[retrac]

In 1994, the Canadian federal government reduced its tobacco excise tax. Quite a lot too, nearly 50%. It wasn't a libertarian whim, or the desperate power grab of a cigar-lover. The black market was rampant. About 30% nationally approaching nearly 100% in some communities. (Clever: you can measure the rate by collecting butts from public ashtrays and the street.)

Prohibition doesn't eliminate demand. And in the Canadian context, with a border with the USA and with some indigenous communities being exempt from federal excise taxes and who use tobacco in religious ceremonies, effectively prohibiting the black market trade seems daunting, both pragmatically and politically. It also raises the old question: are the harms of the substance or the harms of prohibition worse?

[gimmeThaBeet]

I don't know if there's provincial taxes or anything, but a similar dynamic happens in the US, there's arbitrage smuggling between states with different taxes. A bit dated, in the link the negative states are one where cigarettes are net flowing out of the state, so you can see where they are going and coming from.

At first, I was going to state that it would be interesting to compare organized crime trafficking tobacco to other drugs where there is no long running commercial history. But then I saw the southern border states are theorized high in importing smuggled cigarettes. So either wyoming, idaho, and nevada are supporting the whole western US, or some of it's coming up from mexico.

2012 https://taxfoundation.org/cigarette-taxes-and-cigarette-smug...

2017 paper arguing tax increases do not exacerbate this https://tobacconomics.org/uploads/misc/2017/11/2017-generic-...

[retrac]

Oh yes. there's absolutely analogies to that here. It's more common with liquor. Quebec has substantially lower taxes than Ontario and there's a major city straddling the border. Both ordinary individuals and bar owners do routine runs to Quebec to stock up. This is illegal, but given the unrestricted internal border, is about as likely to be caught as interstate smuggling in the USA.