The website, called Silk Road, uses a digital currency to protect online purchases, and an anonymity software to conceal users' identities online, making it very difficult for law enforcement agents to locate the site's servers or its participants.
Nicolas Christin, a cyber security professor at Carnegie Mellon University in Pittsburgh, Pa., said the website is growing at an alarming rate, with total revenues estimated at $1.9 million per month.
"This seems to be a growing marketplace," said Christin, who recently released a research paper on the illegal online pharmacy titled "Travelling the Silk Road; A measurement analyses of a large anonymous online marketplace."
"If you set aside the type of things that they are selling, they seem to be working on a fairly good business model," Christin said in an interview.
According to his research, which looked at the sales activity on Silk Road for eight months between end of 2011 and 2012, Canada ranks fifth in a list of top 12 most frequent shipping origins and destinations, accounting for about six per cent of both.
Marijuana is the top selling drug on the website, accounting for 13.7 per cent of sales.
A spokeswoman for the Ministry of Public Safety said websites like Silk Road demonstrate the need for strong law and border enforcement and collaboration with international partners.
"We are committed to stemming the illicit flow of drugs into Canada, including through the Internet, and law enforcement agencies are committed to working with partners nationally and internationally to identify these websites," Kerri Manning said in an email.
However, an RCMP spokesman said the force does not monitor anonymous websites.
"The RCMP investigates websites reported by the public or information received during active investigations," Sgt. Greg Cox said.
A law enforcement challenge
Cracking down on Silk Road has proved to be a challenge to law enforcement in many countries.
In June 2011, U.S. Senator Charles Schumer said "never before has a website so brazenly peddled illegal drugs online," and asked the Justice Department and Drug Enforcement Administration to shut down Silk Road.
Christin said that many buyers receive their purchases through private shipping companies, but packages are often delivered via registered mail. Silk Road's operators advise sellers to make shipments in vacuum-sealed bags to avoid drug-detecting dogs.
A spokeswoman for Canada Border Services Agency said that they visually screen all goods coming into the country to determine if they pose safety threats, but due to the high volume and manual nature of mail processing they use "risk management principles" to alleviate the process.
"Certain parcels may be examined further if we have concerns that they may be inadmissible, wrongly labelled or contain contraband," Amitha Carnadin said in an email.
Silk Road is not directly accessible on the Internet, but is instead only entered through a free anonymity software network called Tor, which protects users from online monitoring by encrypting their identifying information.
Christin said Tor has been successfully used by dissidents in oppressed countries or for anonymous reporting on sensitive topics.
"Silk Road has been able to conceal where it's operating from by using that network to conceal its location," he said.
The currency used on the site is called Bitcoin — a digital currency that makes it nearly impossible for authorities to follow the money trail. One Bitcoin currently converts to just over $11 Cdn, but the rate changes on a daily basis.
Bitcoin's main draw to illicit websites such as Silk Road is that it is decentralized and uses a network of computers, or nodes, to make monitoring transactions online much more difficult.
An Internet activist who runs Intersango, one of the largest Bitcoin exchanges in Europe, said that Silk Road is an "unfortunate inevitability" that emerged from a new technological trend, much like the spread of child pornography on the internet.
"It is actually selling drugs online and that is a problem, but I also think this is the dual-use dilemma that a lot of technologies have," Amir Taaki said in an interview from London.
"The same technology that can take off to the stars and new worlds can wipe entire countries off of the map," he said. "Blaming the concepts or technology itself is somehow shifting the blame away from the perpetrators."
Christin suggested in his study that destabilizing the digital currency may be one of the only ways to take down the website.
"It's the only currency that is used there and it's already fairly volatile," he said. "This is the type of thing that could potentially be an impediment to transactions taking place on the Silk Road."
However, Christin said similar websites could easily emerge.