’s then driven up into Canada through upstate New York in large quantities of what is known as ‘finecut’ tobacco, meaning it’s sold by the pound and is ready to be rolled by a manufacturing machine.
According to Fournier, over the last 15-20 years there has been a shift from importing finished tobacco products (already rolled and packaged) to importing mostly finecut tobacco that is later distributed to illegal manufacturers in Ontario and Quebec.
“When it comes to manufacturing illegal tobacco products? You probably have four or five First Nations communities that manufacture illegal tobacco, so it’s not fair to say it’s a First Nations issue, it’s less than 1%.”
The most common way it passes through the Canadian Border Security Agency is by being misdeclared as something else.
“Most of the illicit manufacturers are located in Ontario and in the province of Quebec, well not most, all,” said Fournier. “I know some are on some First Nations territories and there is a misconception around that.”
“Sometimes in law enforcement and the public in general, the misconception is that First Nations manufacture tobacco products, but when you break the numbers down, in Canada we have roughly two million people that have First Nations status spread across 619 communities across the country, representing over 50 different nations.”
“When it comes to manufacturing illegal tobacco products? You probably have four or five First Nations communities that manufacture illegal tobacco, so it’s not fair to say it’s a First Nations issue, it’s less than 1%.”
Another drastic misconception is the notion that anyone can purchase tobacco products on a reserve legally, that is not the case. Only tobacco products which have been government approved with what is known as the ‘peach stamp’ are for legal purchase.
Anything else is illegal. In other words, a clear plastic ziploc bag of 200 unmarked cigarettes should be a dead give away.
“From a political perspective it is a very sensitive issue. It’s more of an issue of organized crime using First Nations territories to facilitate the commission of their crimes,” said Fournier.
The specific “door of entry” at the border from the US into Canada is largely controlled by the Italian mob, operating out of Montreal. Fournier said it’s important to stop the flow of finecut tobacco at the door of entry, before it makes its way onto a First Nations’ territory, because it removes the political element from prosecution. It’s what Fournier calls an ‘upstream’ bust.
The Italian mafia provides its carriers with CTPAT (Customs Trade Partnership Against Terrorism) clearance with trucking companies, false paperwork and the name of a company that, at least on paper, actually exists.
A pound of tobacco purchased legally in North Carolina for $2 can then be resold across the border for $9-10 per pound.
It’s a lucrative racket, one that Fournier calls ‘low risk, high reward.’
The penalties for being caught trafficking a load of illegal tobacco are far less severe than that of drugs or weapons.
While provincial police in Quebec and Ontario are doing what they can, they don’t have the resources to keep up with the ever-growing market.
Online, the illicit tobacco’s trade only makes matters more complicated. Catching someone red handed with a truckload of finecut is what Fournier would consider a ‘slam dunk case.’
“From a political perspective it is a very sensitive issue. It’s more of an issue of organized crime using First Nations territories to facilitate the commission of their crimes.”
However, when the “suspect is in the U.S., the cell phone in Mexico, the server in Europe and the product is being shipped from Asia, it’s unlikely that law enforcement will tackle it and even less likely that there will be prosecution in the end,” said Fournier.
The concept then becomes ‘stop the infraction, don’t stop the individual,’ which as Fournier points out, can sometimes be a difficult pill for law enforcement to swallow.
Unfortunately, the reality is that far more heinous crimes occur online every day like child pornography, human trafficking and gun smuggling, without the proper resources to keep up.
The best option for now is to stop the infraction through partnering with online sales platforms like Kijiji, VanSky, Craigslist and Facebook Marketplace.
Although these platforms don’t have the resources to track illegal tobacco sales they have agreed to let Phillip Morris International monitor their platforms and alert them about users who are doing so.
Once flagged by the company, the platforms will remove the page and user and while this doesn’t lead to prosecution, it does stop the infraction.
“It’s a whack-a-mole game,” said Fournier.
For the time being, the best way to curtail the illicit tobacco trade is to raise awareness across various sectors of government, law enforcement and the general public.
In September, the Convenience Industry Council of Canada published a report that revealed sales of legal tobacco have been on a downward trend since 2019 in tandem with the skyrocketing illegal tobacco market. This influx is costing the federal government billions in lost taxes every year.
Fournier’s message to people is simple: if you’re supporting illegal tobacco, you’re supporting organized crime and everything that goes along with that enterprise.
