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Criminal Intelligence Service Canada (CISC)
Annual Report on Organized Crime in Canada 2001
Initial Comment by the Canadian Foundation for Drug Policy
In mid-August 2001, the Criminal Intelligence Service Canada (CISC) issued its Annual Report on Organized Crime in Canada 2001. The CISC details the involvement of organized criminal groups in many activities, among them the trade in illegal drugs.
RCMP Commissioner G. Zaccardelli is the Chair of CISC. His preface to the report states:
We need the public to recognize the effects of organized crime in our communities and across the country. We need the public to take an aggressive stance against all organized criminality.
The report warns about the extensive involvement of organized crime in Canada's drug trade. However, nowhere does the report mention that the extensive interest of organized crime in the drug trade flows from the enormous profits brought about by the prohibition of these drugs.Successes against organized crime require a continual coordinated effort that recognizes its global networks, complex social milieu, and use of technology. Strategic coordination, commitment to intelligence and communication are all integral to the fight against organized crime. Integrated approaches are essential, particularly those that reach beyond organizational, jurisdictional and national boundaries.
Following are excerpts (compiled by the Canadian Foundation for Drug Policy) from the report dealing with the role of organized crime in Canada’s drug trade. Click here to see the full report. Click here to see the press release issued by the RCMP when the report was released.
Foundation for Drug Policy, August 17, 2001
This report is designed to present a comprehensive review of targeted
organized crime groups and their activities, based on intelligence and
investigation reports from Canadian and international enforcement agencies. In
particular, CISC relies on intelligence from CISC member agencies across
Asian-based organized crime (AOC) groups continue to be extensively involved
in trafficking cocaine and marijuana and in the importation and distribution of
Southeast Asian heroin. ...
East European-based organized crime (EEOC) groups are involved in
sophisticated credit and debit card schemes and Internet frauds, the smuggling
of stolen consumer goods and other criminal activities, including drug
importations. . . .
Traditional (Italian-based) organized crime (TOC) groups continue to cultivate
low profile in order to minimize media and law enforcement attention. TOC
groups continue to be a principal force within Canada’s organized crime milieu
and are extensively involved in the importation and distribution of drugs and the
facilitation of laundering proceeds of crime.
The HELLS ANGELS outlaw motorcycle gang (OMG) remain the largest and
most criminally active OMG in the country. The HELLS ANGELS and ROCK
MACHINE declared a public truce in their six-year drug conflict in October 2000
but sporadic violence between the gangs continues. In 2000, the HELLS
ANGELS established a number of new chapters in Ontario, after the ROCK
MACHINE, now probationary BANDIDOS, established chapters in the province.
OMGs in Canada continue to use violence, ranging from intimidation and
assault, to attempted murder and murder to promote and protect the gangs’
interests. OMGs remain extensively involved in the importation and trafficking of
drugs, in money laundering, fraud, theft, counterfeiting, loan-sharking, extortion,
prostitution, escort agencies, strip clubs, booze cans (selling alcohol illegally),
the possession and trafficking of illegal weapons, stolen goods, contraband,
alcohol and cigarettes.
There have been a number of convictions of OMG members across the country
in the past year. In British Columbia, two HELLS ANGELS were convicted of
trafficking in cocaine, while in Québec eight members of the BLATNOIS
MAURICIE outlaw motorcycle gang pled guilty to drug trafficking, assault,
kidnapping, violating anti-gang legislation, threats and weapons offences. Eight
members of the ROCK MACHINE (now probationary BANDIDOS) were
convicted on drug trafficking charges, while four of those members were also
convicted for gangsterism in the first major success for the 1997 anti-gang
In March 2001, the joint forces Operation SPRINGTIME 2001 in Québec
in the arrests of 138 HELLS ANGELS members and associated gang members
and the significant disruption of OMG activity throughout Québec. Two days
later, the joint forces Operation SHADOW in Alberta concluded with the arrests
of 51 members and associates of the Calgary chapter of the HELLS ANGELS.
Organized crime groups have infiltrated and continue to use Canada’s marine
ports as a major conduit for contraband, including drugs, tobacco, alcohol,
firearms and illegal migrants, to enter the country.
ASIAN-BASED ORGANIZED CRIME
Asian-based organized crime groups continue to be extensively
involved in trafficking cocaine, the production, trafficking and exporting
of marijuana, the importation and distribution of Southeast Asian heroin
and have diversified into the distribution of ecstasy.
. . .
Across Canada, AOC groups continue to be involved in the large-scale
importation and trafficking of drugs, particularly heroin and cocaine, the
cultivation, trafficking and exporting of marijuana . . . . The groups are
also involved in the laundering of criminal proceeds and the investment
of laundered money into legitimate businesses.
. . .
There continues to be gang violence in the Lower Mainland, particularly between
Vietnamese gangs. In 1999 and 2000 there were a number of incidents and
homicides involving Vietnamese gangs.33
. . .
As a recent court case in B.C. indicates, AOC continues to be extensively
involved in the large-scale importation of heroin. In a RCMP-led operation, a
Hong Kong resident pled guilty to drug trafficking. In an operation involving police
in Hong Kong and China, the Vancouver RCMP targeted an incoming shipment
of heroin which was shipped from Guangdong province in China. The
high-quality heroin was packed in 55 airtight bricks and hidden inside the false
bottom of a shipping container which also held a legitimate shipment of
Chinese-made merchandise. The accused received a 14-year jail sentence.
Six co-accused are still before the court.39
A joint forces operation, Project KATALYST, involving the Edmonton Police
Service (EPS), the RCMP and Criminal Intelligence Service Alberta (CISA),
concluded in March 2001 with the arrest of five men and two women. The
multi-ethnic gang was involved in cocaine trafficking to various areas in
Alberta.40 Investigation of the ring, composed of approximately 10 members,
began in 2000 after the shooting death of a mid-level gang enforcer who was
killed after he fired on police. The individuals are charged with conspiracy to
traffic cocaine.41 Approximately $340,000 dollars in cash and property has been
seized as alleged proceeds of crime.
Those charged as a result of a 1999 joint forces operation, Project KACHOU,
are before the courts. The 14-month operation, which involved the EPS, the
RCMP and CISA, investigated an AOC family. Thirty-three people were
charged with a number of counts, including cocaine trafficking, money
laundering, possessing the proceeds of crime, conspiracy and participation in a
criminal gang. The cocaine was reportedly obtained in Vancouver, and
distributed to areas in British Columbia and Alberta.42 Approximately $1.7
million dollars in property, cash, jewelry and vehicles has been seized as alleged
proceeds of crime.
In Saskatchewan, particularly in the northern half, AOC groups are primarily
involved in the importation of cocaine and heroin from British Columbia and
Alberta for distribution throughout the province. Some individuals have ties to
AOC groups from Edmonton. There has been an increase in AOC groups
smuggling cigarettes and liquor across the province. In Regina, local individuals
with links to the DAI HUEN JAI43 in Vancouver were actively involved in
counterfeiting, drug trafficking and stolen autos.
In 1998, an operation targeted a predominantly Asian-based gang in Winnipeg
suspected of trafficking cocaine. Thirty-five men and women were arrested in
May 1999, including three gang ringleaders. One pled guilty to conspiracy to
traffic cocaine and received a four-year sentence. Two more junior associates
received two years each for their parts in the conspiracy to traffic cocaine. In the
investigation, more than 2,200 telephone calls were recorded which detailed the
shipment of several kilograms of cocaine from Vancouver to Winnipeg.44
The Akwesasne Mohawk Territory, Walpole Island and the Niagara area
continue to be used by AOC as routes to smuggle goods and people across the
. . .
In September 2000, approximately 57 kg of heroin, 17 kg of designer drug
and $1.2 million in Canadian and U.S. currency were intercepted and seized as
a result of a year-long investigation, which included cooperation from Vancouver
law enforcement, the Combined Forces Special Enforcement Unit47 and the
Canada Customs and Revenue Agency in Toronto. The heroin, which
originated in Southeast Asia, was shipped by rail after arriving in Vancouver
from Guangdong province in China. The drugs were hidden in 1,700 plastic
eggs among 174,000 real duck eggs. The heroin could provide 2.85 million
individual doses. Three individuals from Scarborough are charged.48
There has been an increase in AOC-operated marijuana grow operations
across the country, particularly in Calgary and southern Ontario. The bulk of the
marijuana grown in British Columbia is exported to the United States where
there is a large market and a higher profit margin. It is estimated that, in the city
of Vancouver alone, there are approximately 10,000 clandestine marijuana grow
. . .
AOC groups will continue to be extensively involved in the importation
of Southeast Asian heroin to Canada
. . .
AOC will expand its involvement in the growing and exporting of
39 Ivens, Andy, “14 Years for Trafficker Nabbed in Heroin Bust,” The Vancouver
February 200; Appleby, Timonth, Miro Cernetig and Rod Mickleburgh, “Drug Haul Biggest in
Canadian History, The Globe and Mail (Toronto), 6 September 2000. The same week as the
Vancouver heroin was seized, a large heroin seizure was made in Toronto.
40 “Cocaine Seized, 7 Arrested as Crime Ring Busted,” The Edmonton
Journal, 10 March
2001; Humphreys, Adrian, “Cocaine Crime Ring Smashed in Edmonton: Armoured Police Raid:
Probe Launched After Shoot-Out with ‘Crazy Jimmy,’ ” The National Post (Toronto), 10 March
41 “Cocaine Seized, 7 Arrested as Crime Ring Busted,” The Edmonton Journal,
2001; Humphreys, Adrian, “Cocaine Crime Ring Smashed in Edmonton: Armoured Police Raid:
Probe Launched After Shoot-Out with ‘Crazy Jimmy,’” The National Post (Toronto), 10 March
42 Blais, Tony, “Crown Case Mapped Out; Organization’s Chart Alleges So-Called
Gang Operated Like Large Company,” The Edmonton Sun, 4 November 2000.
43 The DAI HUEN JAI, also known as the BIG CIRCLE BOYS, is an AOC group
national network across Canada and has been involved in a number of criminal activities,
including drug trafficking, extortion, prostitution, gaming offenses and the manufacture and
distribution of counterfeit credit cards and other documents.
44 O’Hallarn, Brendan, “Drug Kingpin Pleds Guilty; Phone Taps Incriminate
Winnipeg Sun, 2 February 2001.
45 Richmond, Randy, “Web of Smuggling Still Growing, The London Free Press,
December 2000; Richmond, Randy, “Eight Chinese Migrants Nabbed – Two London-Area
Natives Held in U.S. after Young Chinese Found in Van,” The London Free Press, 4 August
2000; Dawson, Fabian, “Mounties Investigate Minister’s China Trip: Elinor Caplan may have
Unknowingly Tipped off People-Smuggling Suspect,” The Vancouver Province, 19 December
46 Blackwell, Tom, “Police Crack Korean-based Smuggling Ring,” The Ottawa
March 2001; Faulkner, Robert, ‘Major Player’ Sought After Arrests Made in Asian Smuggling
Ring; 1,200 Migrants Transported to US via Canada,” The Toronto Star, 24, March 2001.
47 The Combined Forces Special Enforcement Unit (CFSEU) is a permanent
operation in Toronto involving a number of police agencies which targets various organized crime
groups, such as AOC.
48 Appleby, Timothy, Miro Cernetig and Rod Mickleburgh, “Drug Haul Biggest
History,” The Globe and Mail (Toronto), 6 September 2000; Elliot, Louise, Dene Moore, “RCMP
Cracks Scheme to Bring Heroin into Canada inside Duck Eggs,” Montreal Gazette, 6
September 2000. This seizure was made the same week as a large heroin seizure in
49 Humphreys, Adrian, “Loans Sharks Worked Casino Rama: Leaders Pled Guilty:
Rates Reached 3.6 Billion Percent a Year for Gamblers,” National Post (Toronto), 14 March
2001; Lamberti, Rob, “Casino Loan Shark Fined $61Gs,” The Toronto Sun, 11, March 2001.
Under law, interest rates are calculated over a year to see if they are above the top legal rate of
60%. The highest rate of interest charged in this case amounted to 3.6 billion percent a year,
although no loans remained unpaid that long.
EAST EUROPEAN-BASED ORGANIZED CRIME (EEOC)
EEOC groups are most active in the larger urban centres of Ontario,
and British Columbia. Other Canadian provinces and territories report an EEOC
presence, notably Atlantic Canada.
EEOC groups are strongly motivated by profit and are indiscriminate in
choice of illegal activity. . . .
The most frequently reported criminal activities include financial frauds,
prostitution, theft, contraband smuggling, illicit drug importation, vehicle theft and
illegal export, and money laundering. . . .
EEOC will continue to be involved in sophisticated financial frauds and
commodities smuggling, and become increasingly involved in other
criminal activities, including drug importations.
EEOC groups will continue to conduct activities in Canadian sectors
vulnerable to penetration that can offer substantial profit.
TRADITIONAL ORGANIZED CRIME (TOC)
Traditional (Italian-based) organized crime remains a threat, with
members involved in a variety of criminal activities throughout Canada.
In Canada, Italian-based criminals either belong or are connected to one
three main organizations: the Sicilian mafia, the 'Ndrangheta or the American
arm of the Cosa Nostra. The Sicilian mafia, the most influential of the three, has
ties to other Sicilian clans in Canada and elsewhere, particularly Venezuela, the
United States and Italy.
All of these organizations maintain close ties with Asian and East
European-based organized crime, outlaw motorcycle gangs, Colombian and
other South American groups, and various domestic criminal organizations.
They participate in joint criminal ventures with these groups in the pursuit of
mutual profit, particularly in the movement of drugs into Canada and providing
assistance for the laundering of drug proceeds.
TOC members are involved across Canada in a variety of criminal endeavours
including drug smuggling and trafficking, illegal gaming, money laundering,
extortion, and loan-sharking. . . . Profits from these criminal activities are
invested in both legitimate commercial enterprises as well as their on-going
. . .
In Ontario, TOC crime families have been active for many years and continue
maintain their presence. They are involved in extortion, loan-sharking, illegal
gambling machines and importing and distributing drugs.
. . .
The majority of TOC involvement in the Atlantic region appears to be focused on
marine ports and involving the importation of narcotics.
TOC will continue to be active in various criminal activities including
drug trafficking, money laundering and illegal gaming.
OUTLAW MOTORCYCLE GANGS (OMGs)
The year 2000 saw dramatic growth for the HELLS ANGELS as
chapters were formed in Manitoba and Ontario. The BANDIDOS
patched-over the ROCK MACHINE as probationary members (one step
below full membership) in December 2000.
OMGs in Canada continue to use violence, ranging from intimidation
and assault to attempted murder and murder.
OMGs continue to associate with street gangs and other organized
crime groups at the regional, national and international levels.
. . . Members of the HELLS ANGELS continue to be involved in
and trafficking of cocaine, the cultivation and exportation of high-grade marijuana and,
to a lesser extent, the production and trafficking of methamphetamine, the trafficking of
ecstasy and other synthetic illicit drugs.
. . .
The HELLS ANGELS continue to be heavily involved in the importation and
trafficking of cocaine, the cultivation and trafficking of hydroponically-grown
marijuana and, to a lesser extent, the importation and trafficking of
methamphetamine, ecstasy and hashish. Criminal organizations involved in the
lucrative marijuana grow-operation industry also exploit the U.S./Canada
The year 2001 brought the first convictions of B.C. HELLS ANGELS for a
serious crime, trafficking in cocaine. Two members of the HELLS ANGELS
Vancouver chapter, were found guilty of three of the five charges they faced
together, for conspiring with four other men to traffic in cocaine, trafficking in
cocaine and possession of the proceeds of crime. One of them was also
convicted of two other counts of possession of cocaine and ecstasy.62
The two-year operation illustrated the difficulty of investigating and
members of a criminal organization. It involved 25 officers and had a Crown
prosecutor dedicated to the case which took four months to prosecute.63 On
January 22, 2001, a prosecutor was allegedly approached by two men and his
life was threatened. The court case is ongoing.64
The HELLS ANGELS in Alberta have three chapters: Edmonton, Calgary
NOMADS chapter in Red Deer. The gang continues to control a large portion of
the drug distribution in Alberta, trafficking in cocaine, hashish and chemical
drugs and also managing hydroponic marijuana grow operations.
. . .
The last individuals charged in the 1997 joint forces operation Project
against the REBELS (now HELLS ANGELS) have received their sentences.
One of them pled guilty to one count of possession of hashish and cocaine for
the purpose of trafficking and one count of possession of proceeds of crime. A
second, a prospect for the HELLS ANGELS Edmonton chapter, pled guilty to
one count of trafficking in cocaine. They were sentenced to three years each in
. . .
Trafficking in cocaine and marijuana continues to be the primary activity
HELLS ANGELS Saskatoon chapter. The gang manages numerous marijuana
grow operations and is also involved in strip clubs and escort agencies.
. . .
In 1999, the HELLS ANGELS began wrestling control of the Ottawa-Hull drug
market from local independent drug dealers and the local OUTLAWS through
violence and intimidation.74
. . .
Outlaw motorcycle gangs continue to use intimidation and violence to promote
and protect gang interests. In September, Michel Auger, a crime reporter for the
Journal de Montreal was shot five times in the back but survived. He had
recently completed a feature on the recent deaths and disappearances of
HELLS ANGELS and Mafia members as a result of drug conflicts.77
. . .
There have been a number of operations and convictions against OMGs in
Québec in 2000 and to date in 2001. Eight members of the BLATNOIS
MAURICIE pled guilty to 84 of 162 charges, including drug trafficking, assault,
kidnapping, violating anti-gang legislation, threats and weapons offences.
Prison terms ranged between three and eight years. The BLATNOIS, which
operates in the northern Mauricie region, is a puppet club to the HELLS
ANGELS Trois Rivières chapter. The gang used violence and intimidation to
direct and control street-level drug dealers.79
The trial originally involved 13 defendants, but was later severed.
remaining BLATNOIS members and two HELLS ANGELS face similar
Eight ROCK MACHINE members and associates were convicted on various
charges, including drug trafficking. Four individuals were also convicted for
gangsterism in the first major success for the 1997 anti-gang legislation.81
. . .
Since 1997, Halifax has experienced a number of drug-related murders and
attempted murders as the HELLS ANGELS attempt to dominate the drug
An associate of the HELLS ANGELS Halifax chapter has been charged with
money laundering and drug trafficking offenses and two counts of murder. After
disappearing from Halifax in June 1999, he was located in November 2000
incarcerated in Grenada. He is the sixth person charged in the murders of two
associates of the HELLS ANGELS Halifax chapter.85
61 Godfrey, Tom, “RCMP- B.C. Pot Rolling Our Way,” The Toronto Sun, 30
Armstrong, Jane, “Hells Angels Quietly Make Money in B.C.,” The Globe and Mail (Toronto), 24
July 2000; Godfrey, Tom,“Marijuana Flows Over B.C. Border,” The Winnipeg Sun, 7 May 2001.
62 Hogben, David, “Crown Urges Court to Give Hells Angels Six Years Each,”
Vancouver Sun, 12 May 2001.
63 Ivens, Andy, “Two-Year, 25-Cop Probe Yields First Hells Angels Convictions,”
Vancouver Province, 23 January 2001. They were found not guilty of trafficking cocaine and
possession of money from the proceeds of crime. Neither had a criminal record. Their
membership in the HELLS ANGELS was not introduced until after the verdict was returned.
64 Galashan, Sarah, “Man Behind Alleged Threat Surrenders to Police,” The
Sun, 29 January 29, 2001.
65 “Police Seize Guns, Drugs and Pager Monitoring Equipment,” Edmonton
News Release, 2 November 2000.
66 “Court Finds Police Violated Hells Angels' Rights,” The Globe and Mail
August 1 2000.
67 “Court Finds Police Violated Hells Angels' Rights,” The Globe and Mail
August 1 2000.
68 Blais, Tony, “Prospects Pled Guilty,” The Edmonton Journal, 11 October
Tony, “Biker Hopeful Jailed,” The Edmonton Sun, 16 January 2001; “Last Biker Arrested in
Crackdown Jailed 3 Years on Drug Charges,” The Sault Star, 24 January 2001. During the
18-month Project KISS, police seized almost $750,000 in cash and raided 38 businesses and
homes. Fifty-one drug-related charges were laid against 10 people, including six full members,
one striker (one step below a member), two hangarounds and two associates of the REBELS.
69 Martin, Kevin, “Angel Convicted, Plotted to Blow up Home,” The Calgary
Sun, 12 May
2001; Slade, Daryl, “Defendant Denies Role in Alleged Bomb Plot: Former Biker Boss Takes
Stand,” The Calgary Herald, 8 May 2001. The judge said there was no evidence proving he
wanted to cause injury. An explosive device seized from the associate's home couldn't be linked
to the accused.
70 Halliday, Bob, “Los Brovos Granted Prospect Status by Hells Angels,”
Sun, 21 July 2000; Halliday, Bob, “Los Brovos Become Hells Angels,” The Winnipeg Sun, 18
71 Cumming, Jason, “Rock Machine Celebrated 2 New Chapters,” The Ottawa
Sun, 12 June
2000; “New Rock Machine Chapter Opening in Niagara,” The Kitchener-Waterloo Record, 8
August 2000. The ROCK MACHINE has a history of associating with the OUTLAWS,
specifically the Ontario chapters, who are also long-time enemies of the HELLS ANGELS.
72 Lamberti, Rob and Jack Boland, “Toronto Bikers Close Chapter,” The Toronto
February 2001; Edward, Peter, “Biker Lion Bound for Barrie Area, The Toronto Star, 6 June
73 Cherry, Paul, “Hells Angels Initiate First Ontario Members,” The Ottawa
December 2000. The Ontario HELLS ANGELS' anniversary date is December 5, 2000.
74 Shulgan, Christopher, “Hells Angels Tighten Grip on Ottawa Rave Scene,”
Citizen, 22 August 2000.
75 MacCharles, Tonda, “PARA-DICE Riders Drop Supreme Court Case,” The Toronto
11 October 2000. The Durham Regional Police Service asked the Supreme Court to rule despite
the abandoned appeal arguing there is confusion regarding police roadchecks. The justices
would not proceed without an appellant.
76 Sturino, Idella, “Courthouse Summit for Biker Gangs,” The Chronicle-Herald
September 2000; Ha Tu Thanh, “Warring Biker Chiefs Make up over Dinner,” The Globe and
Mail (Toronto), 10 October 2000. A similar public truce was declared in Scandinavia in 1997
between the HELLS ANGELS and BANDIDOS. There, like Canada, OMGs were facing
increased police and political pressure.
77 Naumetz, Tim, “Hundreds Show Support for Shot Journalist,” The Winnipeg
16 September 2000; Naumetz, Tim, “Politicians on Organized Crime Committee Seek Police
Protection,” The Ottawa Citizen, 16 September 2000.
78 Carroll, Ann, “Two Arrested in Auger Case,” The Montreal Gazette, 31
“Government Worker Sold Data to Bikers,” London Free Press, 6 June 2001.
79 Cherry, Paul, “Eight Blatnois Members Jailed,” The Montreal Gazette,
2 May 2001.
Jurors' identities were kept secret and the witness stand was shielded from the view of the
80 Panetta, Alexander, “Québec Bikers Pled Not Guilty to 162 Charges
Courtroom,” The Montreal Gazette, 17 January 2001; Cherry, Paul, “Eight Blatnois Members
Jailed,” The Montreal Gazette, 2 May 2001.
81 Ha, Tu Thanh, “Rock Machine Found Guilty,” The Globe and Mail (Toronto),
82 Macafee, Michelle, “Boucher loses bid to get out of isolation,” The
Canadian Press, 12
June 2001. The Supreme Court of Canada ordered a new trial on April 19, 2001.
83 Cherry, Paul, “City Tries to Get Rid of Bunker: Bikers a Menace: Blainville,”
Gazette, 27 January 2001; Porter, Hazel, “City Takes Aim at Bikers: New Dorval Bylaw Bans
Bunkers,” The Montreal Gazette, 24 May 2001.
84 Brooks, Patricia and Randy Jones, “Fugitive Hells Angels Associate Nabbed
Grenada,” The Chronicle-Herald (Halifax), 28 November 2000.
85 Brooks, Patricia and Randy Jones, “Fugitive Hells Angels Associate Nabbed
Grenada,” The Chronicle-Herald (Halifax), 28 November 2000.
Organized crime has infiltrated Canada’s marine ports to facilitate the
movement of contraband into Canada.
Organized crime groups are involved in the movement of contraband into
Canada and/or its distribution. Drug smuggling and trafficking remain the major
source of criminal profit for many crime groups, but other significant forms of
contraband include alcohol, tobacco, firearms, precious stones, luxury vehicles
and illegal migrants. Canada’s marine ports are sometimes used as a conduit
for contraband entering and leaving the country.
There continues to be an illicit tobacco and alcohol market in Canada supplied
to varying degrees by cross border smuggling and various domestic illegal
. . .
In Canada, the illicit tobacco market consists of products from a number
sources, including between provinces due to tax differentials, through illegal
diversion within a province’s internal distribution, smuggled Canadian or foreign
brands and illicit manufacture.
. . .
A new Canadian tobacco tax structure was introduced in April 2001 which
included, among other changes, tax increases in the five low-tax provinces
(Ontario, Québec, New Brunswick, Nova Scotia and Prince Edward Island),
designed to reduce provincial price disparities, and a revised export tax. To
date, the effect of this new tax structure on the dynamics of the illicit tobacco
market remains undetermined.
In the aftermath of the 1994 tax decrease on tobacco products in Canada,
criminal organizations previously involved in the smuggling of tobacco either
switched completely or intensified their previous involvement in the movement of
illegal alcohol into Canada. This criminal activity continues to be attractive to
organized crime groups due its strong demand, low risk, and high profit
potential. . . .
The United States constitutes the primary source country of smuggled illicit
alcohol. This is attributed to the sizeable tax differential, its geographic
proximity, and the openness of the international border. As an example, under
the current tax structure, 83 per cent of the retail cost of a typical bottle of
Canadian spirits in Ontario is paid to provincial and federal governments. This
is approximately twice the average U.S. level of taxation.
Alcohol on the illegal market is also obtained through retail/wholesale
illicit manufacture. In January 2001, alcohol worth approximately $1.4 million was
stolen from a Seagram liquor warehouse.102 Stills for the illicit manufacture of
alcohol continue to surface across the country. For the most part, these tend to
be personal-sized operations but there are larger quantity operations,
particularly in Québec and the Atlantic region. Alcohol from illicit production
carries a health risk for the consumer, ranging from bacterial contamination to
levels of methanol poisoning which could result in death.103
Organized crime groups in Canada are involved in the acquisition and
distribution of illegal commodities that originate from a foreign source and use
Canada’s marine ports as a major conduit for the contraband to enter the
country. Criminal groups use legitimate commercial movement and the
transportation industry to camouflage this illegal activity. The contraband
includes such commodities as drugs, tobacco, alcohol and firearms, but illegal
migrants also have been discovered hidden within commercial cargo vessels,
particularly concealed within cargo containers. . . .
Major crime groups such as outlaw motorcycle gangs, Asian-based organized
crime, East European-based organized crime groups and Traditional organized
crime have infiltrated the marine ports of Canada. These groups also develop
long term alliances or temporary deals to jointly use their connections at any
North American marine port to initially move contraband into one country and
subsequently either way across the U.S./Canada land border.
. . .
Organized crime groups will continue to use marine ports to move
significant quantities of contraband in and out of Canada.
A new tobacco tax structure has been implemented but it is too early to
determine its effect on the current dynamics of the illicit tobacco market.
The illicit alcohol market will continue to be fueled by contraband
products from the United States, domestic thefts and illicit manufacture.
98 Culbert, Lori, “Mounties Seize Smokes Smuggled Into B.C.”, The Vancouver
99 Janzen, Leah, “6,550 Cartons of Cigarettes Seized By Tax Investigators”,
Free Press, 17 October 2000.
100 Schmitz, Cristin, “Canada Revives U.S. Tobacco Suit”, The Montreal
Gazette, 30 May
101 Bloomberg News, “European Commission Turns Up Heat on Big Tobacco”,
Post (Toronto), 7 November 2000.
102 “Hooch Bandit Snapped”, The Montreal Gazette, 30 January 2001.
103 Mathias, Philip, “The Bootlegging Bonanza”, The National Post
(Toronto), 11 November
104 Canadian Firearms Centre, “National Weapons Enforcement Support
Illegal Traffickers and Smugglers,” 26 January 2001.
105 Mitrovica, Andrew, “Blood Diamonds are here, Police Fear”, The Globe
(Toronto), 29 March 2001.
106 Cherry, Paul, “Montreal Port Gets Big Piece of Federal Anti-Drug Cash”,
Gazette, 22 June 2001.
Updated:Sunday, 19-Aug-2001 14:05:37 PDT| Accessed:63807times