FOR IMMEDIATERELEASE

November20,2024 (OTTAWA) – Organized crime, trafficking in drugs, guns and tobacco, are cashing in on Canada’s growing contraband tobacco market, racking in almost $1.3billion– shuttering law-abiding retailers in the process.

A new study conducted by EY Canada, commissioned by the Convenience Industry Council of Canada (CICC) finds the illicit tobacco market is booming, and in some cases surpassing legal sales, harming Canadians, small businesses and government revenues.

Using sales data of legal tobacco products between 2019 and 2023, the new report estimates the illegal tobacco market, controlled by organized crime, is enormous – and growing. Contraband tobacco now accounts for 29 per cent of the market in Alberta, 38 per cent in Nova Scotia, 45 per cent in Manitoba, and an unbelievable 52 per cent in New Brunswick.

That means that in those provinces, at least 1 in every 4 cigarettes sold, are sold in the illegal, unregulated black market. Only in Quebec, which has taken serious action to crack down on the booming illegal market, does that number sink below 20 per cent.

The study estimates that in 2023 alone, these five provinces lost a combined total of $316 million in tax revenue.

In EY Canada’s second report released in September 2023, the market share of contraband cigarettes in the country’s “hot spots” accounted for as much as half in Ontario, 45 per cent in British Columbia and 44 per cent in Newfoundland and Labrador, reinforcing the pan-Canadian nature of the problem.

“The illegal tobacco industry isn’t a victimless crime,” said Anne Kothawala, President and CEO of the Convenience Industry Council of Canada. “Contraband costs us all and is taking money out of the pockets of law-abiding Canadians.”

In a recent media report, RCMP Insp. Etienne Thauvette states, “Contraband tobacco remains a significant revenue stream for organized crime and individuals looking to profit from this illegal underground industry, undermining public health and depriving our communities of vital tax revenue that supports essential services.” Revenue from contraband tobacco “often supports organized crime activities such as drug trafficking, human trafficking and firearms smuggling.”

Addressing illegal tobacco is not just smart economics, it’s necessary for public safety. It also must be addressed to avoid rapid corner store closures; 1.5 stores are shuttering in Canada each day.

To help solve this growing crisis, CICC recommends the following:

• Increasing resources and funding to support police in their e4orts to crack down on illegal tobacco networks and put an end to the contraband epidemic;
• Increasing enforcement and penalties for those caught with illicit tobacco;
• Increasing federal – provincial coordination between law enforcement; and
• Disrupting the online illicit market, which accounts for a significant amount of illegal tobacco and nicotine products sold to young people.

The Impact of Contraband Tobacco on Legal Sales and Government Tax Revenues is the third study conducted by EY for CICC since the pandemic and demonstrates the pervasiveness and rapid growth of illicit tobacco across the country.

About the Convenience Industry Council in Canada

The Convenience Industry Council of Canada (CICC) is an association that brings together retailers, distributors and manufacturers that sell a variety of products in convenience stores across the country. Our mission is to advance the interests of the convenience industry through e4ective advocacy and education. We are proud to represent an industry that contributes more than $25 billion in taxes, employs 188,000 Canadians and brings convenience to communities from coast to coast. We reflect the communities we serve and o4er opportunity to new Canadians.

Contact:

Jeff Brownlee

VP Communications & Stakeholder Relations
Convenience Industry Council of Canada (CICC)
(613) 795-7454
jbrownlee@convenienceindustry.ca