Organized crime cashes in on illegal smokes

It’s a huge new revenue stream for organized crime in B.C.

Trafficking in illegal cigarettes – big business for many years in Central Canada. – has moved west, a conference in Kelowna heard on Saturday.

“We have seen in the past two to three years a huge increase in the presence of contraband tobacco in British Columbia,” said Danny Fournier.

Fournier and Ron Bell with Rothmans, Benson and Hedges were featured presenters at a B.C. CrimeStoppers conference at the Ramada hotel. Both are former police officers now in charge of illicit trade prevention for the tobacco company.

They’re fighting back against a multi-million-dollar illegal industry. It’s a difficult battle when legal smokes cost $135-$180 a carton, but 200 cigarettes sell on the black market for $35.

Twenty-five to 30 per cent of cigarette sales in B.C. are the illicit kind, said Fournier.

Massive cigarette busts used to be something British Columbians would read about in Ontario and Quebec, but now it’s happening here.

Last week, West Kelowna RCMP seized 30,000 packs of cigarettes, along with illegal cannabis, weapons, cash and money-counting machines. Police suggested this was part of a sophisticated cigarette trafficking operation.

In January, 1.5 million contraband cigarettes were seized in Vernon.

In February, B.C.’s gang police seized many kilograms of drugs, 34 firearms, illegal weapons, numerous cars and 3,000 cartons of cigarettes in Dawson Creek. Twenty-three people were arrested.

“People get killed over that,” said Fournier, describing investigations that involved violence and murder. “It’s a huge, huge, huge business. You cannot have a huge business like this without this happening.”

“When organized crime gets involved in any trafficking of any commodity, they will always bring violence to your communities,” he said. “They always have, they always will.”

Bell, a recently retired Manitoba investigator, described how the illegal market has grown in his province.

“Ten years ago, it was big deal when we got close to seizing a million cigarettes in a year and we were losing $1 million a month (in tax revenue). When I retired from the province last month, we’re now at about $30 million a year in lost revenue and the last fiscal year, Manitoba seized over seven million cigarettes, so it shows you how it’s just growing and it’s just getting worse.”

Criminal gangs see illicit cigarettes as another way to make money, Fournier said.

“What’s contraband tobacco to organized crime? It’s low risk, high profit, and the most important, it’s just another commodity. They don’t care what the commodity is. If you can make money off any commodity and there’s a poor regulatory environment, high tax, high demand for the product, and poor enforcement, they would jump into that commodity and make a business of it.”

Illicit cigarette sales in B.C. have taken off in recent years, but “it’s always been here,” said Bell. “There has to be a happy balance between taxation, the desire and the savings with illegal tobacco. Taxation doesn’t always mean people are going to stop smoking. People will find something.”

So how can you tell contraband smokes from legal ones?

Colourful packaging is one giveaway, said Fournier. Tobacco companies are required to use plain packaging.

Cigarette packs are supposed to have excise tax stamps. Most illegal ones don’t.

Legal manufacturers are regulated and their factories are spotless. Not so for the illegal factories.

“We’ve sent them for analysis. We’ve found mice feces, spider mites, pieces of woods, loads of dust bunnies,” said Bell. “There’s no quality control.”

Legal cigarettes are required to self extinguish when not in use.

“None of the contraband tobacco products have that safety feature,” Fournier said.

The speakers cited a 2018 study by the London, Ont., fire department that found contraband cigarettes, without the self-extinguishing features, were connected to recent house fires.

Contraband cigarettes may also be more addictive.

“The nicotine content in an illegal cigarette in some cases will be twice the limit that is allowed by law,” said Bell.

The RB&H investigators report all posts selling illegal cigarettes to website operators. It works, but it’s a game of whack-a-mole, Fournier admitted.

“We flag every post. Everything we flag on these social media platforms is taken out within minutes sometimes.”

Online sales are increasing. And if Ottawa bans flavoured vapes, they too will move to the illicit online market, he said.

Illicit manufacturers smuggle in tobacco from North Carolina, make the cigarettes in Ontario and ship them across Canada.

“When it comes here to B.C., it’s the finished product,” said Fournier.

Often, manufacturing is done on First Nation land, but Fournier said this is not a First Nation issue.

“It is first and foremost an organized crime issue. Organized criminal elements use some First Nation territories to facilitate the commission of their crimes.”

Indigenous police do best they can, he said.

Illegal sales are difficult to measure, but tobacco companies can tell it’s hurting their business, Fournier said.

Statistics are kept on how many Canadians smoke, how many don’t and how many quit.

Sales are dropping faster than people are quitting.

“It’s quite a dramatic loss,” said Fournier.

The ex-cops weren’t defending smoking.

“We know cigarettes are bad,” said Bell. “And everybody wants everyone to stop smoking. We’ve made a commitment in the company, in 2035 — smoke free.”