Sin-Tax Failure: The Market in Contraband Tobacco and Public Safety

[An Introduction to the Black Market] [The Size of the Market] [The Engine of Growth] [The Trail of Contraband] [The Native Dimension] [Other Native Involvement in Contraband] [The Warrior’s Society and the Black Market] [Other Dimensions of Violence] [Guns in Canadian Cities] [Organized Crime] [Countering the Black Market] [The High-Price, High-Tax Strategy] [Reducing the Contraband Market]

Chapter Five

Other Native Involvement in Contraband

At one time, Reg Hill was interested in creating duty-free tobacco outlets on reserves across the country. At times, he and his associates may still support the idea. Moreover, in the days immediately after the Oka Crisis, the Warrior’s Society was interested in selling its concept of violent sovereignty to other bands. There is a partnership between the Silks and the Warriors and both projects were often sold simultaneously on other Reserves.

No other bands or Reserves have been as badly disrupted as Akwesasne, but Rosseau River in Manitoba has come close. Since 1990, Art Montour has visited the Reserve to help establish his "guns ‘n smokes" version of native sovereignty. In January 1993, the RCMP raided the Reserve to shut down an illegal bingo parlour and apparently took the opportunity to look into the Reserve’s smoke shops. In the aftermath of the raid, the "Peacekeepers" slung out the Band Police and assumed the responsibility of policing the Reserve themselves.

In late 1992-early 1993, two of the most notorious Warriors from the Oka Crisis were reported to be busy on Reserves between Garden River at Sault Ste. Marie and the Ontario-Manitoba border. According to two other Iroquois, Ronald "Lasagna" Cross and Gordon "Noriega" Lazore were helping establish local Warrior Societies and cigarette stores in the area. Indifferent success was reported among the Ojibwa at Garden River outside Sault Ste. Marie while a combination of cultural differences and the stifling effect of lengthy and abject poverty doomed the project elsewhere.

The market for contraband tobacco in Alberta and Saskatchewan is usually serviced by individual consumers and organized crime (particularly the Asian gangs which operate in Calgary). The 1992 Contraband Tobacco Estimate reports that the Blackfoot Reserve near Great Falls, Montana is a major source of cigarettes. The Stoney Reserve near Calgary would be an ideal location for cigarette outlets, but the Stoneys seem reluctant to become involved in the industry. This is not due to the apathy of poverty as they have long recovered much of their dignity and pride.

Reg Hill and Two Row Enterprises backed smoke shops on two Reserves located in the Greater Vancouver area. These operated in 1990-92 and ended in failure, so far as Hill was concerned. One Band Council asked Hill to leave and eventually refused to deal with him, the other obtained a court injunction against Hill. Canadian native involvement in the contraband cigarette market in B.C. remains minor with two exceptions. The Plains Indian Reserve in the southeast is reported to be a transhipment point for interior markets.

Another plan backed by the Warrior’s Society involved the willing compliance of a number of Tsehaht Indians in B.C. for a scheme involving their rights to purchase tax-exempt cigarettes. A lengthy court case only allowed Tsehaht to avoid paying duties on 1,000 cartons every month if they were licensed retailers. Soon, it seemed as if every Tsehaht had become a convenience store-owner. Some of the permits may have been sold to non-Indians.

In Eastern Canada, the MicMacs of Nova Scotia and New Brunswick are importing cigarettes from the State of Maine and from Akwesasne. Smoke-shops on the Reserves are selling to other Canadians in both provinces and are supplying some contraband for P.E.I. and Newfoundland. Warehouses of contraband cigarettes have been reported on Nova Scotia MicMac Reserves. Provincial Law in Nova Scotia restricts Natives to purchasing only three cartons of duty-free cigarettes per month. Four natives were arrested in July of 1992, in Nova Scotia, in possession of $400,000 of cigarettes. All were Iroquois and one, Marion Murdoch, is Reg Hill’s sister.

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John Thompson is President of the Mackenzie Institute which studies political instability and terrorism. He can be reached at: mackenzieinstitute@bellnet.ca