QUICK TAKEAWAY
Contraband Tobacco: Buying and selling illegal tobacco is a crime in Canada covered under s.121(1) of the Criminal Code. Contraband tobacco is a significant money-making enterprise for organized crime. It is estimated the Government of Canada loses about $1 billion in tax revenue each year due to illegal cigarette sales, while provinces lose millions in revenue. Along with facing punishment under the Code – which includes prison terms of up to five years – each province and territory has its own laws dealing with trafficking. Depending on the jurisdiction, you could face fines, jail time or both if you buy, sell or possess illegal tobacco. This offence can be treated as an indictable offence or as a summary conviction.
Table of Contents:
What is 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 trafficking 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. Cigarette prices across the country vary but can cost as much as $178 per carton, it is reported. However, some illegal cigarettes can sell for as little as $45 per carton.
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;
- possession for the purpose of sale;
- transportation;
- distribution; or
- delivery.
Along with s. 121(1) of the Criminal Code, each province or territory has its own laws governing contraband cigarettes. In British Columbia, for example, you can be fined three times the province’s tobacco tax, up to $50,000 and be jailed for two years imprisonment for being involved in illegal tobacco activities.
Exceptions
Under Bill C-10, Section 2.2.1 on Prohibited Practices specifies an exception. It states that "the prohibition does not extend to possession without the intention to sell these controlled goods." To clarify, possessing unstamped tobacco is not illegal if there is no intent to resell it.
What is Needed to Convict
The Crown attorney needs to prove beyond a reasonable doubt 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.
Treated as a Summary or Indictable Offence
If you are charged under s. 121(1) of the Code, the Crown can proceed with the charge as an indictable offenceIndictable offences are more-serious criminal offences and you would face imprisonment. The prosecutor could deal with the offence as a summary convictionUsed for lesser 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.
Penalty for Contraband Tobacco
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.
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Cabinet Francois K. Law Office
Cedric Nahum Law
Natasha J. Calvinho Criminal Defence Professional Corporation
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Ryan E. Durran - Barrister & Solicitor
Glossary of Legal Terms
Indictable offence
Indictable offences are the most serious offences under the Criminal Code and they come with more serious punishments, up to a maximum penalty of life in prison.
Summary conviction
Summary convictions are used for lesser offences with penalties, fines and short jail time. They reflect the majority of offences as defined in the Code.
