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Smuggling and Illegal Manufacturing The Black market economy in beverage alcohol consists of primarily of the smuggling of spirits and illegal manufacturing of wine Alcohol smuggling and illegal manufacturing have been growing in recent years and continue to grow exponentially The illegal beverage alcohol market in Ontario is a multi-million dollar business with ties to organized crime Criminals behind the illicit trade are professionals with sophisticated importation manufacturing distribution and sales networks Profits from illegal alcohol are often used to finance other criminal activities The LCBO estimates that about 6 of the annual 72 billion beverage alcohol market in Ontario was lost to the underground economy in fiscal 2000-2001 This is down from the estimated 7 in 1999-2000 and the estimated 10 market share in 1996-1997 This decline is due largely to continuing public education about health risks of consuming illegal alcohol customer service initiatives creditdebit payment options and upgraded store formats that have helped draw customers back to legal channels and the efforts of law enforcement agencies to curb this problem Annual losses to the LCBO from smuggling and illegal wine manufacturing and sales were approximately 406 million an estimated 271 million is in illegal imported liquor and about 135 million is in illegal wine sales These prohibited activities cost the provincial government 228 million in lost taxes It is also estimated by winery experts that illegal wine manufacturing in Ontario is greater than all illegal wine production in the province It is scarcely possible to exaggerate the scale and magnitude of law breaking in alcohol market in Ontario On the other hand the losses to society caused by the black market in beverage alcohol go beyond the LCBO lost sales and government lost revenue There are more general losses involved First there are serious health risks as a result of marketing alcoholic products which often fail to meet LCBO quality standards and testing procedures LCBO investigators have found black market products
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