Sales of counterfeit cigarettes are rising in Canada, despite fewer people smoking, and advocates are calling for reform to stop the trade and ensure applicable taxes are paid.
An interprovincial drug bust on Wednesday was said to be the largest in Manitoba history.
The seizure included 1.35 million illicit cigarettes, as well as hundreds of kilograms of methamphetamine and cocaine following a coordinated effort involving the Winnipeg Police Service, Alberta RCMP, and Ontario Provincial Police (OPP), among others.
Such interprovincial efforts are necessary in managing the trade of these cigarettes, Rick Barnum, the executive director of the National Coalition Against Contraband Tobacco, told Global News.
“Illicit cigarettes, in the Canadian context, is a multi-billion-dollar business — absolutely run and controlled by organized crime at the highest levels,” said Barnum, who was formerly the deputy commissioner of the OPP’s investigations and organized crime command.
“The profit margin is gigantic. I mean a carton of contraband cigarettes sells for about $40. A carton of legitimate cigarettes (would) be about $150 or $160. The reason that product exists is essentially right there in the price gap.”
The primary issue with illegitimate cigarettes is unpaid tax revenue, Barnum said. The cigarettes confiscated on Wednesday were worth $400,000 in uncollected taxes, according to a news release from the Winnipeg Police Service.
Anyone selling, transporting, distributing, or delivering non-permitted tobacco can face up to five years in prison, according to the Criminal Code of Canada.
A recent KPMG LLP study said $2.1 billion of tax revenue went unpaid due to people opting for the tax-free, counterfeit and contraband alternatives.
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“That’s the real issue here. I think people that smoke or use contraband tobacco or cigarettes don’t really understand it that way (and) even if they did, I’m not sure that would make a difference because the price difference is pretty strong in today’s economy,” said Barnum.
Taxes collected from cigarette sales are used for general government revenue, funding hospitals and other public initiatives.
“When (the money) goes to organized crime, it goes to their general spending and wherever that money gets spent from there. Whether it’s importing young girls, or buying more cocaine or methamphetamine, or fentanyl, whatever,” he added.
KPMG’s study found 38.3 per cent of smokers opted for counterfeit and contraband options in 2025. This figure is up over three per cent when compared to 2021, despite the overall number of Canadians who smoke decreasing, according to the report.
“The illegal production and distribution of contraband tobacco is not a victimless crime. It fuels organized crime and poses a threat to public safety. These operations are often controlled by sophisticated criminal networks that view it as a low-risk, high-reward enterprise,” Chief Supt. Mike Stoddard of the OPP’s organized crime enforcement bureau told Global News in a statement.
An OPP-led Contraband Tobacco Enforcement Team (CTET) works alongside other police forces in Canada, and beyond, to prevent this cross-border trade.
In Ontario, $15.6 million worth of illicit cigarettes have been seized by the OPP so far in 2026. By the end of last year, over $54.7 million worth of cigarettes were seized in total by that service.
That figure was up significantly when compared to 2021 and 2022. Both years saw seizure sums in the hundreds of thousands of dollars, according to data from the provincial police.
“Investigations led by the CTET have found these illegal operations can exploit vulnerable individuals,” Stoddard added.
The KPMG report also found countries with large, high traffic, land borders tend to see the most trafficking of illegal cigarettes happen on land.
“The risk is likely to be higher in markets with high-frequency land border movement (like Canada and the United States) than in markets where international travel is more predominately by air,” the report reads.
It explored the impacts of illicit cigarette trading in Canada and Latin America.
Barnum said tobacco is transported over the Canada-U.S. border, typically from North Carolina or Virginia, before the cigarettes are rolled north of the border.
Efforts to mitigate the trade of these illicit items are underway. The former Ontario police officer commended the efforts of Quebec’s ACCES Tabac group, whose title roughly translates to the Concerted Actions to Counter Underground Activities.
“There’s some good blueprints for success that already exist,” Barnum said.
“I always recommend that governments and towns (or) provinces look at what the Quebec model has been since 2009 from a policing context. They focused really hard on organized crime groups and continually had investigations going in that area.”
Barnum also suggested following in Quebec’s footsteps and asking people who are caught trading them to pay the taxes that otherwise would not have been.
“(In) recent seizures that have happened around the country, you can see contraband cigarettes tied in directly. So, it’s not something we’ve talked about for the last few years that may happen. It’s been happening and it’s continuing to grow,” he added.
The recent drug bust in Manitoba resulted in 33 people arrested and a total of 174 charges laid nationwide. Seven of the people facing charges pleaded guilty and were sentenced, with punishments ranging from three to 16 years, an inspector with the police said on Wednesday.
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