When in 1989 the Canadian federal government and the provinces decided a considerable rise in tobacco taxes, cigarette manufacturers warned about an increase in tobacco smuggling. To give point on this warning, the three top-selling companies enlarged the illicit trade by themselves. Huge amounts of Canadian cigarettes were officially exported to the USA and then smuggled back into their country of origin. The main route passed through a Native American reservation at the border region. Members of the Mafia and from Hells Angels have been involved in the transactions. Due to this smuggling boom, the Canadian government felt impelled to again reduce tobacco taxes in 1994. For several years, investigations against the tobacco companies have been carried out and, finally, they agreed to pay a record fine of approx. 1.7 billion US Dollar. But the criminal networks meanwhile took on a live of their own. Factories have been established in Native American reservations manufacturing cigarettes and passing them untaxed.
Canada’s cigarette smuggling corridor (2001)