A Force For Good

"We need to make sure that both the customers and people in the industry are protected. I know it's an odd thing to say about a product that's dangerous but we need to ensure the best practices are followed. ... It's for the best of the community and the people who work in the industry."
"It;s pretty cut and dried ... they [the Canadian federal government and the provinces] consider this illegal and we consider it a right."
"On our part it's non-negotiable and on their side it's non-negotiable. I don't think there's any way we can come to the table and reach a political solution to this."
"We want to prop up the industry but also make sure it can help create other industries and be a force for good. That's not something we imposed -- that's something the tobacco industry put on the table."
Grand Chief Joe Norton, Kahnawake, Quebec

Surete Quebec Lt. Guy Lapointe shows seized tobacco at a news conference on April 30. Police said a U.S.-Canadian investigation had broken up an illegal-tobacco ring with ties to the Mafia. Photo: Ryan Remiorz/The Canadian Press/File

First Nations reserves do not recognize the sovereignty of Canada. They reserve for themselves the laws that govern First Nations reserves; sovereign nations within a Canadian confederation that they insist excludes them. The only matter that interests them in their dealings with the Government of Canada is that it honour their treaty rights as sovereign and equal nations with historical agreements not yet concluded, and that funding for reserves be received in a regular manner courtesy of the Canadian taxpayer.

First Nations reserves like those within the Mohawk territory of Kahnawake in both Canada and the United States have a robust market in illegal tobacco production and the sale of cigarettes. Illegal because they sidestep provincial and federal taxes as contraband cigarettes. It is legal under Canadian law for First Nations to grow and sell tax-free tobacco products but only on reserves across the country. When non-aboriginals buy the discounted cigarettes they are engaging in a criminal act.

The power to strip manufacturers and salespeople of their license to produce and sell such products if criminal ties are established lies with the federal and provincial governments. In the early 2000s some Kahnawake companies obtained federal tobacco licences but swiftly abandoned the licences when Quebec attempted to place provincial taxes on Mohawk cigarettes.

Nearly one in three cigarettes sold in Canada were from a First Nations reserve at the peak of the aboriginal tobacco trade. Which meant that hundreds of millions of dollars in lost tax revenue occurred, leaving the provinces and the federal government that much poorer. Yet it is out of the general tax base that the governments are expected to fund First Nations reserves.

A sign advertising cigarettes and tobacco products on highway 132 just outside the Kahnawake Mohawk Territory in Montreal on Wednesday, July 9, 2014. Dario Ayala / Montreal Gazette

As many as ten to a dozen cigarette factories operate in Kahnawake. Dozens of warehouses and shacks along Highway 132 -- used by over 100,000 commuters daily to access the Mercier Bridge into Montreal -- are in the business of selling contraband cigarettes. Kahnawake, however, has established its own tobacco law. A committee oversees production, from the field to the cigarette factories and the point of sale.

The band council is prepared to license local cigarette trade under provisions underwritten by the Kahnawake Tobacco Law. The growers and manufacturers must submit to rules and set prices and quality control before they are entitled to a licence to sell cigarettes on Mohawk territory. Money collected through licensing fees and fines is funnelled into an account to bankroll the commission along with legal fees related to fighting provincial or federal tobacco charges.

Oh, and also fund social programs on the reserve.

By the numbers:
50 — Number of illicit tobacco manufacturers believed to be operating in Canada
3 — Minutes it takes some manufacturers to produce one case (50 cartons) of cigarettes
2 to 3 — Typical production cost, in dollars, for 200 cigarettes
6 to 45 — Sale price, in dollars, for 200 cigarettes in the underground market.
Source: RCMP criminal intelligence report