The Excise Act, 2001, the Customs Act and the Tobacco Tax Act regulate tobacco products and provide serious consequences for anyone dealing in illegal tobacco products.

Under these laws, merchants that purchase, sell or are in possession of illegal tobacco products are liable to a fine and imprisonment for a term of up to five years, as well as to confiscation of their property and prohibition from selling tobacco products.

Three organizations share the following responsibilities with respect to tobacco products:

• The Canada Revenue Agency is responsible for the application of the Excise Act, 2001 and its regulations, the issuance of licences to manufacturers of tobacco products, and the monitoring of the production cycle (purchase, sale, import, export), accounting records and payment of excise tax at the manufacturing stage.
• The Royal Canadian Mounted Police has responsibilities under the Excise Act, 2001 and the Customs Act. This organization handles criminal investigations of matters involving tobacco, and has the power to conduct surveillance, seize and confiscate property, and arrest persons involved in illegal activities involving tobacco. Due to the nature of these investigations, it communicates with other police organizations as well as both levels of government.
• Revenu Québec applies the Tobacco Tax Act. It controls the marketing of tobacco products by distributors, vendors and merchants, collects tobacco tax on retail sales and administers the GST (on behalf of the Government of Canada). Revenu Québec issues permits for manufacturers and collection officers, and registration certificates respecting the sales tax. In addition, Revenu Québec inspectors ensure the validity of permits and visit all Québec retailers.