Alberta Gaming, Liquor & Cannabis says two men have been charged after it seized $2.3 million in contraband cigarettes and cigars.
The agency says a warehouse was searched in north Edmonton with the help of police after a six-month investigation.
It says the potential lost tax revenue is estimated at more than $797,000.
Mihvan Shekho Salih of Calgary and Hussein Jamaah Abbo of Edmonton have been charged with trafficking in contraband tobacco.
Contraband tobacco is described as any product that does not comply with federal and provincial laws related to importation, marking, manufacturing and payment of duties and taxes.
The agency says that on top of lost revenues, illegally manufactured products can also pose public health and safety risks because they lack regulatory controls and inspections.
The two men are to appear in Edmonton provincial court on April 8.