Government Failure to Tackle Contraband Tobacco Highlights Double Standard Around Proposed Regulations for Marijuana
The latest contraband study, conducted on behalf of the Ontario Convenience Stores Association (OCSA), reveals that the volume of contraband tobacco being consumed by Ontario residents continues to rise at an alarming rate in every region across the province. The study finds that illegal cigarettes now account for 37.2% of all cigarettes smoked, up 13% from the previous year – and up 67% from only four years ago.
Other Key Findings
• The highest contraband use was in Northern Ontario, where illegal cigarettes account for 60.4% of all cigarettes smoked – up from 54.2% last year. The highest contraband levels were found in Sault Ste. Marie (86.4%) and North Bay (75.7%).
• Southwestern Ontario showed the highest increase in contraband levels – up from 26% in 2016 to 33.9% this year – and is now the second highest contraband territory in the province. The highest contraband levels were found in Brantford (49.9%) and Kitchener-Cambridge (36.3%).
• In the GTA, contraband levels rose from 21% last year to 22.9% this year, with the highest contraband levels found in Oshawa (34.7%).
• In Eastern Ontario, contraband levels climbed from 29.3% last year to 33.2% this year. The highest contraband levels were found in Bellville (46.1%).
• In terms of locations where illegal cigarettes are found, high schools reported the biggest year-over-year increase in contraband levels – a 5% rise from the previous year
How The Study Was Conducted
The study, conducted by the firm WrightOn Field Marketing during the month of September, involved collecting and analyzing 18,816 cigarette butts found in 135 public smoking areas spread across 23 regions in Eastern Ontario, Southwestern Ontario, Northern Ontario and the Greater Toronto Area (GTA). A wide range of locations were selected, including schools, government and office buildings, retail stores and food outlets, hospitals, recreational facilities and GO Train and other public transit stops.
This marks the tenth year in a row that the OCSA has conducted the contraband study, considered one of the most accurate diagnostic tools for measuring the share of illegal cigarettes sold in Ontario.
The continued spread of illegal cigarettes poses a number of serious social and economic problems, including:
Government policies are making illegal tobacco products more popular
• Repeated government tax hikes mean the retail price gap between legal tobacco and contraband tobacco continues to widen, making illegal cigarettes financially more attractive, particularly to lower-income residents and minors.
Organized crime and the black market profit while legal businesses lose
• Organized crime groups are actively involved in the distribution and sale of illegal cigarettes and profits from contraband tobacco are being used to fund other criminal activities that pose a threat to Ontario communities.
Government inaction results in the loss of badly needed tax revenue
• The provincial government is forfeiting hundreds of millions of dollars per year in tax revenue while legal vendors such as convenience store owners in Ontario are losing over $1.1 billion per year as a result of sharply declining in-store sales of tobacco.
According to Dave Bryans, CEO of the OCSA, “The rapid growth of contraband tobacco has meant increased profits for organized crime at the expense of hundreds of small businesses like convenience stores who are losing more than $1.1 billion in legal sales each year. It’s time for the Ontario government to realize that every time they increase taxes on legal tobacco, more smokers turn to the black market.”
Adds Bryans: “The Ontario government has already announced plans to increase tobacco taxes again in their next budget. Our members are demanding the government reconsider the schedule of these tax increases until we have effectively dealt with the growth of contraband tobacco in Ontario. The government has stated that it intends to avoid overly expensive pricing for marijuana in order to prevent the growth of illegal sales. The same standard should apply to tobacco as well.”
For more information contact the Ontario Convenience Stores Association at 905-845-5152.