EXCLUSIVE: Over a third of Canada’s total cigarette consumption was contraband tobacco
A new study analyzing tobacco markets in 11 different countries found that over a third of cigarette consumption in Canada was of illicit tobacco, representing over $2 billion in lost tax revenue.
Author: Clayton DeMaine
A new study found Canada lost more than $2.1 billion in tax revenue to illicit tobacco sales in 2025, and that 38.3 per cent of the estimated 17.9 billion cigarettes consumed that year came from the black market.
Danny Fournier, a 25-year veteran of the RCMP and now senior manager of illicit trade prevention for Rothmans, Benson & Hedges Canada, spoke with Juno News about the data and the implications of a growing illicit market for public safety and health.
The report released last week by KPMG LLP, a large professional services firm, was commissioned by Philip Morris, one of the world’s largest cigarette manufacturers. The study examined tobacco markets in 10 South American countries and Canada.
“It first and foremost highlights the implication of organized crime in the trafficking of contraband tobacco. The entire market is controlled by organized crime,” Fournier told Juno News in an interview on Wednesday. “From a public safety perspective, that’s probably the most concerning key takeaway.”
As general cigarette consumption dropped in Canada by 12 per cent from 2024 to 2025, in Canada according to the report, the percentage of contraband tobacco as a share of the market rose by 1.25 per cent.
“There’s a huge price tag to it. So the evaded tax losses are roughly $2 billion per year. So that is huge,” Fournier said.
That’s revenue that could have gone towards paying off just a portion of the $55.6 billion that the Canadian Taxpayers Federation says Canada spends on federal debt interest, according to the Canadian Taxpayers Federation. Fournier noted the lost revenue could also be used for public services.
Fournier said the study’s findings are “in line” with previous reports on the market.
“The numbers may vary a little, but the overall figure of $2 billion of evaded taxes every year still stands,” he said.
When asked for recommendations on how to decrease the portion of the cigarette market controlled by organized crime and contraband at large, Fournier said there are things both consumers and Canadian governments can do to tackle the issue.
He said there are three major segments Canada and Canadians must address to reduce demand in the contraband tobacco market: educating consumers about the risks to public health and safety, improving enforcement both online and in the streets, and the last would be taxation, which drives consumers to buy untaxed cigarettes.
Fournier also noted gaps in interprovincial and federal cooperation enforcement on the tobacco black market.
“There is little to no court national coordination when it comes to contraband cigarettes. A simple example of that would be duty to report,” he said. “Any law enforcement agencies that make a seizure of contraband cigarettes should add the duty to report. It’s a simple process, but that process allows a central function, for example, the federal government or the RCMP, to see trends per region, to dedicate resources per region per phenomenon, to see new trends coming.”
He said Canadian law enforcement would benefit from a centralized hub to address the issue as the contraband tobacco trade isn’t just a one-province or region issue; it often involves the purchase of contraband tobacco in one province and the product being shipped to others.
“We do not want to be, you know, pointing the finger or targeting policies and regulations to the end consumer, but the end consumer needs to be aware that when you purchase contraband cigarettes, you’re funding organized crime,” Fournier said. “It still highlights a huge issue from a public safety perspective and from a tax evasion perspective.”
Well, who can blame the smokers if they can get a break in the cost of cigarettes. No, I do not like smoking, but I myself sin by eating chips from time to time. I also have a drink from time to time. Taxing cigarettes to that extent is simply robbery. And they feel they have the moral imperative to justify the THEFT. All they have to do is convince the rest of society that they are TRYING TO HELP, cloak their superior knowledge and care in compassion and they now have the right to tell YOU how to live. If you do not follow THEIR prescription YOU WILL BE PUNISHED.
A better way of looking at this is Canadian consumers saved over 2 billion in taxes.