Sale of illegal cigarettes growing

Convenience stores are seeing 40% of tobacco sales going up in smoke -- which they say is because of contraband cigarettes. Ontario Convenience Stores Association president Dave Bryans said in 2007 an estimated 21% of all cigarettes being consumed were illegal, a figure that grew to an estimated 32% in 2008. In 2009, non-taxed cigarettes account for more than 50% of smokes sold. "It's growing in double digits every day," he said. "Today it's a crisis for convenience stores, neighbourhoods, schools and society." A study published last week in the Canadian Medical Association Journal found that some 13% of high school students who are daily smokers regularly smoke illegal cigarettes. In Ontario, nearly 22% of youth smokers regularly light up illegal cigarettes. The reality, said Bryans, is that cigarettes being sold from aboriginal reserves or out of the trunks of vehicles are easily accessed by young people who aren't old enough to purchase legally taxed cigarettes from stores. The cheap price, he said, makes it even more enticing for young people to experiment and pick up the habit. But even adults are turning to the contraband cigarettes because of the rock-bottom prices, he said.
For convenience stores it's having a major impact on sales. Most mom and pop shops rely heavily on the sale of tobacco to draw in customers. At Bridgeport Variety in Port Colborne, owner Joe Lyu said some 80% of his sales come from tobacco and he has seen a 40% drop in those sales. At the Dairy Maid Shoppe in Welland, owner Michel Papineau said he, too, has been hit hard in sales of tobacco products. "Remember that each customer lost on tobacco is impacting the sales of impulse items such as gum, pepperettes, pop and snacks. ... The average mom and pop convenience stores have suffered a decline of about 30% in sales (over) the last three years -- about $250,000 in gross sales or $35,000 in gross profits to pay bills or wages," said Papineau.Bryans said this isn't just a Welland problem or a Niagara problem, it's a situation that is raising a lot of concern in lots of communities. It's hurting small business and it's resulting in a "slow and painful death" for convenience stores -- yet there seems to be no political will to stop it.
There are solutions, he said. The association has suggested a few options to curb the activity. Back in the 1990s, when the sale of illegal cigarettes was out of control, the government rolled back taxes. But, Bryans said, that doesn't need to be the approach. Bryans said it should be illegal to supply tobacco products such as papers, packaging and leaf to unlicensed tobacco factories. To curb the purchasing of contraband cigarettes by minors, Bryans said it should be illegal to possess, purchase or consume contraband products.
While no action is being taken, convenience stores are enforcing laws not to sell to under age customers and have followed the laws of out of sight out of mind when it comes to tobacco sales.
Canada, Bryans said, is being flooded with untested, unregulated and untaxed cigarettes which are also robbing the government of more than $1 billion every year.
Those taxes, said Papineau, could be injected into the health-care system, but instead are being lost.
Papineau said he would like to see all levels of government working together on the issue instead of treating it like a "political hot potato."
Niagara Regional Police, OPP and RCMP should band together and enforce the laws to ensure it becomes more difficult to purchase the products, he said.
Papineau said contraband cigarettes are more of "the straw that broke the camel's back" for convenience stores. There are many other issues that are seeing mom and pop stores close up shop for good.
There is a lot of competition from big box stores, chain stores and gas stations all selling groceries and other products with a policy of low margins to get a higher volume of customers. The increased prices of tobacco have also turned customers away, not to mention price wars between businesses. Then, there is an increase in minimum wage. It's all leading to the death of mom and pop shops, he said.