Canadian officials are launching a public awareness campaign in the hopes of fighting the booming contraband cigarette market, a thriving industry that they say costs billions of dollars in lost tax revenues.

"Right now the war on cigarettes is like the war on drugs," said Sgt. Michael Harvey of the RCMP in Cornwall, Ont. "It's just something that's out of control."

Revenue Minister Jean-Pierre Blackburn said that in the coming year, cigarette cartons will be marked with a special security seal. He also suggested police could start seizing the cars of people who are caught with illegal smokes.

The campaign will also remind the public that buying illegal smokes cheats small convenience stores of much-needed income.

Recent studies estimate more than 40 per cent of tobacco smoked in Ontario and Quebec is contraband.

Every day, the RCMP seize tens of thousands of dollars worth of contraband tobacco from boats loaded with cigarettes made on Mohawk reserves.

High taxes on legal brand-name cigarettes are increasing the demand for cheap, native smokes and fuelling a billion-dollar black market. The result is that Ottawa is losing a significant source of revenue.

"We're losing around $2 billion each year because of contraband," Blackburn said.

But Harvey said the issue is not just about the government losing out on tax dollars.

"You're not just sticking it to the tax man because you are buying these cheap cigarettes," Harvey said. "You're actually financing organized crime groups who are using this money to traffic drugs and firearms."

Mohawks deny ties to organized crime, insisting the majority of cigarette producers on reserves are clean.

Tracy Cross, a former police chief at the Kanesatake reserve in Quebec who also sells cigarettes, defended the producers.

"This type of industry creates jobs. It's taken people off social assistance. The crime rate has dropped because of it."

Mohawks are hoping to convince Ottawa to let them regulate their tobacco trade themselves.