Criminal networks are shifting from fentanyl imports to Canadian-made product

Organized crime groups have shiftedtheir efforts away from importing the deadly synthetic opioid fentanyl and are now producing it primarily on Canadian soil.

A briefing note prepared for the deputy minister of Health Canada obtained by CBC News through an access to information request lays out the changes law enforcement agencies have observed in the illegal market for thedrug.

"Superlab interdictions across B.C., Ontario and Alberta suggest that domestic supply is more than sufficient to supply the domestic market," the note says.

The Public Health Agency of Canada estimates that roughly 44,600 Canadians died oftoxic drug overdoses between 2016 and 2023. Four out of every five of the 8,000 overdose deaths Canada recordedin 2023 involved fentanyl.

"The fentanyl threat in Canada has definitely shifted from one of importation to one of domestic production," RCMP InspectorJames Cooke, a member of the police service's organized crime unit, told CBC News.

Cooke said that shift began roughly in 2019. In May of that year, the Chinese government listed fentanyl as a controlled substance and imposed more regulations on its production and export.

"It is believed this may have prompted the shift from fentanyl and fentanyl analogues being imported into Canada illegally toward domestic production in Canada," the Health Canada briefing note reads.

The trend is reflected in drug seizure data collected by the Canada Border Services Agency (CBSA). In 2018, the CBSA seized more than fivekilogramsof fentanylonits way into Canada. Last year, the agency interceptedless than a kilogram. (According to Health Canada, it only takes a few grains of fentanyl to kill someone.)

Det. Matthew Dugdaleof the Hamilton Police Service's drugs and gangs unit said the COVID-19 pandemic only acceleratedorganized crime's switch to domestic production.

"During the early days of COVID, it was almost impossible to import anything into the country, legal or otherwise. So criminal organizations weren't going to let that stop them from being able to sell their product. So they came up with ways to start manufacturing this stuff locally," Dugdale told CBC News.

The Criminal Intelligence Service Canada (CISC) reported in 2022 that organized crime groups had turned fromimporting fentanyl-related products to purchasing chemicalprecursors frominternational and domestic suppliersto make the drughere.

"[Eighty per cent]of chemicals used in fentanyl production are unregulated and can be procured in Canada or legally imported from China," the CISC report says.

"Some [organized crime groups] use privately-owned, licensed companies to import chemicals and precursors used in fentanyl manufacturing."

Some of thoselegal precursor chemicals can be "unwittingly" diverted into the illicit market by chemical companies, Cooke said.

"They may be importing or I would say stockpiling a source for chemicals domestically and they may not have a full understanding of where the final destination of those chemicals is," he said. He added that much of the RCMP'sfocuson precursors involvesworking withindustry to prevent such diversions.

Eric Hrab, a detective with the Hamilton Police intelligence unit, saidfentanyl production has taken off in Canada in part because some precursors can be obtained domestically whilethe ingredients needed to make cocaine or opium can only be found in certain climates.

"[With] fentanyl, ultimately you're looking for the obtainment of lab equipment and precursors and you could produce everything from start to finish on your own, regardless of where you are in the world," he said.

A U.S. congressional committee released a report this spring that said the Chinese government offers tax incentives to companies that export fentanyl precursors.

In recent years, police in Ontario, B.C. and Alberta have cracked down on labs or "superlabs" that crime groups have set up specifically to produce fentanyl.

"We've seen them pop up in all shapes and sizes," Dugdale said.

"I've encountered laboratories in rural areas, hidden inside shipping containers or sea crates. We've discovered laboratories in residential homes."

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Cooke said most labs require a lot of investment which speaks to how lucrative the illegal fentanyl market has become.

"This is not something that a high school student with a chemistry class would be able to put together. There's a great deal of sophistication, not only in the procurement of the chemicals and the products to set up the lab, [but also] the cost associated to those," he said.

Often, crime groups willstockpile precursor chemicals in differentlocations in order to evade detection, Cooke said.

Last year,police agencies across Ontario busted a fentanyl production ring that included chemical storage facilities in Toronto and Vaughan and labsin Stouffville and Smithville.

"They may stage and move the product a variety of different times as it moves towards the lab. They may move chemicals to a location and have them sit there for an extended period of time, which for law enforcement poses huge different challenges for surveillance," Cooke said.

Canadian-made fentanylis moving abroad

Dugdale said one alarming trend that has emerged since the pandemic has been thedramatic drop as much as 30 per cent in the street price of fentanyl.

"That leads us to believe that there's just an oversupply of fentanyl in the drug market that's leading to a price crash," he said.

The prospectof a fentanylglut in Canada wasraised in the briefing note presented to Health Canada's deputy minister.

"It is widely believed that excess product is being exported to lucrative international markets," the note reads.

In 2022, Australian border officials seized 11 kilograms of fentanylbelieved to have originated inCanada. Since the start of 2021, U.S. border officials have seized roughly 25 kilogramsof fentanyl coming in from the northern border a relatively small amount compared to seizures on the southern U.S. border.

Cooke said he believes most fentanyl export operations in Canada are fairly small-scale.

"Primarily, we're seeing smaller personal use quantities that will be exported globally, but primarily into the United States, and they would have likely originated from micro-traffickers that would be operating on the dark web," he said.

Beyond fentanyl, Cooke said other illicit opioids are starting to appear in Canada's illicit drug market.

Xylazine, an animal sedative, and nitazene a synthetic opioid that is estimated to be several times more potent than fentanyl are two such drugs. Cooke said these emerging products present"huge challenges for the whole of government as they try and tackle this crisis."

"That's a constant game of trying to catch up with new and emerging drugs," he said.