Even Tobacco is Better than Stephen Harper’s Law and Order

Contraband Tobacco

Much of the Indian Country coffee-shop chat in southern Ontario these days concerns Ottawa’s Bill C-10, “Tackling Contraband Tobacco Act,” introduced by the Canadian Government in November 2013. Vocal champions of this bill (apart from the government) include the Canadian Convenience Stores Association and the Retail Council of Canada. So a more plainly descriptive title for this legislation might be “A Bill to Prevent the Mohawks from Cutting Into Our Business.”

Contraband tobacco refers to the reserve-based smoke shack industry, which has bloomed in the past decade on the reserves along Ontario’s border with New York State. These happen to be predominantly Mohawk communities. Tobacco has centuries-long importance among the Kanienkehaka. (That’s the “Mohawk” word for Mohawk: it means the People of Flint.) Ceremonial burning and occasional smoking of tobacco are the most common uses of the leaf, and elders will tell you that recreational smoking of tobacco – and especially addiction – are an abuse of the traditional place of tobacco. From this it should logically follow that the sale of tobacco for this purpose is also “against” traditional understanding, but that’s perhaps another discussion.

Whatever one’s view, tobacco is now the economic foundation of a number of reserve economies. Twenty years ago this foundation was the broad category of “Native crafts” – moccasins, dream catchers, pan flute CDs and other pan-Indian (and often faux Indian) manufactures, some of it locally produced and some of it Made-in-China trinketry. The emergence of an Onkwehonwe (Indian) tobacco industry was a simple case of textbook capitalism: a market demand was identified and the product was supplied.

The problem for Canada and its off-reserve retailers is that the economic benefits of untaxed tobacco products are going exclusively to the Indians. Contraband tobacco now accounts for 15% of the market. When the feds cut taxes on cigarettes, in the 1990s, the native tobacco industry contracted; when the taxes shot back up, it expanded. There’s nothing mysterious about the relationship of taxes, price structures and incentives. Cheaper convenience store cigarettes make the baggies relatively less attractive. As the price gap between on- and off-reserve cigarettes widens, the attractiveness of smoke shacks grows. I knew the reserve-based industry had arrived when I’d become used to seeing the disposed Sago Cigarette boxes along my downtown Toronto Street. (Sago, by the way, is how we Kanienkehaka greet one another.)

As a Six Nations Kanienkehaka and a business person, I’m openly critical of an economic strategy that puts all of the eggs into one basket – especially when anyone of average imagination could see the day coming when the federal government would move to put an end to the industry. It’s bad business. Also, the smoke shacks promote smoking, and we have enough health problems already. But this is a booming business, and it has broad legitimacy and support among Mohawk people. Tobacco is much more than money – it’s a source of economic independence, a non-handout form of income that goes well with aspirations of independence and self-reliance. And these are good and necessary goals. Yes, it’s also been deemed illegal and is likely going to draw the communities into a collision with the federal government, but in the meantime tobacco is a desperately-needed investment in the community. Until we discover oil or invent a better iPad (and I hope we do both), tobacco is the best we’ve got.

Mohawks don’t think about this issue the way Canadians (or most Canadians, at least) think about it. For most Kanienkehaka, the Six Nations of the Grand River is not Canada: it’s Haudenosaunee land – an arrangement enshrined in an agreement with King Georges III following our loyal assistance in the War of 1812 – a loyalty that cost us lives and our territory in New York state. First Nations across Canada assert that their agreements with the Crown are clear on the point that native people have tax immunity, and that the (massive) on-going revenues generated by ceded Indian land is the only payment due to Canada. For generations, Mohawks (and others) have gone to the courts and to the League of Nations and to the United Nations to assert and re-assert this view. Any attempt of Canada to shut down the tobacco business is going to be met with firm and active resistance. That’s not a threat, it’s a certain and objective fact that it would be ill-advised to ignore.

Although I don’t agree on every point, “Border Integrity, Illicit Tobacco and Canada’s Security” is one of the more thoughtful and nuanced studies I’ve yet to encounter on the topic of contraband tobacco. Authored by Jean Daudelin, Stephanie Soiffer and Jeff Willows, the study concludes that

“Dialogue with the Mohawk communities about the fuller legalization of First Nations tobacco production and trade, shared taxation and economic development in and around the reserves, along with the kind of careful enforcement of the law that currently prevails, represent a much better path to controlling the damages of contraband tobacco than hardening sanctions against small-time smugglers.”

I’m skeptical about the potential of this proposal, but it strikes me as at the very least more informed and enlightened than the Harper government’s approach. That approach, evident in each of its many Criminal Code revisions, is the failed American example of ever more laws and more prisons, mandatory minimums, and an overall strict law-and-order approach. The study mentioned above notes that the tobacco trade’s often-alleged connection to drugs and organized crime is much overstated (in the case of terrorism, they found no link whatsoever) and that the relatively low-risk profits of tobacco divert from other activities. Impose harsher penalties on contraband tobacco, the authors argue, and the incentive to trade in guns or illegal drugs grows, again relative to tobacco.

That may or may not be so. Either way, organized crime will always follow the money, and I’ve no sympathy for those who deal in violence and destruction. My interest is foremost in economics, and like it or not this is a at bottom a turf war over the spoils of a controversial product. I struggle with this issue because the barriers to economic development in our communities are so very high, and I do feel that almost any form of economic activity is preferable to welfare dependency and unyielding impoverishment. Casinos can lead to gambling addiction and financial ruin, but many native communities have chosen to rely upon them as a way out of abject poverty. The strategy appears to be working. We’re beginning to make some real money through entrepreneurship, and if it takes cigarettes and gambling in the beginning, so be it.

Wouldn’t it actually make more economic sense for the feds to work toward some sort of mutually beneficial deal with the communities? Any money foregone in federal taxes could be money diverted, through incentives and economic planning, into investments in the future economic self-reliance of native communities. Today tobacco, tomorrow a range of community and business initiatives seeded with cigarette capital. Or, yes, the feds can go ahead and spend millions of taxpayer dollars on short-sighted law-and-order measures: more police and prisons, more incarceration, and more economic stagnation and welfare dependence. That’s one way to win a turf war.

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