Smoke signals and cigarette companies

Tobacco farmers have been competing with contraband cigarettes which are mostly produced on aboriginal reserves in Canada and the United States. Most people know someone who can get you a "special price" on cigarettes. These packages are not sold over the counter but are actually tax-free.

The tobacco farmers have filed $150-million in class-action lawsuits. Farmers get a higher price for domestic tobacco. They allege that the tobacco companies paid them the lower, export price for tobacco that was initially sent to the United States. This tobacco is then smuggled back to the Canadian market as a tax-free product. The farmers feel that they have been cheated of their fair profit on their crop.

The anti-smoking movement has said that this is part of a plot to give smokers a source of cheap cigarettes and keep them tied to their habit. Isn't that a lovely thought? Not only do they deprive hard-working farm families of their fair income but they find a further means of encouraging a habit that has been directly linked to lung cancer.

Big Tobacco sees this more as an effort to shut down the illegal-tobacco trade then a true lawsuit. They will defend themselves and point to the illegal tobacco trade in Ontario affecting the growers, not a different valuation system.

A case was settled in 2008 with Benson and Hedges and Imperial and Rothmans paying a total of $300 million in fines after they pled guilty to a violation of the Excise Act. These cigarette companies also agreed to have over more than $500 million to resolve civil cases filed by the governments. R.J. Reynolds and JTI-Macdonald also reached similar settlements April 2010. Imperial paid out $350-million in a civil settlement it reached with federal and provincial governments in 2008. This totals over a billion dollars!

So Big Tobacco is happy. The governments are happy. The farmers hopefully will get their fair share for their toil. It is interesting to note that their lawsuit is the smallest one of all.