"Didn't Canada actually lower their cigarette taxes some because of the huge and growing black market?"
Yes, however they've crept back up since then, mostly because the gov't has successfully put a stop to the tobacco companies exporting more Canadian smokes to the US than can be sold there, then selling them (to smugglers) in the full knowledge that there were going to be smuggled back into Canada.
OTOH, city, state and federal gov'ts in the US have jacked up the taxes on smokes so high in some areas that cigarettes are actually cheaper here now that in some of those places. I paid CDN$8.75 for a pack of 25 (as they're usually sold here) yesterday. That would equate to roughly USD$5.83 for a pack of 20 (as they're usually sold in the US). I guess that doesn't really make me feel much better, but it should upset Americans who are now paying more for smokes than a notoriously "socialist" country like Canada.
RUSH fan, are ya? Seeing your screen name made me fire up 2112 and A Farewell To Kings.