Possible Government Remedies to Address the Contraband Issue

Federal

1. Prohibit the supply to unlicensed manufacturers of raw materials and equipment used in making tobacco products;

2. Revoke licenses of manufacturers acting unlawfully;

3. Introduce an effective package marking system known as 'tracking and tracing' to closely monitor tobacco shipments;

4. Persuade the U.S. federal government to shut down illegal manufacturing operations on the U.S. side of Akwesasne;

5. Establish a minimum bond of at least $5 million in order to obtain a federal tobacco manufacturing licence, instead of the current extremely low $5000.

Provincial

1. Revoke the Ontario tobacco manufacturer licence if a manufacturer is operating illegally

2. Prohibit the supply of raw materials (e.g. cigarette filters, cigarette paper, packaging, potentially electricity, in addition to raw leaf tobacco) to unlicensed tobacco manufacturers

3. Establish a refund/rebate system for products intended for tax-exempt sale on a reserve. Thus manufacturers/wholesalers would ship product to a reserve retail outlet at a price that would include a deposit equivalent to the Ontario tobacco tax. Consumers would purchase product exempt from tax, and on-reserve retailers would apply to the Government for a rebate. A refund/rebate system is in place in Alberta, Saskatchewan, Manitoba, Quebec and New Brunswick. In Ontario, the rebate system would combine with the existing quota system - under current Ontario regulations, there is a quota limit for the quantity of tax-exempt tobacco that can be shipped to each reserve, based on reserve population.

4. Establish a mimimum bond of $2 million for each tobacco manufacturer licence. Bonds would be forfeitable if a manufacturer is non-compliant with the law.

5. Work with federal authorities to persuade the American Government to shut down the 10 or so illegal tobacco manufacturing facilities on the New York state side of Akwesasne reserve - the current situation represents an enormous border security situation for the US that is not being addressed, in addition to being a primary source of contraband for Canada