11/05/2014 01:40 EST | Updated 01/05/2015 05:59 EST

Illegal Cigarette, Tobacco Sales In Alberta Need To End, Say Retailers

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EDMONTON - An organization that represents convenience store owners wants the Alberta government to crack down on the sale of illegal tobacco.

The group says a study it commissioned suggests high rates of contraband tobacco use across the province.

The Western Convenience Stores Association said the study done in September examined discarded cigarette butts at 49 locations and found an average rate of illegal tobacco use of about 10 per cent.

Association president Andrew Klukas said contraband cigarettes are sold without taxes, health warnings or checks of a buyer's age.

Klukas said sales of cheaper illegal tobacco hurt the bottom line of retailers, who sell cigarettes that are fully taxed, and also deprive the provincial government of tax revenue.

The association, which represents more than 2,400 convenience store retailers in Alberta, wants stronger anti-contraband legislation and more enforcement.

"The availability of illegal tobacco is clearly a problem in Alberta," Klukas said Wednesday. "Illegal tobacco is sold without proper taxation, making its rock-bottom pricing appealing to young people.

"Premier (Jim) Prentice and his government need to address this issue."

Jody Korchinski of the Alberta Gaming and Liquor Commission said the province has a team of 10 investigators who look into reports of illegal tobacco sales. She said they are on top of the problem and she urged anyone with tips about illegal sales to contact the commission.

"We follow up on complaints that we receive and our tobacco unit right now is doing a good job of handling this."

Alberta took in about $922 million in tax revenue from tobacco sales last fiscal year.

The Finance Department estimates the province is losing about $18 million a year in taxes because of contraband tobacco.

RCMP Cpl. Sharon Franks said organized crime is behind the contraband tobacco sales. Much of the illegal product comes from Ontario and Quebec, including First Nations communities.

Franks said illegal tobacco is a problem on some Alberta reserves.

"The RCMP does work with First Nations communities to try and combat that contraband tobacco," she said. "There is evidence to suggest that it is present there. As to what level and degree, it is difficult to determine at this point."

Prosecutions can take time to wind through the courts.

In April 2011 the province charged the CEO of Rainbow Tobacco GP after RCMP and commission investigators seized 16 million contraband cigarettes from a Quonset hut belonging to the Montana First Nation south of Edmonton.

The trial of Robbie Dickson and former Montana chief Carolyn Buffalo on charges under Alberta's Tobacco Tax Act is to resume Jan. 26.

When the charges were laid, the Alberta government estimated it would have lost $3 million in tobacco tax revenue if the seized smokes had been sold.

Klukas said contraband tobacco sales are a growing problem throughout Western Canada as gangs work to expand the illegal business beyond Central Canada.

He said it is hard for retailers to compete when a carton of illegal smokes is sold for a fraction of the fully taxed retail price of more than $100.

Alberta should at least hire more investigators, Klukas suggested.

"It really bugs us when there is somebody selling product out of the trunk of a car, cheap, to kids without age testing, without warning labels."


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