With criminals reportedly selling illegal tobacco products outside their stores and membership dwindling, the Ontario Korean Businessmen’s Association is reigniting its "Save our Stores" campaign in the lead up to the provincial election.
OKBA president Kenny Shim, who stepped into the role in November, told reporters this morning that membership has fallen to 900, from a high of 2,700. Convenience stores across the province are closing and he wants Ontario’s next government to help do something about it.
While there are a number of challenges the channel faces, from minimum wage hikes to regulatory red tape, skyrocketing hydro bills and a lack of beverage alcohol at convenience, one issue that continues to plague operators is unregulated tobacco sales.
“Today, many of our members are barely hanging on,” says Shim. “Many of our store owners will be forced to close.”
He was joined by OKBA business development manager, Brian Lee, whose family has operated a convenience store in Orillia, Ont. since 2000. “My parents… will close at the end of April because their sales are decreasing and the most impact is because of tobacco,” says Lee, who believes many customers are now buying tobacco products from nearby reserves.
Shim is calling on Ontario’s next government to follow in the footsteps of Quebec and invest in cracking down on the sale of contraband tobacco. He emphasizes that organized crime groups often profit from contraband tobacco and they don’t follow the rules in terms of age restrictions.
In addition, all Canadians lose out on uncollected tax dollars associated with the legal sale of tobacco and related products. OKBA says every year the provincial and federal governments loses more than a billion dollars in tax revenue, while convenience stores experience hundreds of millions in lost sales revenue when customers buy unregulated tobacco products.
C-stores enjoyed a momentary reprieve during the early months of pandemic-related restrictions because it was more difficult for people to access contraband tobacco.
Data collected from retailers shows that legal cigarette sales peaked in June 2020, representing a 24% increase over sales in this same period of time in 2019, according to a study conducted for the Convenience Industry Council of Canada by Ernst & Young LLP (EY). When on- reserve stores and cigarette factories re-opened in July, legal sales plummeted back down to pre- pandemic levels.
READ: Legal tobacco sales spiked during COVID-19 restrictions: Study
Shim wants to see more money for law enforcement agencies dedicated to contraband and is pushing to modernize the Tobacco Tax Act so that all levels of law enforcement can seize and charge those selling illegal and unregulated product.
“Our members play by the rules and always follow the ever-changing regulations that our government asks us to enforce,” says Shim. “Our members take the responsibility of selling age-restricted products very seriously.”
The OKBA, though its Save our Stores initiative, is encouraging store owners to speak up and let government officials know how big the contraband problem is and how urgently it needs to be addressed.
“We want the government to take more action… at least stop the people selling right in front of my store,” says Shim, who operates Busy Bee King Mart on King Street West in Toronto. “We keep losing business and we don’t want to end up losing all our members."
For more about that convenience operators can do, visit Save our Stores.