Lemmy Lemmy:
I read an article on the relationship between tobacco taxes and smuggling some years ago. I wish I could remember the title or author's name. But I remember it concluded that there was a knowable "threshold price", below which most smokers would pay the tax and enjoy the convenience of retail tobacco purchase, and above which most smokers would turn to the black market.
Govt recognizes that, which is why Ontario reduced taxes on tobacco. But also playing out here is the misstep of allowing natives to produce and sell cigs, which just turned into a clusterfuck. Repeal those laws, and taxes on tobacco could rise significantly.
With booze there's the problem of producing quality - takes time and good equipment. Also the physical size and weight of the product makes it harder to smuggle in quantity. So again, they could probably raise taxes significantly before the black market becomes a big piece of the action. Compare this to pot, so easy to grow and smuggle. Taxes on pot, IMO, have a pretty low threshold. But people growing their own would be all good.