The National Coalition Against Contraband Tobacco claims the sale of contraband cigarettes cost the Canadian government $2.1 billion in lost tax revenue last year.
Ottawa said the figure is closer to $60.5 million based on seizures of illegal cigarettes made by the RCMP in 2008.
Gary Grant speaks for the coalition and claims the lost government revenue lines the pockets of organized crime instead.
"RCMP has estimated 175 organized gangs are making millions and millions of dollars from this, and investing it into drugs, guns, even human smuggling," Grant claimed.
A statement on the RCMP's website backs that claim.
"The illicit tobacco trade is a global phenomenon that contributes to the growth of transnational organized crime and undermines public health objectives," the statement reads.
In 2011, the RCMP seized approximately 598,000 cartons/unmarked bags of contraband cigarettes, 2,200 kg of raw leaf tobacco and 38,000 kg of fine cut tobacco.
The coalition kicked off the second leg of its Contraband Trail Tour in Windsor Thursday. It called Windsor, Ont., a hub for illegal cigarettes
Grant said his association put Windsor on its tour because "it's impacted quite significantly by contraband tobacco."
In April, the Ontario Convenience Stores Association and RCMP told CBC News that more contraband tobacco has been seized in Windsor, Ont., than anywhere else in the province.
Local MP says improve task force
Grant said governments need to toughen up penalties to cut down on the problem. A Windsor MP agreed with Grant.
Joe Comartin, the NDP's critic for public safety, wants Ottawa to bolster a special task force focused on contraband smokes. He's been working against contraband for nearly eight years.
In May 2008, the Task Force on Illicit Tobacco Products was formed and its work is ongoing.
Comartin, said reserves need more resources to fight the trade in illegal smokes. However, a police spokesperson from the Oneida reserve south of London told CBC Windsor that tobacco products only become illegal once they leave the reserve.
That's the jurisdiction of the OPP and RCMP. The RCMP has a Contraband Tobacco Enforcement Strategy.
Cigarette seizures by the RCMP peaked in 2009 when the force seized 975,000 cartons of illegal smokes. That number fell in each of the next two years.
"There needs to be more public education on this as well," Comartin said.
He said government stats show young people are smoking more illegal cigarettes. Illegal smokes, Comartin said, cost half as much as legal ones.
"They can get cheap tobacco," Comartin said. "It's as simple as that."