On both sides of the Canadian-U.S. border, a new criminal class is getting rich smuggling cigarettes. The Mafia, Russian mobs, Asian triads, Native-American militants, college kids, heavy-metal motorcycle gangs and old folks in Winnebagos are selling-and most everyone with a habit is buying.
Even some Mounties’ relatives won’t say no to illegal cigarettes.
“The same public that won’t buy illicit drugs or hot stereos will say, `Hell, yes!’ to cheap smokes,” said Cpl. Garry Sexsmith of the Royal Canadian Mounted Police anti-smuggling unit.
“There’s no shame to it. My own mother-in-law has offered me contraband cigarettes when I’ve asked her for a smoke.”
An estimated $1.8 billion in cigarettes were smuggled into Canada by way of the United States last year. And so far this year, there has been no shortage of supply. Authorities said profits compare with those of the illegal drug trade, but penalties are far less severe.
Although much of the contraband enters Canada through Mohawk reservations straddling the U.S. border between Ontario and Quebec, tens of millions of dollars of illegal cigarettes are smuggled routinely across the Washington-British Columbia border. And that heavy traffic, some Washington officials fear, could attract the attention of narcotics pushers and gun-runners, who always are looking for new routes to move illegal goods.
In a sting by U.S. law enforcement in February, Canadian cigarettes worth $1.5 million were seized and two men were arrested outside a Bellingham, Wash., shopping mall.
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About 80 percent of black-market cigarettes are made in Canada; the rest are produced in the U.S. Bootleggers legally buy cigarettes in Canada from manufacturers or wholesalers. Then, because exports are not subject to Canadian tax, they ship the cigarettes to a free-trade zone, such as the Bellingham airport.
By law, the cigarettes then should be picked up by a licensed wholesaler for distribution in the U.S. or another foreign country. Instead, officials said, bootleggers load the cigarettes onto trucks bound for Indian-owned smoke shops in eastern Washington and Montana that allegedly are willing to assist in smuggling the cigarettes back into Canada tax- and duty-free for a cut of the profit.
Sold on the street, illicit cigarettes run $28-$30 in Canadian dollars a carton. Demand is huge, largely because Canada’s taxes push the price of a carton in British Columbia to about $50 Canadian, or the equivalent of $38 U.S.
In Washington, a carton of cigarettes sells on average for $23, including tax.
The Vancouver RCMP has formed a special nine-person unit to deal almost exclusively with cigarette smuggling. Contraband smokes seized in raids by the RCMP fill storage lockers and converted parking garages.
In a desperate attempt to stop the widespread smuggling, Canadian Prime Minister Jean Chretien in February ordered a cut in federal taxes on cigarettes.
Canadian law-enforcement authorities said at least 10 organized-crime rings are involved heavily in trafficking cigarettes.
But with so many willing buyers, an expanded class of smugglers has developed: Along with identified mob types and street hustlers, police said they must contend with husband-and-wife teams, entrepreneurial brothers, college students, even retirees looking to supplement their pensions.
“Anybody who ever hoped to make a fast buck,” said Sexsmith.