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Tobacco Industry: Canada The Kahnawake Advantage Page 2
Posted on Tuesday, October 23 @ 15:56:39 EDT by samantha |
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The Kahnawake Advantage
A contradiction over contraband
July 23, 2008
Steve Buist The Hamilton Spectator NEW YORK, N.Y. (Jul 23, 2008)
A Six Nations cigarette-maker fights to keep selling its products in the U.S., while black-market tobacco crushes the Canadian side of its business; Tobacco Road
It's a long way -- literally and figuratively -- from Chiefswood Road in Ohsweken to the Southern District of New York courthouse on tiny Pearl Street in the heart of downtown Manhattan.
It's a journey that Jerry Montour, the native CEO of Six Nations cigarette-maker Grand River Enterprises, has had to make on more than one occasion as he watches the wheels of American justice grind slowly on.
For the past six years, Montour and GRE have been fighting the attorneys general of 31 different U.S. states over GRE's ability to have its cigarettes sold south of the border.
The irony of GRE's American court battle is striking.
Two months ago, Montour appeared before a parliamentary committee in Ottawa and told members that the growing problem of contraband tobacco is crushing the Canadian side of his business.
In the U.S., however, GRE's products have been declared contraband and banned from sale in at least 21 states -- from Arizona to Wyoming.
The company launched its court case in 2002 to prevent the states named in the lawsuit from enforcing legislation that would put GRE's products on the contraband list.
For Grand River Enterprises, the stakes of the court case are huge.
In 2005, the company sold 3.6 billion cigarettes in the U.S., even though GRE products are only available in some states.
That's more than three times as many cigarettes as GRE sold in Canada that year.
The case has been highly contentious and, at times, acrimonious.
Hundreds of documents and thousands of pages of material have been filed in court over the years. The entire court file has to be wheeled out in a buggy when requested for viewing.
At one point, the exasperated judge was even forced to issue an order prohibiting the two sides from sending any more faxes to his office because the machine was overloaded with the back-and-forth exchanges between the lawyers.
The story starts in November 1998 with a landmark victory over major tobacco producers called the Master Settlement Agreement, known simply as the MSA.
The attorneys general for 46 states hammered out a tough agreement with the four largest U.S. cigarette-makers at the time, which required them to make annual payments in perpetuity to cover the present and future health-related costs associated with smoking.
More than 400,000 Americans die each year from tobacco-related illnesses, a lawyer for the U.S. National Association of Attorneys General told the court.
If an adolescent's tobacco use continues over a lifetime, that person has a 50 per cent chance of dying prematurely from smoking.
The agreement also included massive back payments to be made by the companies to cover health costs absorbed by the states in the past.
Over 25 years, the cigarette companies signing on to the agreement will end up paying an estimated $206 billion to the various states.
The MSA restricted advertising of tobacco products, provided funding for public education programs and required the cigarette companies to make public the millions of documents that were produced during the discovery phase of lawsuits involving the states.
In exchange for signing on, the cigarette-makers were released from any past or future lawsuits by the settling states.
Once the original agreement was reached, other cigarette manufacturers were also given the option to make an application to sign on.
Eventually, the agreement covered the makers of more than 99 per cent of the U.S. cigarette market.
Grand River Enterprises was not among the cigarette companies that signed on to the Master Settlement Agreement.
To prevent some of the smaller companies from trying to get around the MSA by not joining, the 46 states then enacted their own escrow statutes that required non-MSA manufacturers to deposit money into a trust account -- or escrow, as it's called.
The payments are based on a per-cigarette formula for all units sold by the company in that state and they're similar to what would be paid under the Master Settlement Agreement.
Like the MSA payments made by settling producers, this money could be used by the states to recoup health costs associated with smoking.
But some companies -- including GRE -- soon discovered a loophole in the escrow statutes.
The companies were required to deposit money into escrow for all of their sales in a state, but their actual escrow obligation would get recalculated under a complicated formula based on each state's share -- figured out down to the seventh decimal place -- of total cigarette consumption in the U.S.
Unintentionally, the statutes allowed companies to get rebates on their escrow payments if their share of cigarettes sold in the state was higher than the state's share of the national market.
What it really meant was that companies could put up more money at the front end than required and then receive a significant rebate.
What GRE and the other companies figured out was that if they loaded up all of their U.S. sales in just a few states, they could get back almost all of their escrow deposits.
In 2005, for example, court heard that GRE's escrow obligations for North and South Carolina were slightly more than $28 million, but $27 million of that would get returned to GRE.
The other important factor, especially for a native-owned company such as GRE, was that any cigarette sales that took place on a U.S. Indian reservation were exempt from the states' escrow payment laws.
In 2004, there were only five MSA states where GRE was selling cigarettes off-reservation.
In an Arkansas court case involving GRE, for example, the state's attorney general noted that GRE had taken advantage of the loophole to gain big refunds, which "permitted Grand River Enterprises to undercut competition, generate significant short-term profits and avoid its obligation to establish funds from which Arkansas could recover its medical assistance costs."
By 2005, the states had amended their escrow statutes to close off the loophole. No longer would companies be eligible for massive rebates, and tobacco manufacturers that didn't comply with their escrow payment obligations could find their cigarettes banned from sale.
In April 2006, less than two weeks before nearly $16 million in escrow payments was due, GRE decided it wanted to join the Master Settlement Agreement.
The Southern District of New York courtroom in Manhattan was called to order in a special session at one minute past 4 p.m. on Holy Thursday, April 13, 2006 -- an hour before the Good Friday long weekend was to start.
One hour earlier, GRE's lawyer showed up in Judge John Keenan's chambers seeking a temporary restraining order.
The company wanted to stop the states from enforcing their escrow laws against GRE and to prevent them from banning the sale of GRE cigarettes.
It was an ex parte motion, meaning that GRE was going to court without giving notice to the other side in the dispute.
"I was supplied with papers that are literally -- and I say literally, meaningfully -- literally 4 1/2 inches thick. Were I the greatest speed-reader in the world, I could not have possibly read this by now," an angry Keenan told the court.
"I was not a happy camper."
In two days, GRE would owe about $16 million to comply with escrow obligations, and if the money wasn't paid, the states would be in a position to declare GRE cigarettes contraband and ban their sale.
Within the first couple of minutes of calling court to order, the judge turned to Leonard Violi, lawyer for Grand River Enterprises.
"First question," said the judge. "How long have you known about the fact that money is due on Saturday, and if you don't pay that, you will be banned from selling cigarettes?"
The answer: GRE had known since mid-January, yet the company had waited until two days before the money was due to seek a temporary restraining order.
Ten days earlier, on April 3, 2006, GRE contacted the U.S. National Association of Attorneys General to request admission into the Master Settlement Agreement.
The letter was received by the NAAG on April 5, 2006.
In its accompanying letter, GRE said if it didn't hear from the group by April 7, it would take the silence to be a rejection of the application.
The lawyer representing the attorneys general later pointed out that it can take many months to review an application and carry out due diligence before a decision is made.
More importantly, he said, no tobacco company will be accepted into the MSA until it pays off all of its back escrow obligations and agrees to not challenge the legality of the agreement in court at some later time.
GRE hadn't paid off its escrow debts and the company had made it clear it intended to fight the legality of the MSA in court even if it was granted admission.
"By joining the MSA, we shouldn't have to give up our rights to be heard on whether or not the law is either constitutional or consistent with the federal antitrust laws," said Violi, GRE's lawyer.
The frustrated judge refused to grant GRE's temporary injunction and ordered everyone to return to court the following week to hear arguments and testimony under oath.
Throughout its six-year court battle in the U.S., Grand River Enterprises has suggested in documents that the company faces irreparable harm and imminent peril if the states get their way.
"My client's position is it's their last chance, their last hope," Violi told the judge. "They have been corralled."
In October 2004, GRE president Steve Williams filed an affidavit that painted a very grim view of the company's future if the lawsuit was to fail.
"During the last 18 months, Grand River has been able barely to survive," Williams said in his affidavit.
The states named in the lawsuit have "decimated (GRE's) ability to compete in the U.S. market" and their actions "are now choking off the sales venues for Grand River's products to the point that Grand River's existence is in serious jeopardy," he said.
"Grand River cannot and will not survive if it does not obtain legal redress," Williams said.
A delay of another year in obtaining a judgment would be "a further delay that Grand River simply cannot bear and remain in business," he added.
That was October 2004.
GRE's financial statements and court testimony suggest a different story, however.
In 2005 -- when the company was to be struggling to stay in business, according to Williams' suggestion -- GRE sold 3.6 billion cigarettes in the U.S.
That was a 50-fold increase over the company's U.S. sales in 1999. In fact, from 2004 to 2005, GRE's U.S. sales jumped by about 60 per cent.
Sales of one GRE brand in South Carolina alone went to 1.6 billion in 2005 from 44 million cigarettes in 2002.
In 2003, GRE paid nearly $24 million in management bonuses to its small group of seven shareholders.
In 2004, GRE's gross sales were $202 million, and about $23 million was paid to the shareholders in management bonuses.
In 2005, GRE's shareholders were paid an estimated $18 million in management bonuses.
When Montour, the CEO, took the stand for two days of examination on April 26 and May 1, 2006, he testified that the massive shareholder bonuses were paid out that way to take advantage of the owners' native status when it came to personal and corporate taxes.
Montour said that much of the estimated $65 million in shareholder bonuses in the previous three years was loaned back to the company by the shareholders to help keep the company operating.
But he also admitted that GRE's owners took at least $22 million of the bonus money out of the company for their own use.
On top of that, GRE also paid out $5 million in bonuses over five years to other company executives, including a $750,000 bonus to Peter Montour, Jerry's father.
Montour also testified that his salary as CEO of Grand River Enterprises at the time was $1,500 a week -- $78,000 a year.
"They don't live lavish," the lawyer for GRE told the court. "They don't, you know, have a high lifestyle."
In 2005, Montour and his wife spent $880,000 to purchase a 3,000-square-foot Mediterranean-style villa perched along the escarpment's edge on the west Mountain.
Montour subsequently demolished the house, obtained a $515,000 building permit in June 2006, and built a new house, reported to be 9,000 square feet in size, on the property.
The lawyer representing the attorneys general told the judge that the $16 million owed by GRE to clear up its escrow obligations was less than the $22 million taken out of the company in bonuses by the shareholders from 2003 through 2005.
He also told the judge he didn't understand GRE's rationale for trying to join the Master Settlement Agreement in the first place.
Joining the MSA would allow Grand River Enterprises to sell cigarettes in each of the 46 settlement states. But paying off the back escrow would also allow GRE to sell in every state.
To join the MSA, Grand River Enterprises would have to make back payments of $204 million, including $77 million alone for cigarettes sold on native reservations prior to 2005.
That's far more than the $16 million it would have cost the company to clear up its escrow debts outside of the MSA and be allowed to sell across the U.S., including on-reservation sales that weren't subject to escrow payments.
GRE's application to join the MSA "doesn't make sense," the lawyer for the 31 attorneys general told court.
"The states cannot look kindly on the application made by Grand River," he said. "In fact, we cannot conclude that it was made in good faith."
There were a number of other interesting financial details about GRE revealed during five days of court hearings in April and May 2006. Among the revelations:
* GRE made a profit of almost $41 million in 2004, with almost $40 million of that due to Canadian operations, even though the company sold more than twice as many cigarettes in the U.S. than Canada.
* Montour said GRE's profit on cartons sold in the U.S. was as low as 10 cents. In Canada, profits were in excess of $8 a carton.
* At the time, GRE sold cigarettes in Germany, Denmark, Switzerland, Sweden, Vietnam and some African nations, in addition to Canada and the U.S.
* Wahta Springs, a water bottling company on the Wahta reserve in Muskoka owned by Montour and the other GRE shareholders, had sales of about $11 million in 2005.
* Not all of GRE's small group of shareholders even get a vote on some of the company's financial decisions, and one of the people with a vote isn't a shareholder -- president Steve Williams. Those with a vote are Montour, Williams, Ken Hill, Curt Styres and Scott Smith.
* Of GRE's $202 million in gross sales for 2004, $128 million of the sales were made to shareholders of GRE and affiliated companies.
But when he was asked to identify these companies that bought nearly two-thirds of GRE's cigarettes, Montour said he didn't know.
"You are the CEO of the company?" the lawyer representing the attorneys general asked Montour.
"Yes I am," Montour said.
"As you sit here you cannot identify for us the related companies or shareholders to whom Grand River made $128 million in sales?" the lawyer asked.
"No," Montour testified. "I can tell you how many cigarettes I sold. I can tell you the margins. I can tell you in the United States what the margins are."
"I asked you a simple yes or no question," the lawyer continued.
"And the answer was no," replied Montour.
GRE's court case launched against 31 U.S. states continues to drag on slowly.
In February, company president Steve Williams was examined under oath for two days in Manhattan, while Montour faced another two days of examination in May.
But this time, GRE successfully applied to have the two men's testimony kept from the public under a confidentiality order.
Six years after the suit was launched, the discovery phase of examinations hasn't concluded and the judge recently extended that deadline by another two months.
A trial date is still far off in the distance.
STEVE BUIST is a two-time winner of National Newspaper Awards in the investigations category, and was nominated last year for a third NNA, in the politics category. He was also named the Ontario Newspaper Awards' Journalist of the Year in 2004, and has been nominated 18 times for ONAs and won nine times in the past six years.
He recently chronicled the life of a pig in the 13-part Spectator series A Pig's Tale. You can contact Buist at 905-526-3226 or at sbuistATthespec.com.
Tobacco Road
http://www.thespec.com/Local/article/407492
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Native manufacturer of cigarettes says he's demonized by his own people for paying taxes -ON
July 22, 2008
Steve Buist Record news services
Jerry Montour spits out the word in a mocking tone, the same mocking tone he hears directed at him by his own people:
"Sellout."
That's what other natives call Montour, the chief executive of Ohsweken-based Grand River Enterprises, one of the three largest cigarette manufacturers in Canada.
A sellout.
"And you know what? I am. I very clearly am," he adds. "It's hurtful but it's truthful.
"But I'm committed, and I always will be, to putting jobs on reservation and making it a better place than when we started here," he says. "Can everybody say that?"
Jerry Montour is a conflicted man.
He's a native himself, a member of the Wahta Mohawk reserve near Bala, in the middle of cottage country. He also runs Grand River Enterprises, a native-owned, native-operated company located on native land, smack in the heart of Six Nations, that is the reserve's largest employer.
The company employed about 300 people in 2006 and GRE's gross sales in 2004 were more than $200 million.
But GRE also pays all applicable federal excise taxes to the Canadian government in exchange for the right to make cigarettes -- almost $500 million so far, since the company became licensed in 1996.
On top of that, GRE has paid another $300 million to U.S. governments for cigarettes sold south of the border.
It's a thorny issue for First Nations people, who have long claimed a right to freedom from taxation. The company's decision to pay taxes hasn't been welcomed with open arms by other natives.
To some, it makes Montour and GRE sellouts. Some of the smoke shacks that dot Six Nations refuse to sell GRE products because of the taxation issue. Other native tobacco manufacturers treat him with scorn.
"Oh, they constantly harass me," Montour says. "You have to understand that I'm almost demonized because I choose to go the federal tax route."
But that's only part of the conflict Montour now faces. Contraband cigarettes have become a massive problem for people coming at the issue from many different sides -- law enforcement agencies, federal and provincial governments, legal cigarette makers and First Nations territories.
It's estimated that almost one of every three cigarettes now smoked in Ontario and Quebec is contraband. Non-natives can drive to Six Nations and easily purchase carton-sized bags of cigarettes for as little as $6 or $8, compared to the $75 to $85 it costs for a legal carton that includes all proper taxes.
An overwhelming majority of the contraband smokes -- more than 90 per cent, it's estimated -- originate on First Nations territories.
The RCMP has identified nearly two dozen unlicensed cigarette manufacturing facilities at Akwesasne, near Cornwall, and Kahnawake, near Montreal, as well as another seven unlicensed sites at Six Nations -- the very same place where GRE operates legally.
You can see Montour's dilemma.
Contraband tobacco -- most of it originating on native reserves -- is crushing Grand River Enterprises, itself a native-owned and operated business that pays taxes and produces cigarettes legally in the eyes of the federal government.
In May, Montour even went to Ottawa and appeared before a standing parliamentary committee on public safety and national security, which has been gathering testimony about the contraband tobacco problem for the past two months.
His conflict was clear.
Montour knows he must walk a fine line between protecting his business and protecting the interests of other natives, some of whom rely on the production and distribution of contraband smokes for employment.
"I can remember coming up to this same building (years ago). I had every First Nations member in the community saying, 'Don't sell me out or don't come home.' By the same token, as a First Nations businessman, am I not entitled to a level playing field? Am I not entitled to play under the same rules as everybody else?"
A level playing field.
Over and over, it's a theme that rises to the surface with Montour as he talks about the contraband tobacco issue.
"As a First Nations person, I'm not trying to decide who has jurisdiction, who should be paying tax, who shouldn't be paying tax," Montour said. "All I know is that we have been a compliant manufacturer all the way through this and there's just an unlevel playing field.
"It's pretty tough to compete with a $6 bag, right?" notes Montour, adding that contraband has cut GRE's Canadian business by more than 50 per cent. "Who's right, who's wrong, who has the ability to tax, all of those questions that keep coming up, I don't know why that would be a question for a business to answer.
"As a business I just say, 'What are the rules?' On reserve, the federal government says all applicable federal taxes are due. OK, well, I pay them. Would you pay more than $400 million if nobody else paid nothing?" Montour asks. "For how long would you do it?"
If it's determined that GRE doesn't need to pay taxes, then the solution is simple, he adds.
"If it's not owed, then cut me a cheque and 'I'll f--- off."
On that May day in Ottawa, Montour appeared before the parliamentary committee alongside another cigarette company chief executive -- Benjamin Kemball, president of Imperial Tobacco.
The two men arrived at their respective positions from far different backgrounds.
Kemball is British-born and earned a degree in biochemistry from the University of Bristol. He joined British American Tobacco, the parent company of Imperial Tobacco, in 1979, and has worked for BAT around the world.
Montour, a Wahta Mohawk, lived in east-end Hamilton until recently moving to a sprawling property with a newly built mansion on the Mountain brow.
Montour and Ken Hill, a Six Nations Mohawk, got involved in the cigarette business in 1992 when they entered into a joint venture with another native who lived on the Akwesasne reserve. Together, they financed the construction of a cigarette manufacturing facility on the U.S. side of Akwesasne where they could begin producing their own brands.
Based on their early success at Akwesasne, Montour and Hill decided to build the much larger Grand River Enterprises cigarette plant at Six Nations.
Weary of being pursued and fined by the government over unpaid excise taxes, GRE chose to acquire a tobacco licence in 1996 and pay all applicable federal taxes.
So how do you get a level playing field? Montour is asked.
"Somebody has to lay out the format for operating a business on reservation," he says. "If the federal government feels they have the jurisdiction to do it, OK, where are your guidelines and why are they not enforced?
"I just don't see right now a sense of fairness to anybody."
There is a solution to the contraband tobacco problem, Montour says.
A very simple solution that doesn't distinguish between native and non-native cigarette manufacturers.
Restrict the sale of raw materials to licensed manufacturers only, Montour argues, and the contraband problem will dry up.
"All I know is that if we run out of glue, I have to shut down," Montour said. "If I run out of filters, I have to shut down."
The sale of raw tobacco is already controlled through the Ontario Flue-Cured Tobacco Growers' Marketing Board. It can only be purchased legally by a licensed manufacturer.
But the other specialized products that make up a cigarette -- low-ignition rolling paper, the brown cork tipping paper at the end and, most importantly, the acetate tow filter -- can be purchased by anyone.
Montour says it would be easy for Canada and the U.S. to make it illegal for a company to sell those raw materials to anyone but a licensed manufacturer.
Montour and Kemball, his Imperial counterpart, have very different ideas concerning the source of the contraband raw tobacco.
Kemball told the parliamentary committee that the vast majority of raw tobacco used in the illegal production of cigarettes originates in North and South Carolina and Virginia.
Montour, on the other hand, believes that a significant amount of the raw tobacco -- up to 80 per cent, he claims -- is coming from southwestern Ontario's traditional tobacco belt, which stretches from Simcoe to Tillsonburg.
Sometimes, he suggested, truckloads of raw leaf tobacco will arrive in the middle of the night, there's a sale handled in cash, and the trucks move on.
"A lot of these farmers are in really, really dire straits right now," Montour told the committee members. Right now, they're a bit more easy victims of prey from organized crime because they're destitute."
http://news.therecord.com/News/Local/article/386919
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Buying contraband cigarettes may not seem illegal -- but it is -ON
July 21, 2008
Special Report
The Hamilton Spectator (Jul 21, 2008)
Whether it's because of ignorance, wilful blindness or the perception that it's a victimless transaction, smokers who flock to Six Nations to buy cheap cigarettes may not realize they're breaking the law.
"I'm not sure that a lot of people perceive it as a crime," said Inspector Derek Simmonds, director of the RCMP's Customs and Excise branch. "It doesn't register that way because the product itself is legal, as opposed to the analogy of drugs."
While cigarettes themselves are legal, it's illegal to possess cigarettes that have not been properly stamped for tax purposes, or don't carry the required labels and packaging.
"The three main things that tell you whether it's legal or not is the price, the packaging and where you're buying them from," said Corporal Marc LaPorte, spokesperson for the RCMP's Ontario division.
"If you're going out of your way to go onto a reserve to buy cigarettes from a smoke shack, or someone selling them out of the back of the car, or someone at work who sells them out of his locker, that tells you that it's illegal," LaPorte added. "You can justify it in your mind that you didn't know, but those are all signs you should know that it's illegal."
The penalties for possession of contraband tobacco can range from a minimum fine of 16.5 cents per cigarette confiscated up to 24.6 cents per cigarette and a maximum jail term of five years. In addition, the purchaser's vehicle can be seized under the Excise Act.
Six Nations Police Deputy Chief Rocky Smith said charges aren't pursued on the reserve against non-natives who purchase cigarettes illegally, and once they exit the reserve, "we don't enforce stuff off the reserve."
"That's the other police forces' area," Smith said.
LaPorte said the RCMP doesn't have the resources to focus enforcement activities on individuals purchasing contraband smokes for their own use, even though it's illegal.
"We don't target those people," he said.
"If you were going on-reserve and buying three or four cases of cigarettes and then going back home, then you'd catch our interest."
RCMP Staff Sergeant Tim Ranger of the Customs and Excise branch said the illegal purchase of cigarettes on reserves perpetuates a cycle that encourages more illicit manufacturing, which, in the end, helps support organized crime elements.
"Sure, you may be only paying $10 for 200 cigarettes, but then again, you're not paying for social programs" Ranger said. "The taxes you're paying pay for a whole bunch of social programs we're faced with here in Canada."
What is contraband tobacco?
Contraband tobacco is any tobacco product that does not comply with the provisions of all applicable federal and provincial statutes. This includes importation, stamping, marking, manufacturing, distributing and payment of duties and taxes.
Contraband products are currently entering the Canadian tobacco market through four major sources:
* Products that are unlawfully or lawfully manufactured in the U.S. and then smuggled into Canada, or unlawfully manufactured in Canada;
* Counterfeit tobacco products that enter the country illegally;
* Diverted GST/HST-relieved and provincial tax-exempt tobacco products;
* Products from convenience store and cargo thefts, truck hijackings.
Source: RCMP Contraband Tobacco Enforcement Strategy
http://www.thespec.com/Local/article/406175
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Risky business
July 21, 2008
Contraband cigarettes travel a treacherous route to get to Six Nations, where smoke shacks sell them for pennies; TOBACCO ROAD, Day 2
Steve Buist The Hamilton Spectator Six Nations (Jul 21, 2008)
'This? This is all contraband," Tammy says bluntly, with a wave of her hand across the table laden with cigarettes inside her small smoke shack.
Tammy, a native woman in her 30s, is the owner and operator of one of the estimated 300 smoke shacks that dot Six Nations, Canada's most heavily populated native reserve.
She used to be a runner, smuggling cigarettes from the Akwesasne reserve near Cornwall along back roads to Six Nations.
Now, she's decided to just sell contraband smokes -- sometimes thousands of dollars' worth a day -- to a solely non-native clientele that comes to the reserve looking for cheap cigarettes.
She's breaking the law by selling them, the customers are breaking the law by purchasing them, but that doesn't seem to deter either side. Nor has it put a dent in a flourishing trade that has evolved primarily at Six Nations and the Mohawk territories of Akwesasne, Kahnawake, near Montreal, and Tyendinaga, near Belleville.
It's an issue that is once again at the forefront for Canada's law enforcement agencies, as well as lawmakers in Ottawa.
For the past two months, a standing parliamentary committee on public safety and national security has been hearing testimony from all sides of the contraband tobacco issue.
The hearings have made strange bedfellows of people as disparate as British-born Imperial Tobacco CEO Benjamin Kemball, and Jerry Montour, CEO of licensed native-owned cigarette maker Grand River Enterprises at Six Nations, himself a Mohawk.
They both appeared before the committee on the same day in May to talk about how contraband -- most of it from First Nations territories -- is hurting their respective businesses.
The financial stakes at play are huge for both the government and the legitimate manufacturers.
The parliamentary committee heard that sales of contraband cigarettes are costing the Canadian government, according to one report, an estimated $4.4 million in lost tax revenue -- each and every day.
Legal cigarette sales outlets in Ontario and Quebec, such as convenience stores, may have lost as much as a combined $2 billion last year to the contraband market.
"Like other criminal trends, the illicit tobacco trade ebbs and flows," RCMP Chief Superintendent Mike Cabana told committee members. "Today, it is not only flowing, but also hemorrhaging, and it has flourished into a key business enterprise for many criminal groups."
First, the ground rules.
Tammy says she'll agree to talk, but no last name and nothing that would easily identify her or her smoke shack.
She hasn't had any trouble so far, but she doesn't want to invite any, either. She fears she could face reprisals for giving a sneak peek inside the world of contraband tobacco at Six Nations, where smoke shops litter the roadside landscape.
Some are nothing more than a small trailer on wheels that might have a table filled with cigarettes. Others are impressive log cabin-style structures with parking lots, wheelchair ramps and a selection of goods no different than a convenience store.
Before starting her own shop, Tammy ran cigarettes from Akwesasne for a man who was her boss.
He used to live at Akwesasne before moving to Six Nations, where he could take advantage of his eastern Ontario connections to import smokes westward.
Akwesasne is a logistical nightmare for law enforcement because it straddles five jurisdictions -- Canada, the United States, Ontario, Quebec and New York state. According to the RCMP, much of Canada's contraband tobacco is manufactured in cigarette factories on the U.S. side of Akwesasne.
Running through the middle of the reserve is the St. Lawrence River, and the native territory includes a number of small islands.
The RCMP says boats travelling across the river are the main means of moving contraband cigarettes from the U.S. to Canada. In the winter, even snowmobiles are used.
Once on the Canadian side of the border, the products are transferred to vehicles and moved around the country.
Tammy says there are close links between Six Nations, Kahnawake and Akwesasne.
"If we didn't have those ties, we wouldn't be doing this," she says.
The boss would pay Tammy $500 a trip to bring back a load of smokes to Six Nations in her big SUV.
"He'd just tell them, 'I'm sending this girl, her name's so-and-so and she'll be there within six hours or seven hours,'" Tammy explains.
He'd give her the money and then she'd wait for her truck to get loaded once she arrived.
"I didn't have to do anything, I just drove," she says. "We'd take different roads every single time.
"You don't want to come down a highway with all that because me, looking native, you know, a cop could just look at me and say, 'I know what she's doing.'
"Really, it was better if you looked non-native because there's more non-natives on the road."
A couple of times, she had to make back-to-back trips to Akwesasne.
"So that's 24 hours driving right there," she says. "I almost fell asleep a couple of times coming back through Toronto. It's a good thing my partner was there to wake me up.
"You can't stop and pull into a place and go to sleep for a little while because you've got a whole mess of cigarettes in your truck," she adds. "If somebody knows that, you could easily get robbed."
Tammy also knew that she was on her own if trouble ever did arrive: "If you get caught,'" the boss told her, "I don't know who you are."
Would she have ever ratted out her former boss if she had been caught?
"No, you don't do that around here," Tammy says. "I may not like him but I would never do that.
"Don't get me wrong -- I hope he does get caught," she says with a laugh, "but I would never do it to him."
Was she nervous?
"Oh yeah," Tammy says, laughing again. "I was sweating bullets every single time I was up there.
"My nails were so short because I was biting my nails all the time, driving down the road," she adds. "I'd look conspicuous just because of how nervous I was."
She was never once stopped on one of her trips.
"But I follow the road rules when I'm carrying contraband in my truck," she says. "I followed the rules right to a T."
She laments the cut-throat culture that has taken over the world of illegal smokes.
"In that kind of work, you get people screwing you over left and right," she says. "You create a lot of enemies and it's not a good thing because it's mostly among our own people."
Once, she says, there was a delivery of a trailer load of smokes at Six Nations from Akwesasne -- part of the shipment was for Tammy's boss and part was for another customer.
Tammy's boss told her he needed a favour.
"What he wanted me to do was flirt with the driver and keep him preoccupied so he could take more than what he was supposed to take," Tammy says. "So I kind of flipped out.
"I said, 'No. Your wife is standing over there, get your wife to do it,'" she said. "He said, 'I don't want my wife to go flirt.' So I said, 'What the heck makes you think it's better for me to do it than her? If you want to rip somebody off, you do it on your own.'
"Our way of life is that we're supposed to look out for each other, you know what I mean?" Tammy adds.
"Help each other out. This contraband stuff, it causes a lot of problems."
That's one of the reasons she stopped running smokes and set up her own shop.
"People are out to make money for their own self and step on whoever they can to get there," Tammy says. "That's why I got out of working with other people and decided I'm just going to do it by myself.
"I don't have to depend on nobody and nobody has to depend on me."
The risks were starting to outweigh the potential benefits, as well.
Penalties for smuggling contraband tobacco can be as stiff as a maximum five years' imprisonment, vehicle seizure and almost 25 cents in fines for every cigarette confiscated.
For a case of 50 cartons, that's a potential $2,500 in fines, and one load could include 10 cases or more.
"I don't have a whole lot going for me," Tammy says. "My criminal record is clean and I've got a licence and I want to keep it that way. I don't have anything to fall back on.
"If I lost my licence or lost my truck, that's too much for me.
"This is good enough for me right now," she adds, looking around the inside of her shop.
Not everyone is as forthcoming as Tammy. In fact, most of the smoke shack operators interviewed were reluctant to speak, let alone give a first name.
Those who would talk informally said they've never experienced any trouble in their shops, nor do they arm themselves.
Last year, there were two shootings at Six Nations smoke shops, and in February, arson was suspected in a fire at a native smoke shop on disputed land at the edge of Caledonia.
"I've worked in a few different shops and I've never heard of a firearm," says one woman at a smoke shack on Fourth Line. "The most I've ever seen was a baseball bat."
Occasionally, she says, the smoke shop owners will meet to set prices "so there's no bickering."
At one shop on Sixth Line, the woman behind the counter says she has never been robbed or had a problem.
"I have great, great customers," she adds.
But she also says there's a security car sitting not far outside that she can summon with the push of a button.
At another Sixth Line smoke shop, the sales clerk said the business used to be more dangerous back in the early '90s, when it was common to have a shotgun under the counter.
Now, it's not necessary.
Why is that, she was asked.
Because of the security outside, she said, pointing toward the gas bar across the road.
"Everyone knows everyone now," she says.
The woman also says a cigarette-making machine accidentally fell off the back of a truck not long ago as it was being transported across the reserve. Out of fear, the driver just left it there and drove off.
Back at Tammy's shop, she says she has never had any trouble and doesn't arm herself.
"I don't carry nothing," she says. "I know a lot of people on this reserve and I do get along with most of them. I'd like to think that they have enough respect for me not to try."
By the time contraband cigarettes reach a Six Nations smoke shop, the profit margins are skimpy.
For some brands, Tammy says, she can make $2 per carton. But in other cases, the profit is as little as 50 cents a carton.
For bags of "rollies" -- 200 loose cigarettes in a resealable plastic bag that are sold as cheap as $6 or $8 -- Tammy's profit is 50 to 75 cents a bag.
She has to depend on selling high volumes.
"Sometimes I can sell, say, $4,000 worth of cigarettes in a day, but the profit on that, if I'm lucky, is $300 or maybe $350 and that doesn't happen every day," Tammy says. "Some weeks, I'm struggling to make ends meet and other weeks, I'm doing good."
Occasionally, a customer will buy six or seven cases at a time -- 300 to 350 cartons -- to take back off the reserve, maybe to be resold illegally. She doesn't ask questions.
"I don't care what you do with it as long as I'm making my money," Tammy says.
What does rankle her a bit is when those same customers tell her they can make a $150 profit reselling the cartons.
"I'm making 50 cents a carton off of that case," she says, or $25 total per case. "He's making tons more money than me, but he's also taking a bigger risk because he's taking it off the reserve and distributing it, where I'm pretty much safe here."
In the past, she'd dabble in distribution herself.
Once, she took 10 cases in her truck to a reserve near Sarnia and offered them for sale to different smoke shops.
But she became so nervous that she began dumping the cases for whatever price she could get.
She ended up making $50 a case -- $500 in total.
"At the time, heck, you could have made $150 a case by taking it out there," she says.
Tammy has made a decision that she won't stock any Grand River Enterprises products in her shop.
It bothers her that GRE pays all applicable federal taxes.
"It should bother everybody, all of us on the reserve," she says. "It's saying the government wins."
She says there are also other smoke shacks that won't carry GRE products because of the taxation issue.
"I don't think we should have to pay taxes," Tammy says. "We've been through too much to have to even get into something like that."
She buys her products from Akwesasne suppliers, but there are also a number of unlicensed cigarette manufacturers operating at Six Nations.
One of the other smoke shop operators says it's fairly common knowledge within the Six Nations loop who the unlicensed manufacturers are and where they're located, but she declines to give any further details.
"I'm not going to go that far," she says with a quick laugh.
Tammy says she knows who the unlicensed manufacturers are but she won't identify them.
She has also been tempted with the opportunity to become one of the unlicensed manufacturers.
"I've had somebody ask me if I wanted to buy a cigarette (making) machine, but ... " Tammy says, her voice drifting off.
Isn't that where the real money is?, she's asked.
"It is," she says. "But I don't want to get into it and then not be able to do it, and then turn around and lose that money.
"I know somebody who's got one (machine) right now and he's asking me to help him find some place to get rid of it. But I don't think it's worth it."
Finding the raw materials wouldn't be that difficult, she adds. "There are people around here saying, 'I can get you tobacco for so much a kilo,' " she says.
There's one final question left to ask Tammy.
Are you a smoker?
"Yeah, but I don't smoke these," she says, pointing to her table of products. Then she laughs heartily. "I smoke du Mauriers or Players.
"I will not smoke this stuff. I ask my customers all the time, 'How can you even (smoke these)?'
"If I do run out and I do have to smoke these, my throat is so sore three days or four days after, I feel like I can't talk."
Does she find it at all ironic that she's native, she sells native cigarettes to non-natives, yet she smokes cigarettes produced off-reserve by a non-native manufacturer?
"It is funny, and people laugh at me when they see my du Mauriers or my Players sitting on the table," she says.
"They're like, 'What? You don't even smoke your own cigarettes?'
"No, I don't touch those if I don't have to."
An in-depth look at cigarettes, contraband and the native connection
DAY 1: 10 billion cigarettes a year
DAY 2: Inside the smoke shacks
DAY 3: Native CEO walks fine line
DAY 4: GRE fights ironic battle in U.S.
http://www.thespec.com/News/Local/article/406180
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Tobacco licensing a secret matter
July 19, 2008
The Hamilton Spectator (Jul 19, 2008)
There are currently 46 tobacco manufacturing licences issued in Canada, including 14 tobacco licences on First Nations reserves.
Who holds those licences?
That's a secret, says the Canada Revenue Agency.
The agency, which oversees tobacco licensing, says the public isn't allowed to know the identity of licence holders because of confidentiality provisions in Canada's Excise Act.
In fact, one police source said even the RCMP can't obtain information from the revenue agency about the identity of legal holders of tobacco licences.
It raises a simple question: How can law enforcement agencies properly investigate the issue of illegal cigarette manufacturing without knowing who is a legal manufacturer?
"That's a piece of public policy that maybe has to be revisited at some point," admitted Inspector Derek Simmonds, director of the RCMP's Customs and Excise branch.
The RCMP says it's not aware of any licensed tobacco manufacturers at Six Nations other than Grand River Enterprises.
But a spokesperson for Six Nations Police said he believes there is at least one other licensed manufacturer at Six Nations.
"At one time, there were three licensed manufacturers," said Deputy Chief Rocky Smith. "But I don't know if those licences are still valid."
The Canada Revenue Agency refused to provide any information to The Spectator about the number of licensed tobacco manufacturers at Six Nations or the identities of the licence holders.
http://www.thespec.com/Discover/article/405511
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Tobacco road
Canadians smoked an estimated 10 billion contraband cigarettes last year and the problem is costing the government as much as $4 million a day in lost tax revenue. In a four-part Special Report, Spectator investigative reporter Steve Buist explores the gro
July 19, 2008
The Hamilton Spectator (Jul 19, 2008)
The RCMP has identified nearly 30 illegal cigarette manufacturing plants operating on three native reserves between Six Nations and Montreal, but the national police agency has only been able to put a single one of them out of business in the past two years.
"It's politically sensitive, there's no doubt about it," said RCMP Staff Sergeant Tim Ranger of the Customs and Excise branch.
According to the RCMP, seven of the unlicensed cigarette manufacturers are operating at Six Nations, one of Canada's main hubs in the contraband tobacco trade.
A spokesperson for Six Nations Police believes the number of unlicensed facilities could be even higher.
"We're hearing in excess of 10," said Deputy Chief Rocky Smith.
To date, the RCMP says, there haven't been any charges laid at Six Nations related to illicit tobacco manufacturing.
"As you're aware, the issue of external police presence in some communities is very sensitive," said Inspector Derek Simmonds, director of the RCMP's Customs and Excise branch.
"You simply cannot do this in isolation. The RCMP cannot just simply move in and do it all. We have to look at it as a partnership."
But Smith said his Six Nations police force doesn't lay charges related to illegal cigarette manufacturing because it's viewed as a taxation issue, not a policing issue.
"Six Nations Police has always maintained that we're not tax collectors," Smith said. "It's a tax issue that we're not involved in."
The growing connection between illegal cigarettes and some of Canada's First Nations territories has become a thorny issue for enforcement agencies because of a clash between Canadian law and native sovereignty and taxation issues, as well as traditional First Nations rights regarding the role of tobacco.
Contraband refers to any tobacco product that does not comply with all aspects of applicable federal and provincial statutes, including such things as importation, stamping, marking, and the payment of proper duties and taxes.
Almost one of every three cigarettes smoked in Ontario and Quebec last year was a contraband product, according to a recognized study, and more than 90 per cent of those illegal cigarettes originated on First Nations reserves.
Along with the seven at Six Nations, the RCMP has identified between 11 and 13 unlicensed manufacturers at Akwesasne, which straddles the Canada-U.S. border near Cornwall, and another 11 at Kahnawake, just south of Montreal.
"I don't think it's as simple as just showing up on the doorstep," Simmonds said. "These things involve long, protracted investigations.
"It's not as simple as walking up to all 29 or 31 that's listed ... and just dealing with them that easily," he added. "It involves getting partnerships, it involves consultations with the stakeholders, it involves the communities themselves.
"Everybody has to be part of this process."
Tackling contraband tobacco has become a major priority for law enforcement agencies, including the RCMP, the Canada Revenue Agency, the Canada Border Services Agency and the federal finance department.
For the past two months, a standing parliamentary committee on public safety and national security has been hearing testimony from all sides, including aboriginal leaders from those First Nations territories identified as major sources for the production and distribution of illegal smokes.
The problem is costing Canadian governments as much as an estimated $4 million a day in lost tax revenue, as smokers turn to unmarked bags of 200 cigarettes that can be bought for as little as $6 or $8 a bag on a native reserve. Compare that to the cost of a legal carton of 200 cigarettes that can sell for around $85 with all appropriate taxes included.
That's as little as 3 cents a cigarette for the contraband smokes versus almost 43 cents per legal cigarette.
Contraband tobacco is a problem that's growing dramatically, by all estimates.
Last year, the RCMP seized the equivalent of more than 123 million illegal cigarettes.
It marked an all-time high for the RCMP, more than 20 times greater than the amount of illegal cigarettes seized in 2001.
The pace of seizures this year is slightly higher still.
Through the first six months of 2008, police agencies have confiscated about 69 million illegal cigarettes.
Just three weeks ago, the RCMP and OPP stopped a tractor-trailer on Highway 401 near Brockville and seized a load of 17 million contraband cigarettes that were destined for the black market.
If convicted, the driver faces a minimum fine of $2.8 million.
Not all of Canada's contraband tobacco is connected to First Nations territories, however.
There's also been an increase in illegal tobacco products shipped from China. According to the Canada Border Services Agency, more than 95 per cent of the 54
million illegal cigarettes seized at the Canadian border last year came from China.
There has also been a sharp increase in the use of couriers and postal systems to move contraband tobacco. From 2006 to 2007, the number of seizures through these routes rose by 150 per cent, from 641 seizures to 1,610 last year.
"I'm not appearing before this committee today to state that we have control over the situation and that there is no problem," RCMP Chief Superintendent Mike Cabana told the parliamentary committee in May. "Yet I would not say that we have lost control of this particular situation. There is some distance between the two extremes.
"The problem is on the rise, which has been confirmed by the number of tobacco seizures made in recent years," he said.
More than 150 organized crime groups are involved in the contraband tobacco trade, according to the RCMP.
"These are criminals who also deal in drugs, firearms smuggling and money laundering," Cabana told committee members.
There's even an element of human smuggling, the RCMP noted.
"The public needs to understand that purchasing contraband tobacco directly supports organized crime," Cabana added.
At Six Nations, Smith said there is some evidence pointing to the involvement of organized crime in the contraband tobacco trade.
"I'm sure they're in the background somewhere," Smith said. "With organized crime, if there's money to be made, they certainly want to get their hand in it."
The deputy chief also said he has seen an increase in drugs and guns on the reserve.
"That relates to the money being available," he added.
The RCMP declined to identify any specific organized crime groups involved in the contraband tobacco trade.
"It's a pretty big field," Simmonds said.
"Tobacco is a commodity. (Organized crime groups) are commodity-based," he added. "If that window closes tomorrow, I suspect they will move on to whatever comes up as the next commodity of choice."
Some of the organized crime networks date back to the early 1990s, when cigarette smuggling last showed a spike because the government quickly and drastically raised taxes. Now some of the higher-end organized crime groups are trying to muscle out smaller rivals to create monopolies.
In the U.S., a report earlier this year for the House Committee on Homeland Security described how millions of dollars in profits from cigarette smuggling in the U.S. are being funnelled to Middle East terrorist organizations, such as Hezbollah, Hamas and al-Qaeda.
Simmonds said the RCMP is not aware of any links between Canada's contraband tobacco trade and the funding of such terrorist groups.
He was also quick to point out that the contraband tobacco trade involves only small groups on First Nations territories.
"We definitely do not want to leave the perception that it's the entire community," Simmonds said. "It's a small group.
"Just like there is crime in Hamilton, not every Hamiltonian is involved."
Ten billion cigarettes.
That's billion, with a "B."
That's the estimated number of illegal cigarettes consumed in Canada last year, according to an in-depth study of the country's tobacco market.
That's equal to about 330 cigarettes for every man, woman and child in the country. It's enough to fill a thousand 40-foot trailers.
According to Benjamin Kemball, president and CEO of Imperial Tobacco, the illegal trade has now overtaken Rothmans, Benson & Hedges and JTI-MacDonald to become the second-largest supplier of tobacco products in Ontario and Quebec.
"It's well on course to becoming the leading supplier nationally, ahead of even Imperial Tobacco, which manufactures 14 billion cigarettes a year," Kemball told the standing parliamentary committee in May.
Overall tobacco consumption, including contraband, is declining by 2 to 3 per cent a year, but about 8 per cent of the market is shifting to illegal cigarettes each year.
The ease with which people can now access illegal cigarettes is startling, and that easy access is spreading across the country.
Calgary Conservative MP Art Hanger told The Spectator that contraband cigarettes from Six Nations are flooding the streets of Calgary, where they're being sold through businesses, or out of the backs of vehicles.
A baggie of 200 illegal cigarettes bought for $8 at Six Nations can be trucked to Alberta and resold for $40, generating large amounts of tax-free cash.
"My question is, why is nobody doing anything about it on the enforcement side?" Hanger said.
"There's a tax issue here, there's distribution of contraband, and who's behind it all?"
Kemball told the committee he has heard anecdotes "of people leaving $10 in their mailbox and coming back that evening and they have their baggie of 200 in there."
"In parts of Montreal, and indeed in other parts of Quebec, you (find) a card under your door saying, 'Firewood, so much a cord; cigarettes $6, $8, $10,' " Kemball added. "So there is that network out there.
"How much of that is actually organized crime, in terms of the Mob or the gangs, and how much of it is entrepreneurs getting into the illegal market, we don't know. Either way, it's very bad news."
The limitless supply of cheap cigarettes through the black market leaves a couple of groups particularly vulnerable -- children and, somewhat ironically, natives themselves.
"Children now have access to cigarettes at pocket-money prices, and criminals do not ask for proof of age," Kemball told the parliamentary committee.
A study published last fall analyzed 11,000 cigarette butts collected from the area around 105 schools in Ontario and Quebec.
The median rate of contraband cigarettes at the schools was about half, and at schools in some lower-income neighbourhoods, the percentage of illegal cigarettes was as high as 75 per cent.
"What that means is that the market is extremely prevalent in the youth segment, which represents a highly vulnerable client group," said Michel Gadbois, senior vice-president for the Canadian Convenience Stores Association.
At the same time, smoking rates among aboriginals "are scandalously high," according to Rob Cunningham, senior policy analyst with the Canadian Cancer Society.
About 19 per cent of Canadians, on average, are smokers. Among aboriginals, however, the rates are as high as nearly 60 per cent.
"The most important explanatory reason for this is access to cheap cigarettes, including contraband cigarettes," Cunningham told the committee.
Last month, a handful of native leaders from Akwesasne and Kahnawake appeared before the parliamentary committee, warning the government that it's dangerous to use terms such as legal and illegal in the context of the First Nations tobacco industry.
"We resent the effects of our continued criminalization in the mainstream media," Michael Delisle, Grand Chief of the Mohawk Council of Kahnawake, told committee members.
"The term 'contraband tobacco' refers to your government's perception of the products manufactured and the industry itself."
Lloyd Phillips, public security adviser for the Assembly of First Nations of Quebec and Labrador, said linking organized crime with the native cigarette trade is also unhelpful when it comes to finding a solution.
"Including cigarettes and tobacco, which is primarily a taxation issue and highly political, in the same category as drug traffickers and other crimes is not only wrong, it sets the stage for conflict," Phillips said.
The native leaders also said the government needs to recognize the important role tobacco plays in the First Nations economy.
"When you talk about smuggling in Akwesasne to our community residents, they'll say 'Guns, drugs, aliens, terrorism,' " said Michael Mitchell, former Grand Chief of the Mohawk Council of Akwesasne. "You say 'cigarettes' and they'll give you a look like, 'Well, it's helping the economy.'"
According to the native leaders, the federal government needs to negotiate an agreement to the taxation questions that have been raised, instead of making it a law enforcement issue.
"We are law-abiding citizens," Delisle said, "depending on, I guess, what we consider and what you consider 'law-abiding citizens.'"
Read contraband tobacco transcripts from the Standing Parliamentary Committee on Public Safety and National Security by clicking on the following links.
http://www.thespec.com/article/405455
Cigarettes whisked out of sight -ON
Published: Monday, June 09, 2008
Jonathan Spicer, Reuters
TORONTO (Reuters) - You can browse the latest porn magazines at Canadian shops, but tough new laws mean that cigarette packages are simply too suggestive.
Shop owners in Ontario, Quebec and a few other provinces must now hide tobacco products from their customers under rules that will cover most of Canada by year-end as the country tries to stamp out smoking by young people.
The provincial governments want to discourage the habit by "de-normalizing" the presence of cigarettes, which typically enjoyed prime placement behind the cash register.
Retailers must store cigarettes in drawers or behind grey wall coverings that cost as much as C$1,000 ($980), leaving some fuming over the cost, inconvenience, and hypocrisy.
"It's a pain in the ass, and a double-standard that the government supports liquor sales," said a Toronto shop owner who did not want to be named, but who noted children too young to buy pornography are still free to eye the plastic-covered magazines, which are only partly hidden by their shelving.
"It's kind of like a nanny state."
The law has its critics, including those who point accusingly at Ontario's provincially owned liquor stores. But advocates say the seemingly draconian measure will eventually work, and is too important to get bogged down by morality.
"Pornography, with all its faults and deficits, won't kill you," said Michael Perley, director of the Ontario Campaign for
Action on Tobacco, an anti-smoking lobby group. "Tobacco industry products kill one in two of their long-term users."
Perley's group, backed by national cancer and medical associations, complains that the cigarette industry paid retailers to display their colorful products in prominent positions in retail stores.
The latest move puts Canada, which already bans cigarette advertising and sports sponsorships by tobacco companies, among a small group of countries which hides tobacco products at the cash register.
Iceland was first in 2001 and Thailand followed in 2005, while Ireland is moving in the same direction.
Canadian retailers complain the law will confuse customers and sellers, and stifle sales of their top product.
But the provinces, which are responsible for managing Canada's publicly funded healthcare system, say they are trying to curb the country's No. 1 cause of early death, cancer.
Canada's explicit health warnings on tobacco products, including graphic images of blackened lungs and rotten teeth, are already considered among the world's most direct.
"It doesn't take long to de-normalize social psychology," said Toronto cigarette-smoker Karolina Jonsson. "People underestimate just how much advertising we are exposed to every day, and cigarettes are the same."
(Reporting by Jonathan Spicer, editing by Janet Guttsman)
Read
Road to serfdom littered with cigarette butts
Published: Wednesday, June 04, 2008
The Ottawa Citizen Re: Ban youth possession of tobacco products, May 31.
Letter-writer Steve Tennant says we should ban youth from possession of tobacco products. He is concerned about the "quiet menace" of cheap contraband cigarettes without warning labels that "may contain insect eggs and human feces." His group, We Expect ID, actually inspected 11,000 cigarette butts found around 105 Ontario and Quebec high schools, to determine the ratio of legal to contraband cigarettes smoked by our youth. The ratio turned out to be one out of four cigarettes are contraband. I am not even certain you can tell the difference from the butts alone, but did they really need to inspect 11,000 to come to such an obvious conclusion? And why are contraband cigarettes so prevalent? It is because of the high taxes on legal cigarettes, a tax I am certain Mr. Tennant supports.
What does he mean by youth? Cigarettes are still legal to purchase if someone is 19 and older, even though now they cannot even be displayed in stores, due to a silly law mandating covers for shelving. I am sure people like Mr. Tennant think this new law is very progressive, but it is infantilizing and just plain silly.
So I assume Mr. Tennant means people under the age of 19? How does he propose this ban be enforced? Police would see someone they assume is under 19 smoking a cigarette so they approach him or her and ask for ID? And if it is discovered they are under 19 then what? Call their parents? Levy a fine? Call the principal? Sounds like a huge waste of police time, and a big intrusion on citizen's freedoms. Perhaps patrols of concerned citizens shaking down youths in malls and on street corners? Mr. Tennant offers no details.
Zealots of many stripes present a not-so-quiet menace to citizens' freedoms in Canada. Canada has not seen mass demonstrations against government intrusions on freedom because groups like Mr. Tennant's realize if you erode civil liberties bit by bit,
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