Illicit tobacco trade discussed at Ontario’s latest budget committee
Illicit tobacco trade discussed at Ontario’s latest budget committee

Ontario held its Standing Committee on Finance and Economic in Cornwall on Thursday where Rothmans, Benson & Hedges Inc. made recommendations to curtail the ever-growing illicit tobacco trade in Canada.

The annual meeting allows consultants to weigh in on Ontario’s upcoming provincial budget.  

It’s estimated that the contraband tobacco market represented up to $1.7 billion in lost provincial tobacco tax revenue from 2019 to 2023.

Head of External Affairs for RBH Kory McDonald spoke before the Legislative Assembly committee to present recommendations for the 2024 Budget, focussing on how best to combat contraband tobacco.

Ontario’s illicit tobacco trade accounts for anywhere between 39% to 50% of all cigarettes smoked in the province, according to data from the Convenience Industry Council of Canada.

Products are facilitated by organized crime syndicates and the profits help to further fund their other criminal enterprises like human trafficking and the sale of weapons and harder drugs like fentanyl.  

The underground trade also increases the risk of youth’s access to tobacco as sellers have no incentive to ID underage customers. 

McDonald recommended that the Ontario government “increase penalties in the Tobacco Tax Act to disincentivize the manufacture, distribution and sale of contraband tobacco products.”

“Without action, Ontario’s 1.5 million adult smokers will continue to face barriers to accessing potentially less harmful alternatives. Governments should acknowledge harm-reduced product categories within the Tobacco Tax Act to encourage adult consumers to switch to potentially less harmful alternatives to cigarettes These modest steps could make a huge difference in protecting Ontarians from organized crime, increasing provincial tax revenue and helping curb youth access to tobacco and nicotine products,” said McDonald.

Among the recommendations presented were the launching of a public education campaign to outline the rules of purchasing contraband tobacco products, increasing police abilities to inspect vehicles suspected of trafficking and assigning Ministry of Finance investigators to monitor and report the illegal tobacco trade online.

“It’s a big business, especially for organized crime,” Danny Fournier, Manager of Illicit Trade Prevention for RBH told True North in an exclusive interview last fall. 

“These are common sense steps that can have a big impact in terms of slowing the continued growth of the contraband tobacco market and keeping Ontarians safe. As well, there’s a need for governments to address the fast-growing issue of online illicit trade and establish their own online detection and interdiction program. While this space represents a clear threat it can also be a great opportunity to have better cooperation between government and private sector,’ said Fournier.

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