The Convenience Industry Council of Canada says the border closure between Quebec and New Brunswick may have helped choke off the illegal tobacco trade in Atlantic Canada.
An Ernst & Young report conducted for the CICC says the so-called Atlantic bubble erected to limit the spread of COVID-19 could explain why legal cigarette sales jumped in the region.
“We’ve always known (illegal sales were) a big problem in Ontario and Quebec, but I think what this really showed was you had another factor for Atlantic Canada, which was, essentially, the closure of the border,” council president Anne Kothawala said in an interview Monday.
While the sale of legal cigarettes rose more than 20% across Canada in the period studied, the highest increase was seen in the Atlantic provinces, the study found.
Comparing figures from June 2020 to those in June 2019, Prince Edward Island saw a 47% increase in legal cigarette sales, while New Brunswick and Newfoundland and Labrador both saw increases of more than 44%.
The study published Monday found legal sales in Nova Scotia were 21% higher in June than a year earlier.
The report says that before the COVID-19 pandemic, little was known about the extent of the illegal cigarette market in the Atlantic provinces.
Atlantic travel restrictions may have prevented or discouraged carriers from making trips into the region to supply underground sale networks, the study says.
Since tobacco taxes are much lower in Quebec, traffickers have been known to use New Brunswick as the gateway for illegal cigarette trade into the Atlantic provinces, allowing contraband to trickle through to Nova Scotia and P.E.I., Kothawala said.
She said her organization decided to embark on the study after some of its members reported an uptick in legal sales.
She suspects the effects of the border closure between New Brunswick and Quebec will linger until the end of the year and retailers will continue to see higher rates of legal cigarette purchases in the region.