Cigarette smuggling rises in Canada

Cigarette butts lie in an ashtray outside a Montreal office building, Feb. 21, 2005. Over the last six years, the black market in cigarettes in Canada has made a comeback. (Shaun Best/Reuters)

TORONTO, Canada — Some years ago, in the heyday of cigarette smuggling, I found myself in a speedboat bouncing on the St. Lawrence River at 65 mph, heading to the Akwesasne Indian reserve that straddles the Canada-U.S. border.

Behind the wheel was a young French Canadian named Pierre, who described himself as a mid-size player in a billion dollar game. He smuggled 275 cases of cigarettes a week, each case filled with 50 cartons of smokes. In six months, he had made $100,000. (Note: Money in this story is in Canadian dollars.)

He set up our first meeting in a raunchy strip bar in Sainte Barbe, a small Quebec town on the south shore of the St. Lawrence. After a few beers he took me for a white-knuckle ride on the river, his speedboat bounding through the black void of a moonless night.

I passed some kind of a test: The next day, I was on a smuggling run for a story on the underground business. “If you mention my real name,” he said, “I'll end up at the bottom of the lake — and you're going to join me.”

On the Canadian side of Akwesasne, Pierre pulled into a waterway lined with tall grass. He stopped at a makeshift dock, where one of his employees waited in another boat.
Minutes later, a van blaring rock music and an SUV with tinted windows backed up to the dock. Three young aboriginal men stepped out, opened their trunks and filled the two boats with 34 cases of Rothmans, Mark Ten and Export A — each case stacked with 400 packs of contraband smokes.

For some reason, the aboriginal in charge of the operation then threw a smoke bomb in the water and laughed hysterically as smoke billowed. Seemed to me a great way to attract cops. A wad of money exchanged hands.

Pierre sped back to the Quebec side of the shore and unloaded the cigarettes into a waiting van for distribution in Montreal. From start to finish, the operation took less than an hour.

“Now you're a smuggler, too,” he said to me, before heading off for another run.

Smuggling slowed down in the late 1990s after the Quebec and Ontario governments cut taxes, thereby significantly reducing the price of store-bought packs. But in the last six years, the illegal trade has come back with a vengeance.

The black market in cigarettes is believed to be a $1.5 billion industry in Canada. The Ontario government estimates that half of all cigarettes sold in the province are illegal. In neighboring Quebec, that number is 40 percent. Contraband smokes cost the federal and provincial governments more than $2 billion in lost taxes.