JTI-Macdonald launches campaign to combat illegal tobacco in Canada

In an effort to educate Canadians about and combat against the growing sale and use of contraband tobacco products in Canada, JTI-Macdonald, a tobacco company operating in Canada for over 150 years, launched its Know What You’re Buying?, a digital campaign targeting the illegal tobacco industry.

In September 2023, the Convenience Industry Council of Canada (CICC) along with EY Canada, published its Impact of Contraband Tobacco on Legal Sales and Government Tax Revenues report, which focused on tobacco sales in the provinces of British Columbia, Ontario and Newfoundland and Labrador. The 80-page report found the size of the contraband tobacco market was as high as 69% in Ontario, 45% in British Columbia, and 44% in Newfoundland.

Upon the release of the study, the CICC wrote: “The uptick in illegal sales, which law enforcement agencies, including the RCMP, have previously noted are controlled by organized crime groups, directly corresponds with a sharp decline in the sale of legal products. Legal tobacco sales are down 33% in B.C., 20% in Ontario and a staggering 49% in Newfoundland.”

In Ontario, illegal cigarettes are one of the province’s fastest-growing industries and have become a major source of exports for the province. Illegal cigarettes manufactured in Ontario are smuggled throughout Canada and around the world. On December 16, 2022, the CBC reported that “retail organizations, merchants and tobacco industry officials estimate between 30 and 50% of tobacco sales in the province are contraband products, and they are calling on governments and police to crack down on the organized crime groups that sell them.”

Elaine McKay, head of corporate affairs and communications with JTI, told Convenience Store News Canada that about 10% of Canadians still smoke, which has remained relatively consistent over several years, while the revenues and monies generated for governments from tobacco taxes continues to fall. She says what is happening is that those Canadians who continue to smoke and use tobacco products have shifted from purchasing legal products to contraband products, fueling the rise in contraband tobacco.

The campaign looks to accomplish several things. The first is educating the public on what contraband tobacco is and how to identify it, from non-standard packaging, the lack of proper labeling demanded by law, security features, to even such things as cigarettes being offered with flavourings that are illegal in Canada. 

“When we talk to consumers, they are not even aways that [such contraband products] are illegal,” McKay said showing several cigarette packages that were clearly not to be sold in Canada, and a zip-lock bag filled with some 200 cigarettes that is available for purchase. “For example, these 200 cigarettes in this package, as you can clearly see it has not mandated health warnings on the package, no product information, and yet, Canadians will say they believed this packaging was legal.”

The other goal is to educate people about the costs associated to governments and the impact on communities from the contraband tobacco trade. For provincial governments in Canada, contraband tobacco brings about a significant and growing tax revenue hit to provincial coffers. In the province of Ontario, contraband tobacco brings a tax revenue loss of up to $1.7 billion, according to the CICC, EY Canada report. British Columbia, Ontario and Newfoundland and Labrador combined lost up to $2.47 billion in tax revenues over four years due to the growth in illegal tobacco sales.

McKay points out that loss of tax revenue impacts provincial programs that everyone uses. As well, the importation and sale of contraband tobacco often goes together with other organized crime that negatively impacts communities.

In a recent seizure of contraband cigarettes in British Columbia—where some 133,000 cartons with a total estimated retail value of $24 million were intercepted by federal investigators and the Mounties—it was discovered the illegal cigarettes were part of a larger criminal enterprise that was suspected of having links to cross-border cocaine smuggling and money laundering activities.

“What you see is illegal tobacco is not on its own; it is part of other illegal products that it is sitting along side it,” she says.

READ:  B.C. police seize $11M worth of contraband cigarettes along with guns, drugs

McKay adds part of the Know What You are Buying? campaign is also to push for greater efforts on the parts of all levels of government to crack down on the importation and sales of contraband tobacco, and for the enforcement of rules governing the sale of contraband tobacco, such as levying the fines that exist for purchasing such products. 

She points to Quebec where the province’s Acces Tabac program and Bill 59 provided resources and increased powers to local police and municipalities to crack down on contraband tobacco more effectively. The Acces Tabac and Bill 59 has helped drive down contraband tobacco sales in the province, and McKay says more provinces need to take a page from what Quebec has accomplished, or at the very least enforce the fines that already exist on the books.

Take Ontario, for example. Under the province’s Tobacco Tax Act, if someone is convicted of possessing unmarked cigarettes, they may be fined up to three times the tax on the unmarked cigarettes. That means a a fine of $100 if one is caught possessing 200 unmarked cigarettes or less; $250 for more than 200 unmarked cigarettes but less than 1,001; $500 for more than 1,000 unmarked cigarettes but less than 10,001; and a fine of not less than $500 and not more than $10,000 for more than 10,000 unmarked cigarettes.

“What a police officer in Quebec can do is not possible here in Ontario, such as seizing the [illegal] products that one may be selling out of the back of their car,” she says, adding that in Quebec they have lowered the incidents of the illegal trade significantly.

“I’ve worked in the tobacco industry for many years, and I’ve never seen anything like this,” McKay wrote in the release announcing the program. “Canadian governments are sitting on the sidelines while known criminal entities are taking over the country’s cigarette industry. They are undermining years of public health victories, costing billions of dollars a year in lost tax revenue, making it easier for youth to start smoking and giving criminals an easy way to get rich. What will it take for the government to step in?”