The illegal cigarette industry in Western Canada is booming. Why?

With illegal tobacco products becoming more ubiquitous in Western Canada, police agencies are ramping up efforts to confiscate and charge people taking advantage of the illicit trade that is fuelling organized crime.

Rick Barnum, the executive director of the National Coalition Against Contraband Tobacco and former Ontario Provincial Police deputy commissioner, said the illegal tobacco trade is a billion-dollar industry.

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“We believe, as governments continue to tax and crack down on legal cigarette sales, they’re driving more people to the black market and buying contraband cigarettes,” said Barnum. “There’s not a lot of activity by some governments across the country to counter that.”

In the last few years, Barnum said tobacco products on the black market has grown significantly.

For example, a carton of legal cigarettes costs about $150 on average. A carton of contraband cigarettes is about $40, said Barnum.

“The challenge that exists for tobacco smokers essentially, is the price.”

While saving more than 50 per cent by buying illegal cigarettes, Barnum said there is a heavier price to pay.

“You can’t get more direct support of organized crime than buying contraband cigarettes,” said Barnum, adding that there are about 150 organized crime groups selling contraband tobacco to support endeavours in other illicit commodities.

Troy Savinkoff with Alberta RCMP said the purchasing of illegal cigarettes is essentially defunding the province.

“It undermines legal tobacco sales with the province … That tax revenue is used to pave roads, pay for schools and hospitals,” he said. “So that illicit sale does have a direct effect on the communities we live in.”

Purchasing illegal cigarettes also puts a strain on convenience stores, said Barnum, with a large portion of their revenue coming from legal tobacco sales.

Some convenience stores have resorted to selling illegal tobacco in order to keep up with the market.

But Savinkoff says the biggest concern police have is with the organized crime aspect.

“We are seeing unstamped tobacco in the hands of drug dealers, straight and simple,” said Savinkoff. “They’re selling it hand in hand.

“When we’re conducting search warrants regarding illegal drugs, we quite often are seeing unstamped tobacco with seizures that include methamphetamine, fentanyl and so forth.”

Peter Bruni-Bossio, with the Alberta Gaming, Liquor and Cannabis (AGLC), said with the sale of illegal tobacco, organized crime groups reap the benefits with little risk.

“It’s not like selling a kilo of cocaine where the repercussions are going to be a lot more harsh than getting caught with the same value of tobacco,” he said.

Bruni-Bossio is a senior manager in charge of investigations in northern Alberta, operating several teams that deal with criminality under AGLC. He said in the 2020-21 fiscal year, the agency saw 18,000 cartons of contraband tobacco seized. In 2024-25 that jumped to about 240,000 cartons seized.

Because of the increase, Bruni-Bossio said they’ve changed their investigative efforts to target importers and higher-level criminals involved in the trade by working with law enforcement partners across the country.

Where are the cigarettes coming from?

Most contraband cigarettes are coming from First Nations in Quebec and Ontario, said Barnum.

“This is not an Indigenous issue,” he said. “If it was truly an Indigenous issue, we’d have perfect drinking water in every Indigenous community in the country and proper housing and everything.”

Barnum said organized crime groups have infiltrated certain individuals, making partnerships that give the groups access to the supply.

Indigenous communities and producers are licensed by the federal government to produce a certain number of stamped and packaged cigarettes for sale.

The cigarettes that are being seized are unstamped and are being produced after hours and sold to organized crime groups by a few individuals who have “lost their way,” said Barnum.

Australia, New Zealand also seeing rise in crime connected to contraband tobacco

While the price of cigarettes in Canada has contributed to its success on the black market, other countries are seeing worse impacts as they impose stricter legislation on smoking.

New Zealand, for example, implemented a generational smoking ban in 2022, stopping anyone born after 2008 from legally buying cigarettes. It was repealed last year before coming into effect after the newly-elected conservative government said the ban would likely cause a black market to emerge.

But Barnum said the black market has already emerged in both New Zealand and Australia, where some of the most stringent tax policies on tobacco products are in place.

“We don’t have the same level of violence directly involved that they have,” he said. “But they would be the two places that I find the most comparable to what we have going on in Canada, but a bit more extreme.”

He said he’s seen reports of the use of fire bombs in connection to black market tobacco.

A pack of legal cigarettes in Australia and New Zealand typically costs around $40.

Seizure efforts

While police are making more seizures of illegal tobacco, Barnum said there could be more done to slow down the market at a local level.

In Quebec, if an individual is caught transporting contraband tobacco, the fine is equivalent to the amount of the driver’s vehicle, he said.

Fines are also connected to driver’s licences like a demerit system.

“There are things that we can do at a provincial level and don’t have to wait for the federal government to change the Criminal Code,” said Barnum.

Although the low price of illegal cigarettes is essentially sustaining the black market, Barnum said lowering the price of legal tobacco products isn’t the move.

“I am not really sure that you could decrease the taxes enough to make a significant impact nowadays,” said Barnum, adding that the better thing to do would be to not put anymore taxes on cigarettes until police get a handle on the contraband market.