Convenience stores and smoke shops in Ottawa are losing money because of rising sales of contraband cigarettes.
“We have lost 40 per cent of our business since last summer due to contrabands,” said Eli Ayoub, owner of South Bank News Plus.
Ayoub said he sees contraband smokes being sold in front of his store and, as a result, it is getting harder to sell cigarettes a top moneymaker for him.
For consumers, the attraction to contrabands is the low cost.
According to Finance Canada, a carton of 200 cigarettes purchased legally in Ontario including federal and provincial taxes would be $64.79.
A carton of contraband cigarettes may cost between $6 and $10.
After 18 years of business, owner Richard Primeau closed his Beechwood Avenue store, blaming contraband cigarettes.
The New Edinburgh News Stand was a cornerstone fixture of the neighbourhood where residents went to buy their papers and magazines.
A sign on his door said he could no longer live on the sale of magazines alone because of the migration of smokers to contraband cigarettes.
“I mean I’ve probably lost 50 per cent of my business for sure,” he said in reference to cigarette sales.
Primeau said that others are saying people are smoking less. He said they aren’t in his area.
“I think 50 per cent of the small stores in Ottawa within the next three years will close if cigarettes carry on like this,” Primeau added.
While contraband cigarettes are not new, their popularity is on the rise.
Dave Bryans, president of the Canadian Convenience Stores Association, said 37 per cent of cigarettes sold in Ontario are contraband and nationally, one in four cigarettes smoked is illegal.
“Tobacco is a habitual product that bring people in daily or every other day and the sustainability of traffic isn’t there anymore,” Bryans said.
He added that overall sales in convenience stores in Ontario are down 25 per cent recently.
Since customers are no longer coming in to buy tobacco they do not buy other products such as gum, chips, pop, lottery tickets or magazines.
Store owners like Ayoub and Primeau are not the only ones losing money. So too are the federal and provincial governments.
They lost $1.6 million in tobacco tax revenues in 2006 alone according to a report from the Canadian Convenience Stores Association.
Contraband cigarettes are either shipped in from other regions, such as Asia, or are made at 21 federally licensed Native production facilities in Ontario and Quebec.
Aboriginal people in Ontario are exempt from paying federal and provincial taxes on unbranded cigarettes and tobacco products purchased on reserves.
For smoke stores and news stands in the region Primeau said there are three main cigarette wholesalers: Tannis Trading, Costco and the National Grocery.
An employee at the Times Square Tobacco and News Stand on Clarence Street who asked to remain unnamed said contraband cigarettes are being sold everywhere.
The employee said people regularly sell the cigarettes on Bank Street.
Several of the shop's customers have told the employee that once someone in their office has the illegal cigarettes, they get sold among colleagues.
According to Primeau you can probably go to any bar in Ottawa and ask if anyone is selling contraband cigarettes. Contraband smokes are also being delivered to schools and houses.
“More people are smoking now than they ever did because it’s cheaper and the government doesn’t have the political will to do anything,” said Ted Britton, owner of Britton’s on Bank Street.
While he relies on the sale of magazines at his store, Britton said he knows a lot of the smaller stores which depend on tobacco sales are really hurting badly.
Who is responsible for keeping contraband cigarettes off the streets is questionable Bryans said.
Primeau said he thinks something has got to happen within the next year to control and enforce contraband laws but he doesn’t know what the best option is.
“It’s time for the federal government, the provincial government, enforcement agencies and health groups to come together and say, ‘How are we going to tackle this issue that is growing out of control and hurting small businesses?’” said Bryans.
He added that if something is not done more stores like Primeau’s will be closing, especially in smaller communities.
Bryans said all that he can do for now is ask the government to come to the table and help small businesses.
He is currently in talks with several federal bodies including Health Canada, the Prime Minister’s Office and the Department of Finance to see what can be done to protect small businesses.