Contraband Tobacco

Contraband tobacco is tobacco that is not purchased, possessed, acquired, marked, stamped, transported, stored or sold in accordance with federal and provision legislation. After introducing the Tackling Contraband Tobacco Act in 2014, the federal government amended the Criminal Code to combat the traffickingInfluencing the movements of a person in order to exploit them and cross-border smuggling of contraband tobacco. 

Contraband tobacco costs billions in lost tax revenue each year. The profits from illegal tobacco sales are often used to fund other serious organized criminal activities such as weapons and drug trafficking, according to the Government of Canada. The RCMP estimates there are some 175 criminal gangs in Canada that trade or sell contraband tobacco.

Not only does contraband tobacco threaten tax revenue that reduces support for such programs as healthcare and education but it undermines efforts to reduce smoking rates, the government reports. 

Trafficking can involve the following actions:

• sale;
• offer for sale;
• possessionHaving knowledge and control of something — not only physically holding it, but also an item kept somewhere else that you know about and control. for the purpose of sale;
• transportation;
• distribution; or
• delivery.

The Criminal Code offence concerning possession or sale of unstamped tobacco is hybrid. The indictable maximum is 5 years; summary penalties follow the applicable summary-conviction rules. Provinces and territories also impose separate tax and regulatory penalties. In British Columbia, penalties under the Tobacco Tax Act vary by the offence and whether it is a first or subsequent conviction, and can include forfeiture, tax-based fines, additional fines, and imprisonment.

The Crown attorney needs to prove beyond a reasonable doubtThe high standard the Crown must meet to prove guilt. that you were in possession of contraband tobacco. Since each province and territory affixes their own tobacco stamps on every pack of cigarettes, it would have to be demonstrated that there were no stamps on the packages seized or that the stamps were counterfeits.

If you are charged under s. 121.1 of the Code, the Crown can proceed with the charge as an indictable offenceA more serious type of Canadian criminal offence. and you would face imprisonment. The prosecutor could deal with the offence as a summary convictionLess-serious criminal offences, which has less severe punishment. 

The Crown will consider such factors as the number of illegal cigarettes seized and your prior criminal record when deciding how to proceed.

The penalty you face can depend on where you are charged. For example, under the Alberta Tobacco Tax Act [PDF] if you are convicted of purchasing tobacco for less than the tax payable or from someone other than a retailer, licensed wholesaler or licensed importer you could face a fine of up to $20,000 as well as a six-month jail term.

In Ontario, a repeat offender convicted of being in possession of more than 10,000 unmarked cigarettes can face a jail term of up to two years.

Under the Criminal Code, a person who sells, distributes or possesses an unstamped tobacco product is guilty of an indictable offence and faces a prison term of up to five years.