Quebec Could Rack Up To $1 Billion In Fines By Enforcing Tobacco Laws In Kahnawake
Should the Quebec government decide one fine morning to walk the talk by enforcing laws to everyone equally — including the good people of Kahnawake Native reserve — how many dollars in fines would a smoke shack be liable to for its numerous offenses under the Tobacco Control Act?
Answer: $5.2 million in fines per smoke shack, as estimated by DepQuébec.
And if we take the entire Kahnaware reserve that includes about 175 smoke shacks, what would be the total fine that could be imposed?
Answer: almost $1 billion, or a full year of Loto-Québec government dividends!
These findings are not trivial as they bring to light the extreme severity of tobacco laws and regulations imposed upon the 8000 convenience stores, grocery stores and supermarkets in Quebec who nevertheless accept to sell tobacco despite all the risks incurred.
And while Quebec political parties are announcing billions in electoral promises, DepQuébec is rendering a useful public service by pointing out to a potential source of income to fund those promises through this mostly forgotten area of tax evasion!
An Act? Which Act?
According to our estimates, this large sum of $1 billion in fines, which is very much a disguised subsidy, represents the sum of the fines payable by all 175 current smoke shack owners at a rate of $5.2 million each on average, for a total of $910 million for the entire reserve.
For one thing, this estimate is very conservative since it only takes into account penalties related to the Tobacco Control Act.
As for the Tobacco Tax Act, which rules the important aspect of collecting and remitting taxes, the fine-setting mechanism is way too complex for us to come up with any sensible figure.
Indeed, this piece of legislation provides that, depending on the quantities of tobacco seized and the assessment of previous illegal sales, the amount of the fine payable is $6,000 plus three to five times the amount of tobacco tax due.
While we can’t estimate such figure, it would certainly be quite bulky, not to say astronomical.
But, for the purpose of this estimate, we will content ourselves with that billion amount, the idea being to realize the severity of the fines with respect to the tobacco sale regulation.
From Smokin Guns to Starbutts
To prepare this estimate, we paid a visit to a genuine Kahnawake smoke shack formerly known as “Smokin Guns” but recently renamed to “Starbutts – Drive Thru”.
By putting ourselves in the shoes of an MSSS (Quebec Health Department) inspector, we scrutinized the smoke shack business practices against every section of the Quebec Tobacco Control Act.
Given the severity of the offenses found in the reserve and their long duration over time, we applied the maximum fine possible for every offense.
This estimate – a first of its kind – is presented in the following summary table.
| Chapter II: Restriction on the use of tobacco | |||
| Lack of notices indicating that smoking is prohibited | |||
| Tolerating a smoker in the premises | |||
| Chapter III: Sale of tobacco, displays and signs | |||
| Selling tobacco to a minor (owner) | |||
| Selling tobacco to a minor (clerk) | |||
| Selling tobacco outdoor | |||
| Tobacco access without the help of an employee | |||
| Cigarette packs sold containing less than 20 sticks | |||
| No declaration to the business register | |||
| Tobacco display in public view | |||
| Tobacco display in public view from outdoor | |||
| No notices to indicate that selling tobacco to minors is prohibited | |||
| Distribute tobacco free of charge | |||
| Organize a promotional draw | |||
| Selling tobacco at a discount | |||
| Make tobacco advertising | |||
| Selling non compliant tobacco | |||
| Chapter V: Tobacco products | |||
| Selling tobacco with flavour | |||
| Hindering the duty of an inspector | |||
| Violations to advertising standards | |||
Some heavy fines for tobacco advertising
The first observation that stands out is that the Tobacco Act severely punishes tobacco advertising with a $1 million fine plus fees. This is the highest of the fines.
Before even entering the premises, and everywhere on the reserve in fact, we are inundated by the presence of tobacco advertising posters that remind us of the commercial landscape some 30 years ago.
Tobacco gifts and promotions severely punished
Moreover, in addition to advertising, the smoke shack organizes a weekly $100 draw among its loyal clientele. This goes directly against section 21, which prohibits this kind of promotion and is punishable by a fine of up to $125,000 (which becomes $ 159,900 when you add the court fees and the contribution to the Fund for Victims of Criminal Acts).
Finally, to complete the marketing section, the store graciously provided us with a sample of tobacco containing 12 PlayFare’s brand menthol cigarettes, which represents three offenses in one fell swoop, namely:
- To hand-out tobacco for free (section 21): $125,000 fine;
- To sell non-compliant tobacco (section 29): $600,000 fine;
- To sell tobacco with flavor (section 29.2): $250,000 fine.
Smoking anywhere… no problem
Our trained eye has noted the lack of signs prohibiting smoking, whether at the front door, within an area of 9 meters of it or inside the store (maximum fine of $25,000 as per section 10).
In addition, we know that this smoke shack tolerates the presence of smokers within its premises, which is worth another $25,000 under section 11.
Ka-ching!
In terms of sales and display, the meticulous inspector will do well to sharpen his pencil, because the list is long.
- Allowing access to tobacco products without the assistance of an attendant: $50,000 fine or $65,400 with legal fees;
- Showcasing products in plain customer sight: $50,000 fine or $65,400 with legal fees;
- Allowing tobacco products to be seen from the outside: $50,000 fine or $65,400 with legal fees.
Not Fair and Not For All (Quebec Revenue Min. slogan)
Since numerous investigations have shown Native smoke shacks to sell tobacco to minors repeatedly (see here), we granted them a fine of up to $125,000 plus fees.
In addition, several of the provisions that convenience stores are used to respect have no hold here, such as simply registering the activity of selling tobacco into the Quebec business register ($50,000 fine, just for that).
Finally, selling tobacco from a drive thru results in an additional fine of $250,000 (or $317,400) as all sales must occur between four walls and a ceiling.
All this to say how strict the Tobacco Act is towards retailers, except of course if they are established on the Kahnawake or Kanesatake Native reserve.
And while we learned last week that the government does not hesitate to violate retailers’ fundamental rights (see article here) – it is important to keep the spotlight on the other side of the coin, i.e. the complete lack of law enforcement toward Mohawk communities who can do anything they want with respect to tobacco regulation.
This remains a total hypocrisy on the part of the government.
I thought the Mohawk Territory of Kahnawake had a a constitutional right to sell tobacco. I am Australian, and perhaps there’s something I do not understand about the Canadian Constitution and laws subject to that Constitution. I had, perhaps naively, thought the Canadian constitution alloted certain historic rights to First Nations.
They do. They can grow and sell tobacco within their reserve without any government interfering. What’s at stake here is tobacco sales without taxes to white people. This is where they make the bulk of their money and doing so is turning a genuine Native right into an unfair competitive advantage.