Cigarettes produced on Canada’s native reserves are at the heart of ‘multinational’ smuggling
With Donald Trump only weeks away from his inauguration, talk of walls along the Mexican border have – for the moment at least – fallen from the agenda. But another border is fast becoming a problem.
The 3,000-mile frontier with Canada has seen smuggling involving organised crime develop on a potentially global scale, with both governments apparently powerless to do anything about it.
The smugglers’ commodity is tobacco, mostly ready-rolled cigarettes, boxed and branded but untaxed, uncontrolled, and being sold at barely one third of the legal price, particularly in Canada where taxes are higher – and often to schoolchildren.
The problem has been growing since it took off in 2008. The Canadian government claims to have seized to date 252 million contraband cigarettes and 4.3 million untaxed cigars, but reckons that represents just the tip of the illegal tobacco mountain.
Canada is due to legalise cannabis totally next year and there are hopes that a “pot tax” could replace some duty lost to contraband cigarettes, but also fears that excessive tax would end up with the same situation as now pertains with tobacco, involving the same players.
In March 2016 a mammoth cross-border operation involving some 700 US and Canadian police and customs officials seized C$4m (£2.5m) in cash and 5,200kg of smuggled tobacco worth C$13.5m (£8m).
Six months later, Sylvain Éthier, 41 – among those arrested and still awaiting trial – was shot dead outside his home near Montreal by a member of one of the biker gangs believed to be facilitating the smuggling operations.
But the reason this formidable and growing racket has not been stamped out by either the US or Canada is that there are more than two nations involved.
In theory at least, there are several hundred, scattered all across North America, even if some of them number no more than a few thousand individuals. In Canada they call them First Nations; in the US, Native Americans.
Following centuries of maltreatment and under-representation, both the US and Canada nowadays recognise their “reservations” – usually no bigger than villages – as sovereign territory with their own internal laws and “peacekeeper” police forces. But for the Indigenous community it is all too little, too late. They consider themselves to have been lied to and robbed for more than 250 years, despite supposedly legal treaties signed, over time, with British, French and US governments.
They insist they never sold off their land, but were robbed of vast areas by unscrupulous “Indigenous agents”. And, over the past decades, even as their cause became recognised, they have become more militant, demanding compensation and an end to encroachment.
The first major incident occurred in July 1990 when the mayor of Oka, a small town near Montreal, began felling trees to expand a nine-hole golf course to 18 holes and develop an apartment block nearby.
The local Mohawk tribe were outraged, claiming the development infringed on their land. They blocked access and set up barricades, and police armed with tear gas and stun grenades inflamed the situation. One policeman was killed, while the rest retreated, leaving behind bulldozers and patrol cars.
The situation escalated over several weeks, with “natives” from all over North America rallying to the Mohawks’ support, until at one stage there was an army of 600 armed men defending the territory and blocking a bridge over the Saint Lawrence river into Montreal.
The “Oka Crisis”, as it has gone down in Canadian history, lasted nearly two months and ended with a climbdown by the authorities and advice to police forces to go softly on “Indian” relations.
Spool forward three years, to the signing of the North American Free Trade Agreement (a target very much in Trump’s sights), and many of North America’s big tobacco companies relocated their manufacturing plants to Mexico’s cheap labour market.
The result? Members of the Indigenous community acquired their equipment cheaply and went into the business themselves, setting up factories on the reservations, theoretically not subject to US or Canadian domestic law. The theory was that the cigarettes could only legally be bought by reservation-dwellers; the result was a contraband explosion.
The most visible evidence of the native tobacco revolution has been the mushrooming of “smoke shacks” along the roads and in the village centres of almost every reserve, selling packs of home-made cigarettes at less than a quarter of the price of big brands, and unbranded loose bags of 200 for substantially less.
Drive into Kahnawake, a small territory lying in the shadow of Montreal just across the Saint Lawrence, and every corner has its own: Red Man Smoke Shop, Mighty Iroquois Tobacco, Totem Pole Smokes, proclaiming “Meilleur qualité, meilleur prix” [best quality, best price], and offering the vast multiplicity of “native”’ brands: Tomahawk, Deerfield, Fleur de Lys, Canadian Goose, Putters and dozens more.
And then there are the “baggies”, which offer 200 smokes for just C$10 (£6) as opposed to the C$80-90 for well-known brands bought in an ordinary Canadian corner shop. Officially the “natives” are not supposed to sell to outsiders, but in practise it is impossible to enforce.
On the road into Kahnawake, a small town of some 8,000 people, I watched a portly white Canadian couple in their 60s load 20 baggies into the boot of their car: 4,000 cigarettes for the price of 400. They may be for private use, they may be being sold on in places much further away.
Anti-smoking campaigners say baggies are regularly to be seen on sale near schools even though the legal age to buy cigarettes is 18. They also insist the Indigenous are harming themselves: on average just 18.2 per cent of Canadians smoke; among the aboriginal population that rises to 56 per cent.
But ask any of the mostly Mohawk inhabitants of Kahnawake and they will tell you that the tobacco industry that has mushroomed on the “reserves” provides much-needed jobs and a major source of local wealth and investment for often relatively poor communities. “Anyway, tobacco is part of our culture,” says Linsey, a girl behind the counter at a smoke shack on the road into town.
The tribes, after all, have been smoking, chewing and cultivating the stuff since the Stone Age. And the anti-smoking lobby accepts the cultural importance of “sacred tobacco” to the natives of North America. But it tries to insist that the traditional use of tobacco in healing and prayer rituals did not involve inhalation.
It is an argument that might be labelled the “Bill Clinton approach”, since most historians acknowledge that in many tribes it was customary to try to inhale deeply and hold the smoke in an attempt to increase the narcotic effect. No plant ever became sacred by people doing nothing with it.
As for the factories, they are mostly discreetly located down back roads on the reserves, often in unmarked barns. Their owners and employees are not exactly garrulous. I asked for an interview with someone at Rainbow Tobacco in Kahnawake and was politely laughed aside: “You gotta be kidding.”
The reason for their lack of enthusiasm for publicity is that the smoke shacks that provide the basis of a living for many locals are barely the tip of the iceberg. Although the cigarettes may not legally be sold off-reserve, the producers insist on their right to transport them between First Nation communities, particularly out west.
Rainbow has fought legal battles against the governments of the western provinces of British Columbia and Alberta for confiscating cigarettes they insist were either sent “as gifts” or bore the proper stamps to show they had government duty paid. Not that all the tobacco is Canadian grown.
The tobacco belt of south-western Ontario was a motor of prosperity in the mid-20th century, having helped Canada out of the depression in the late 1920s, but in recent decades the crop has been discouraged and the government has bought out some farmers. The remainder are grateful for the native industry, which takes all it can get and then some.
Between 2014 and the summer of 2016, the Canadian government estimates that 2,081 tonnes of tobacco worth some C$530m (£300m) was imported illegally, much but not all of it from the US, but all headed for the cigarette manufacturing plants on the First Nations reserves.
Grand River Enterprises (GRE), by far the largest of the native cigarette companies, has line after line of grey warehouses and manufacturing sheds adorned with a picture of an Indigenous chief in traditional feathered war bonnet, on either side of the northern end of Chiefwood Road in the Six Nations reserve in south Ontario.
Fully licensed by the Canadian government as a tobacco producer, GRE insists that it abides by all regulations, though some former law enforcement officers say it is hard to police exactly how strictly it complies with the rules in a factory technically located outside Canadian-controlled territory, even though it pays large sums in tax to Ottowa.
Its Mohawk founders have faced allegations ranging from large-scale smuggling in the 1990s to links last year with large-scale cannabis cultivation on Native American lands in northern California, although no formal charges have been brought.
One thing is certain: GRE has grown astronomically over 20 years, from a tiny two-man business to a company with more than 1,000 native employees and a business empire worth tens of millions, including a factory in eastern Germany, opened in 2004, which now produces billions of cigarettes a year for discount supermarkets in Europe.
GRE funds local services in its home territory, the Six Nations’ small town of Ohsweken, its very name proclaiming its native origins in an area where nearby towns are London, Cambridge, Woodstock and Kitchener. First Nation lobby groups insist on their right to move their products freely between their widely scattered territories.
The question is, how many go astray en route. According to Canada’s Frontline Safety and Security magazine, the profit to be made from a single tractor-trailerload of native-produced cigarettes resold at half the commercial shop price could bring in an illicit profit of nearly C$2.5m and a loss to Ottawa’s revenue of nearly double that.
The incentive is therefore enormous. But the roadside smoke shack sellers shrug and say that the government is really only interested in lost tax revenue and cares no more about the native communities than it ever did. And the irony, now, is that the colonial authorities’ historic dismissal of the rights of natives to “their own land” is being used against them in the cross-border smuggling business.
The border situation near the town of Cornwall in southern Ontario is one of the most complicated in the world, involving the US, two Canadian provinces – Quebec and Ontario, with different police forces and different jurisdictions – plus a large area of Akwesasne Mohawk land, which extends across all three of them.
Akwesasne Mohawks legally recognise but do not in practise accept the frontier running through their lands. There are no border controls on the southern mainland: they can walk or drive freely from their territory in Canada to their territory in the US.
But they can only get back to the Canadian mainland by crossing the invisible border to the non-Akwesasne US, then over a bridge and through customs control into Canada.
There is, of course, an easy alternative: a boat. The river here is a sportsman’s paradise. Most people here live on the river, have jetties and small boats. Most crossings are within Canadian territory. They are also within Akwesasne territory – as are those to the US. It is not just a paradise for sportsmen, but smugglers too.
There is no imminent end to the impasse. Not least because, whatever the native producers say, tax collection is not the only motive. Canada is rapidly acquiring a reputation as one of the world’s most interfering nanny states. On the exterior walls of the Ramada Inn in Cornwall signs warn “No Smoking within 30ft of the hotel”. Back in 2001 Canada became the first country to insist on gory health warnings covering 50 per cent of the front and rear of cigarette packs.
The theoretical fine for possessing anything from one pack of “native” cigarettes is a minimum of C$100 (£60) plus three times the tax, though in areas around the reserves small-scale smuggling is so common it is rarely enforced.
Now the anti-smoking lobby is pressing for totally plain packaging, which would completely obliterate the branding. The irony is that by so doing they would be playing directly into the hands of the native cigarette manufacturers, who could still sell their brightly coloured packets on the reserves.
Darryl, the Scottish-born landlord of the Glengarrian pub in Cornwall, told me he would regularly spend C$16 on a packet of Matinée cigarettes for his wife, but for himself he often made do with native cigarettes. And he had a favourite brand: Putters, recognised by most smokers as a rip-off of popular big brand Players: “They’re not quite as good as the real thing, but they’re not bad, and they’re cheap.”
Cheaper still are the bêtes noires of the anti-smoking lobby: the “baggies” selling out there in the reserves – and later in the schoolyards – at the price of a Pokemon Go starter pack for 200 random cigarettes in a clear plastic bag: the ultimate plain packaging.
This would be an odd way to make the illegal trade more transparent. But there is no sign of a peace pipe being smoked any time soon.