Ontario group says 'contraband' cigarettes are rising sharply
For years, some have argued that New York State's convenience stores are at a disadvantage when it comes to cigarette sales because Native American shops need not charge the same taxes as non-Natives are required to do. Across the border in Ontario, a convenience store advocate says their problem with "contraband cigarettes" is similar, skyrocketing and will only get worse.
Untaxed cigarettes and lost revenues are just as much a problem to Ontario's convenience store owners as they are to many Western New York shop owners. But an advocacy group for an estimated 6,500 stores throughout the province says it's getting worse and only shows signs of increasing in the new year.
The Ontario Convenience Stores Association recently completed its annual study of 'contraband' cigarette use in the province. OCSA CEO Dave Bryans explained to WBFO that their process is unscientific: they collect used butts from high-traffic smoking areas such as malls, high schools, race tracks, casinos and the exteriors of hospitals. They then inspect the butts for the subtle markings that reveal which were produced in compliance with government rules and which are not.
The rates of the latter have rapidly increased over the past two years.
"In 2014, I believe it was 22 percent. In 2015 it was 24.6 percent and the shocking number this year of 32.8 percent," said Bryans. "It's a continued growth line, even though our political masters say they're doing something to fix it."
Many Ontario smokers are turning to Native tobacco products, as many Western New Yorkers do on this side of the border. A carton of cigarettes costs about $100 in Ontario. Bryans says contraband cartons range in price from $15 to $37. depending on the production facility.
Smuggling cigarettes into Canada from the United States remains a problem as well, Bryans says, with runners delivering the product at crossing points including the Thousands Islands, from Massena into Cornwall and from the Kahnawake Reserve into Quebec.
Bryans expressed frustration that his American counterparts seem unconcerned when the contraband is heading out of the United States and flooding the Canadian market. He also hints that the problem will only get worse when 2017 arrives.
"Keep in mind, in Ontario starting January 1 we have a menthol ban," he said. "So all the menthol smokers, about another five percent of the population, will be racing toward the Reserves."
Bryans says there are about 2,000 fewer convenience stores throughout Ontario than ten years ago.
He also warns that what is happening with illegal tobacco could also happen when another product, marijuana, hits the market. The Canadian government is slowly moving toward legalizing pot, and Bryans believes it wouldn't take long for those making illegal cigarettes to begin producing untaxed marijuana.
"If you even drove into Toronto today, you'd be shocked by how many many marijuana shops are already up and running," he said. "And they're all illegal."