Canada Gazette, Part I, Volume 153, Number 51: Vaping Products Promotion Regulations

December 21, 2019

Statutory authority

Tobacco and Vaping Products Act

Sponsoring department

Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues: A rapid increase in youth vaping has been observed in Canada. Health Canada is concerned that young persons are being exposed to vaping product-related harms, including those related to nicotine exposure which can result in an addiction to nicotine and long-term use of tobacco products. Health Canada has identified vaping product-related promotional activities as being one of the key factors that has contributed to the youth vaping problem.

Description: The proposed Vaping Products Promotion Regulations (proposed Regulations) set out measures that could mitigate the impact of vaping product promotion on young persons and non-users of tobacco products. Health Canada is proposing regulations that would (1) prohibit the promotion of vaping products and vaping product-related brand elements by means of advertising that is done in a manner that can be seen or heard by young persons, including the display of vaping products at points of sale where they can be seen by young persons; and (2) require that all vaping advertising convey a health warning about the health hazards of vaping product use.

Cost-benefit statement: The proposed Regulations would result in total incremental costs estimated at $6.2 million present value (PV) over 10 years (or $0.9 million annually), consisting of $2.7 million (or $387,658 annually) in industry costs and $3.5 million (or $496,023 annually) in government costs. The monetized costs to industry are associated with complying with the proposed prohibition on the display of vaping products at points of sale where they could be seen by youth and the proposed requirement that a health warning be conveyed in those advertisements not prohibited under the proposed Regulations. The government costs are associated with the costs to monitor compliance and conduct enforcement activities under the proposed Regulations. Even if they cannot be directly quantified, the benefits are expected to outweigh the costs of the proposed Regulations.

One-for-one rule and small business lens: The small business lens applies. There is no administrative burden on businesses as a result of the proposed Regulations. Therefore, the one-for-one rule does not apply.

Domestic and international coordination and cooperation: The proposed Regulations would apply prohibitions and requirements on the commercial promotion of vaping products that would not conflict with provincial and territorial promotion restrictions, including in the retail environment. With regard to the requirement that all vaping advertising convey a health warning, the proposed Regulations would not apply where a vaping advertisement must convey a health warning required by a province or territory, as is the case in Quebec.

Due to the uniqueness of the legislative framework set out in the Tobacco and Vaping Products Act (TVPA), the proposed Regulations would not align with measures in the United States that are less restrictive on vaping promotions and that require a different health warning in advertisements of vaping products.

Issues

A rapid increase in youth vaping has been observed in Canada. Data from the 2018–2019 Canadian Student Tobacco, Alcohol and Drugs Survey (CSTADS) indicates that the prevalence of vaping has doubled among students compared to the previous survey in 2016–2017.

Health Canada is concerned that young persons are being exposed to vaping product-related harms, including those related to nicotine exposure which can result in an addiction to nicotine and long-term use of tobacco products. Health Canada has identified vaping product-related promotional activities as being one of the key factors that have contributed to the youth vaping problem.

Evidence suggests that Canadians know very little about the health hazards of using vaping products. Health Canada has also observed that not all vaping product advertisements display a health warning, and where such a warning is displayed, it is not prominently displayed and its content is not consistent across vaping advertisements.

Background

Vaping — Survey data

Data from the 2018–2019 CSTADS indicates that the prevalence (past 30 days) of vaping had doubled among students compared to the previous survey in 2016–2017. Twenty percent of students (418 000) in grades 7 to 12 (secondary I through V in Quebec) had used an e-cigarette in the past 30 days, double the 10% from 2016–2017. In 2018–2019, the past-30-day prevalence was 11% (115 000) among students in grades 7 to 9 (secondary I to III in Quebec) and 29% (304 000) among students in grades 10 to 12 (secondary IV and V in Quebec). Further data is presented in Figure 1. Frequency of use is also high, particularly in the upper grades: the prevalence of daily or almost daily e-cigarette use was 13% (133 000) among students in grades 10 to 12.

Figure 1: Past-30-day use of e-cigarettes grouped by grade

Past 30-day use of vaping products by students in grades 7 to 9 and in
grades 10 to 12 from 2014 to 2019 2019 – Text version below

Text version
Past 30-day use of vaping products by students in grades 7 to 9
Year Prevalence of past 30-day use of vaping products by students in grades 7 to 9
2014-2015 3,2 %
2016-2017 5,4 %
2018-2019 11,1 %
Past 30-day use of vaping products by students in grades 10 to 12 (Secondary IV to V in Quebec)
Year Prevalence of past 30-day use of vaping products by students in grades 10 to 12
2014-2015 8,9 %
2016-2017 14,6 %
2018-2019 29,4 %

Evidence suggests that Canadians know very little about vaping products and the health hazards of using vaping products. The 2017 Canadian Tobacco, Alcohol and Drugs Survey indicated that almost one in four Canadians were unaware how much a person risked harming themselves by using an e-cigarette once in a while (23%) or on a regular basis (24%). Health Canada has observed that not all vaping product advertisements display a health warning, and where such a warning is displayed, it is not prominently displayed and its content is not consistent across all advertisements.

Vaping and nicotine addiction

Vaping products are harmful and most contain nicotine. Children and youth are especially susceptible to the harmful effects of nicotine, including addiction. Youth can become dependent on nicotine at lower levels of exposure than adults do. Exposure to nicotine during adolescence can also negatively alter brain development, including long-term effects on memory and concentration abilities.

Furthermore, vaping products emit an aerosol that contains toxic chemicals. The inhalation of these emissions into the lungs could have a negative impact on health, especially to non-users of tobacco products including youth.

Vaping — A new legislative framework

In response to the 2015 report of the House of Commons’ Standing Committee on Health entitled Vaping: Toward a Regulatory Framework for E-Cigarettes, a new legislative framework was established by Parliament. An Act to amend the Tobacco Act and the Non-smokers’ Health Act and to make consequential amendments to other Acts received royal assent on May 23, 2018. As a consequence, vaping products are regulated under the Tobacco and Vaping Products Act (TVPA) and either the Food and Drugs Act or the Canada Consumer Product Safety Act, depending on whether or not the product is marketed for therapeutic use. The provisions of the TVPA apply to all vaping products, including those regulated under the Food and Drugs Act, except where they are expressly excluded (e.g. through the Regulations Excluding Certain Vaping Products Regulated under the Food and Drugs Act from the Application of the Tobacco and Vaping Products Act).

Tobacco and Vaping Products Act

The overall objective of the TVPA with respect to vaping products is to prevent vaping product use from leading to the use of tobacco products by young persons and non-users of tobacco products. Specifically, it aims to (1) protect young persons and non-users of tobacco products from inducements to use vaping products; (2) protect the health of young persons and non-users of tobacco products from exposure to and dependence on nicotine that could result from the use of vaping products; (3) protect the health of young persons by restricting access to vaping products; (4) prevent the public from being deceived or misled with respect to the health hazards of using vaping products; and (5) enhance public awareness of those hazards.

To this end, the TVPA regulates, in addition to tobacco, the manufacture, sale, labelling and promotion of vaping products. Several provincial and territorial jurisdictions have also adopted measures to regulate vaping products, to varying degrees and through different approaches. These generally include measures to prohibit vaping product sales to youth and restrict promotional activities at retail establishments.

The TVPA prohibits vaping product advertising that could be appealing to young persons and lifestyle advertising. The TVPA also prohibits certain types of vaping product promotion, such as sponsorship promotion, testimonials or endorsements and the promotion of flavour descriptors that are appealing to youth. Vaping advertising can be further restricted by regulations.

Current research on vaping

Studies indicate that youth and young adults are particularly vulnerable to the effects of commercial promotions. Youth who are exposed to vaping product advertisements exhibit a greater openness to try and a greater likelihood of using vaping products. While the TVPA prohibits certain types of vaping promotion, vaping product advertising is still permitted in most public places. These promotions are believed to have contributed to the inducements that lead young persons to experiment with vaping products and become frequent users.

The report entitled Public Health Consequences of E-Cigarettes, published on January 23, 2018, by the U.S. National Academies of Sciences, Engineering, and Medicine (NASEM), footnote 1 represents expert consensus resulting from an independent, systematic review of a high volume of peer-reviewed scientific studies. The report offers three conclusions that are of particular significance in supporting the need to further protect youth and non-tobacco users: (1) there is substantial evidence that the use of an e-cigarette (a type of vaping product) results in symptoms of dependence; (2) there is conclusive evidence that in addition to nicotine, most e-cigarette products contain and emit numerous potentially toxic substances; and (3) there is substantial evidence that e-cigarette use increases the risk of ever using combustible tobacco cigarettes among youth and young adults.

Canada’s Tobacco Strategy

Tobacco use is the leading preventable cause of disease and premature death in Canada. It is a known or probable cause of more than 40 debilitating and often fatal diseases of the lungs, heart, and other organs, and is responsible for approximately 45 000 premature deaths every year in Canada. Tobacco products contain nicotine, a highly addictive substance that is responsible for tobacco dependence and consequent repeated long-term use that results in chronic exposure to harmful chemicals. Health and economic costs associated with tobacco use in Canada are estimated at $16.2 billion (based on 2012 data). footnote 2

Canada’s Tobacco Strategy, introduced in 2018, features broad, population-based approaches to achieve the ambitious target of less than 5% tobacco use prevalence by 2035, with targeted approaches focused on specific populations suffering from high levels of tobacco use. One of the Strategy’s objectives is to protect youth and non-tobacco users from nicotine addiction.

Since the enactment of the TVPA, in May 2018, commercial vaping advertising campaigns have been observed on television, on social media and other digital platforms, at events, on outdoor signs and at points of sale. During the same period, a rapid and significant increase in youth uptake of vaping products has been observed. Canada’s public health achievements in tobacco control are at risk of being eroded if nicotine dependence from vaping product use proliferates among young persons, particularly those who would not otherwise have tried smoking.

Severe pulmonary illness associated with vaping

The proposed Regulations would not address the recent emergence of severe lung illness related to vaping that has been observed in Canada and abroad. The cause of this acute illness is still under investigation. footnote 3

Objective

The proposed Vaping Products Promotion Regulations (proposed Regulations) set out measures that could mitigate the impact of vaping product promotion on young persons and non-users of tobacco products, while allowing limited but targeted promotion to adults, in particular those who smoke.

Specifically, the objective of Part 1 of the proposed Regulations is to protect young persons from inducements to use vaping products by prohibiting advertising that can be seen or heard by them, including the display of vaping products and vaping product-related brand elements at points of sale.

The objective of Part 2 of the proposed Regulations is to enhance public awareness about the health hazards or health effects of using vaping products that would enable adults to make an informed choice regarding the use of these products. Vaping product advertising can influence perceptions about vaping product use.

Description

The proposed Regulations are presented in two parts.

Part 1 — Advertising and Point of Sale Promotion

Advertising — Requirements Related to Protection of Young Persons

This part sets out vaping advertising placement restrictions with the specific objective of protecting young persons from inducements to use vaping products. This part prohibits the promotion of a vaping product or a vaping product-related brand element by means of advertising done in a manner that allows the advertising to be seen or heard by young persons. Hence, advertising in places such as recreational facilities, public transit facilities, broadcast media, in publications or online would be prohibited, if it is done in a manner that allows it to be seen or heard by young persons.

Advertising that is communicated in a way that ensures that it cannot be seen or heard by a young person remains permitted, as long as it is compliant with all other applicable provisions. Therefore, subject to limited exceptions set out in the proposed Regulations, for online vaping product advertising, Health Canada expects that, before visitors are granted access to a website or social media page that advertises vaping products, their age and identification would be diligently verified, for example by requiring visitors to upload a valid piece of ID so that their age and identity can be confirmed. Simply requiring visitors to “check the box” about their date of birth or age on a website or social media page before they can access the advertising would not be enough. Similarly, subject to limited exceptions set out in the proposed Regulations, vaping product advertising at a retail establishment would only be permitted if it is displayed or accessed in a manner that ensures that it cannot be seen or heard by young persons.

These restrictions would also apply to advertising of vaping products regulated by the Food and Drugs Act that are not excluded from the application of the TVPA (e.g. those not excluded through the Regulations Excluding Certain Vaping Products Regulated Under the Food and Drugs Act from the Application of the Tobacco and Vaping Products Act).

The exceptions for advertising on signs at points of sale and in publications are as follows:

Signs at points of sale

For the purpose of the proposed Regulations, points of sale would include retail establishments and online stores. Retail establishments would include all physical locations where vaping products are sold, including gas and convenience stores, vape shops, temporary points of sale such as kiosks and stalls and any other physical locations where vaping products are sold to consumers.

Visual advertising that only indicates the availability and price of vaping products would be permitted at points of sale as long as it complies with the conditions set out in the proposed Regulations with respect to the content, placement and form of the visual advertising. These conditions would help ensure that this form of visual advertising would have a limited promotional impact on young persons.

The conditions would be that there could only be one visual advertisement of this type per point of sale that is accessible to young persons. Only black characters on a white background would be permitted and no visual, sound or other effects would be permitted that may draw attention to it. For signs at retail establishments where vaping products are sold, additional requirements would apply, e.g. the sign would have to be rectangular and must not exceed 3 600 cm2 in area.

The placement, form and content conditions relating to signs at retail establishments would not apply where provincial or territorial legislation applies to the retail establishment and governs signs promoting vaping products.

Advertising in publications

Vaping product advertising in publications that are addressed and sent to a named adult would be allowed. Advertising in publications, such as product brochures or pamphlets, would also be permitted if the publication is provided on request to an adult at a retail establishment where vaping products are sold. These proposed exceptions take into account the fact that the manner of communicating the advertising would limit the likelihood that a young person would be exposed to it. Publications would include print publications and electronic publications that are sent or accessed by means of telecommunication such as websites, applications, social media, text messages or other digital platforms. Advertising in these publications would remain subject to all other applicable requirements, including those set out in the TVPA.

Point of sale promotion

The display of vaping products and their packaging at points of sale, including those displayed at an online point of sale, would be prohibited if they are displayed in a manner that would allow them to be seen by young persons. The proposed Regulations would also prohibit the display of a thing that shows a vaping product-related brand element at a point of sale in a manner that allows the brand element to be seen by young persons. For example, a baseball cap bearing a vaping product-related brand element would have to be displayed in such a manner that the vaping product-related brand element is not visible to a young person. Conversely, there would be no prohibition on the display of vaping products, their packaging, or vaping product-related brand elements at points of sale that do not allow youth access.

For points of sales that are retail establishments, this prohibition would not apply if provincial or territorial legislation applies to the establishment and prevents vaping products, their packaging or vaping product-related brand elements from being displayed in a manner that allows them to be seen by young persons.

The measures proposed in Part 1 would come into force 30 days after final publication, except that the restrictions on the display of vaping products and their packaging at points of sale would come into force 60 days after publication in the Canada Gazette, Part II.

Part 2 — Required Information in Advertising

Part 2 of the proposed Regulations would require that a health warning be conveyed in the advertising of a vaping product or vaping product-related brand element. It would also set out the conditions for the presentation of the health warning and of the attribution to Health Canada for both audio and visual vaping advertisements.

At the point of sale, a health warning would not have to be displayed in advertising that indicates only the availability and price of vaping products. Furthermore, the proposed Regulations would not require the display of a health warning in vaping advertisements subject to provincial or territorial legislation that also requires the display of a prescribed health warning.

Another exception is proposed in the case of advertising for a vaping product authorized for sale under the Food and Drugs Act in order not to conflict with the conditions that could be set with said authorization.

The proposed health warnings would be listed in a document entitled List of Health Warnings for Vaping Product Advertising that would be published by Health Canada on the Government of Canada website. The following health warnings are being proposed for inclusion in the initial list:

The list would be incorporated by reference in the final Regulations and could be amended from time to time. This approach would allow Health Canada to be more responsive to new scientific research on the health effects or health hazards of using vaping products. The document could be updated with additional health warnings, the removal of existing ones or amendments to their text. Health Canada could also modify the list of health warnings to maintain their effectiveness. Interested parties would be notified of any proposed changes to the document. The proposed Regulations would allow for a 60-day transition period following any change to the document to allow for the phasing out of advertisements conveying modified or deleted health warnings.

Conditions relating to the presentation of the required information in advertising, such as size, format and placement, the presentation of the health warnings in both official languages and the attribution to Health Canada would be prescribed in the proposed Regulations.

More specifically, every vaping product-related advertisement would be required to convey a health warning in both official languages, unless the advertisement is only in one official language; in the latter case, the health warning would be conveyed only in the one official language. For visual advertising, the display area for the health warning would have to occupy at least 20% of the total surface area of the advertisement; the health warning and the attribution would have to be enclosed by a rectangular border in the display area; and there would be requirements regarding the format and appearance of the health warning and the attribution.

The proposed Regulations would also prescribe the manner of presenting health warnings in advertisements delivered through various media (e.g. text message, audio and video). For audio format, the health warning would be conveyed at the end of the advertisement and be communicated at the same speed, volume and tone as the rest of the audio advertising. For video format, the health warning would be conveyed at the end of the video advertisement and occupy 100% of the total surface area of the advertisement and remain visible for eight seconds if the health warning is displayed in both official languages and four seconds if displayed in one official language. For text messages format, a text-only health warning would be displayed at the beginning of the advertisement.

The measures proposed in Part 2 with regard to the display of a health warning in advertisements would come into force 30 days after publication in Part II of the Canada Gazette.

Regulatory development

Consultation

Health Canada has consulted on proposals to further restrict the promotion of vaping products. The comments and the views of interested stakeholders are presented below and are organized based on the two parts of the proposed Regulations.

Part 1: Advertising and Point of Sale Promotion
A. Proposals for the Regulation of Vaping Products (2017 Consultation)

On August 25, 2017, Health Canada published a consultation document setting out 10 proposals to regulate vaping products in Canada (2017 Consultation). The document was open for comments from the public and interested stakeholders for a 60-day period. A summary of the feedback received can be found in the Consultation Summary: Proposals for the Regulation of Vaping Products published by Health Canada in April 2018. footnote 4

Proposal 10 in the 2017 Consultation proposed to “establish regulations to help limit youth exposure to information and brand-preference advertising of vaping products. . . . Restrictions would … seek to limit advertising in or near locations that are attended predominantly by youth, such as schools, parks, recreational and sporting facilities. Restrictions would also be placed on advertising in certain media for example by either prohibiting advertisements on television and radio or restricting the times of the day when such advertisements may appear or be heard to limit youth exposure to them.”

In general, public health groups and non-governmental organizations (NGOs) were strong advocates for additional advertising restrictions, with many suggesting that vaping advertising restrictions should be stricter than those being proposed and align with those for tobacco products. Other suggestions included banning all promotion on television, radio, social media and billboards, at points of sale, and via the use of promotional emails and giveaways. They also advocated for a ban on all lifestyle advertising, including in age-restricted areas.

Those in the vaping industry (manufacturers and retailers) also expressed support for advertising restrictions in order to protect youth, while still allowing marketing of a reduced risk product to adult smokers. Some advocated that social media be allowed as an advertising medium, noting that they already have age-restricted access to their social media feeds to adults over the age of 19. Others suggested bans on vaping advertising on television and radio at certain times of the day. One suggested banning all promotional materials near schools.

B. Notice of Intent – Potential Measures to Reduce the Impact of Vaping Products Advertising on Youth and Non-users of Tobacco Products (2019)

On February 5, 2019, Health Canada published a Notice of Intent to seek feedback on selected regulatory measures under consideration, including measures to restrict the placement of advertisements where they can be seen or heard by youth as well as measures to prohibit the display of vaping products at retail establishments accessible to youth. The Notice of Intent was open for comments for a 45-day period. A summary of the feedback received can be found in the Consultation Summary: Notice of Intent – Potential Measures to Reduce the Impact of Vaping Products Advertising on Youth and Non-users of Tobacco Products published by Health Canada in July 2019. footnote 5

The majority of the respondents supported restrictions on the promotion of vaping products. NGOs, associations of health professionals, local and regional health authorities, municipalities and the general public called for stricter regulations than those being proposed, similar to those for tobacco products.

With respect to advertising at points of sale accessible to youth, vape shop owners and vaping industry associations were supportive of the proposed restrictions. They mentioned that several provinces have already implemented restrictions on advertising at retail establishments accessible to youth. However, one vaping industry association commented that a complete prohibition on advertising in public places would have a negative impact on persons who smoke.

Most of the larger manufacturers (multinational manufacturers of both tobacco and vaping products), one vaping association and all retail associations were against the proposed advertising restrictions at points of sale. They stated that the proposed restrictions would limit communication on the availability of vaping products as a less harmful alternative for persons who smoke. They felt strongly that the same restrictions on the placement of advertisements should equally apply to vape shops that prevent youth access, since not doing so puts retailers at a competitive disadvantage in terms of how they can market vaping products.

With respect to websites where vaping products are sold, manufacturers suggested that the proposed Regulations should clearly indicate the criteria that Health Canada would use to determine if appropriate measures to prevent youth access were in place. One manufacturer asked whether an age verification box, as is often used on websites for online retailers, would be sufficient or if an age-gate done in combination with a third-party age verification would be required in the proposed Regulations. In the manufacturer’s view, requiring third-party age verification to access a website may have the unintended consequence of preventing customers who smoke from switching to vaping products.

In general, most respondents were supportive of the proposal to restrict advertisements in public places or did not express any opposition to the proposal. Several vape shop owners proposed that broad, national brand-specific advertising campaigns in public venues be prohibited except in age-restricted locations. One manufacturer suggested that all outdoor advertising be prohibited within 500 feet of any schools, youth-oriented facilities and childcare facilities. However, one manufacturer commented that if advertising in public places were to be severely restricted, they should be allowed to communicate at retail establishments with persons who smoke to let them know that vaping products are a less harmful alternative to smoking.

Some vape shop owners mentioned that advertisements of vaping products in broadcast media should be restricted to adult programming. Another suggested that advertisements should only be allowed after prime-time hours. Some vape shop owners felt that the proposed criteria to prohibit promotion during “youth-oriented” programming could be problematic, as it would only capture children’s programs. Instead, they suggested that advertisements only be permitted after a specified time or only during adult viewing times.

Most vaping manufacturers were supportive of the proposal and commented that advertisements must not be directed at young persons. They suggested that no media should display vaping products advertisements if more than 25% of the audience is below 25 years old. They also supported the proposal to prohibit advertisements in children’s and youth-oriented publications, including electronic publications such as websites and social media platforms. However, they expressed concerns that “youth-oriented” should be clearly defined. Some also mentioned that the enforcement of such measures in the online domain would be challenging, and therefore one manufacturer suggested that advertising in social media should be completely banned.

Certain vape shop owners mentioned that businesses should be allowed to use signs and billboards to advertise the company name, location, website, phone number and hours of operation. They also indicated that such signs should be allowed to display authorized statements that compare health effects. One vaping industry association mentioned that Facebook and other social media platforms are critically important to ensure that adults who smoke or vape have access to information and support. Several vape shop owners mentioned that communication through social media is important for their business to reach out to adults who smoke.

Health Canada also consulted the public on measures to prohibit the display of vaping products at points of sale. Such restrictions would not apply at points of sale where youth do not have access (e.g. a vape shop that does not allow youth on its premises or that blocks access to its website to youth), as long as the products cannot be seen from the outside of these places.

Most of the larger vaping manufacturers and the retailer associations were strongly against these proposals, stating that such restrictions are not reflective of a balanced approach that recognizes the harm-reduction potential of vaping products compared to tobacco products. Furthermore, they stated that the proposed restrictions would considerably limit communication to persons who smoke about the availability of vaping products as a less harmful alternative to tobacco products, especially at locations where they purchase tobacco products.

Part 2 — Required Information in Advertising (Health Warning)
A. Proposals for the Regulation of Vaping Products (2017 Consultation)

The 2017 Consultation sought comments on whether vaping products that contain nicotine should display a health warning on the vaping product or its packaging such as “WARNING: This product contains nicotine. Nicotine is an addictive substance. Use of nicotine during pregnancy may harm the fetus” in English and “MISE EN GARDE : Ce produit contient de la nicotine. La nicotine crée une dépendance. L’usage de la nicotine durant la grossesse peut nuire au fœtus” in French (Proposal 3).

Many of those that responded to the 2017 Consultation supported the display of health warnings, although several suggested additional health warning statements should be developed. Some commenters felt that the health warning statement needed to be stronger to truly warn of harm, while others felt that the proposed health warning might discourage smokers from switching to a less harmful alternative (i.e. vaping). Although the feedback was in response to health warnings on a product or package, Health Canada has considered the comments in the development of health warnings on advertisements.

In February 2018, Health Canada commissioned public opinion research on nicotine-related health warnings. A summary of this research can be found in the Evaluation of Possible Labelling Elements for Vaping Products — Phase I and Phase II: Final Report, published in April 2018. footnote 6 This public opinion research included the testing of the statement “Caution: Nicotine is highly addictive – Health Canada” with two alternate statements: “Warning: This product contains nicotine. Nicotine is an addictive substance” and “This product contains nicotine which is a highly addictive substance – Health Canada.”

Participants felt that the messages — i.e. that the product contains nicotine and that nicotine is highly addictive — should be included in one short, simple statement for added clarity, prefaced by the word “warning.” The Health Canada attribution was considered important to participants to establish credibility.

B. Notice of Intent – Potential Measures to Reduce the Impact of Vaping Products Advertising on Youth and Non-users of Tobacco Products (2019)

One of the measures described in the Notice of Intent was to require that advertisements include a health warning. The content, format, size and manner of display of the health warning would be prescribed by regulations. Where the advertisement only has an audio content, the applicable health warning would have to be read aloud. The example included in the Notice of Intent of a health warning that could apply to vaping products containing nicotine was the following in English and French:

The proposed health warning on nicotine’s addictive properties received widespread support. With regard to the proposed text, several NGOs commented that the proposed wording to the effect that youth and non-users should not vape could solicit interest from adolescents and be counterproductive, and therefore recommended that this wording be removed. There were also suggestions that alternate health warnings be considered, such as health warnings concerning the risk of damage to the developing adolescent brain and the risk of vaping leading to tobacco use.

Numerous vape shop owners and most vaping product manufacturers expressed reservations about the statement “Vaping products also release chemicals that can harm your health.” They mentioned that it is factually ambiguous and could misinform Canadians or discourage persons who smoke from switching to vaping products. Some suggested that the word “can” be replaced by the word “may.”

Several manufacturers and vape shop owners stated that the proposed health warnings should be attributed to Health Canada, a respected source of information.

The association of broadcasters suggested that the health warnings be no longer than 25 words and readable in five seconds or less, to permit reasonable use on audio media, such as the radio. Furthermore, the association commented that Health Canada should consider requiring a generic health warning for the advertising of non-substance specific vaping devices, such as “Vaping devices may release chemicals that can harm your health. Youth should not vape. Health Canada.”

After the consultation, Health Canada commissioned public opinion research on public perceptions of nicotine in November 2018. A summary of this research can be found in the final report entitled Qualitative and Quantitative Research on Perceptions of Nicotine, published in March 2019. footnote 7 This public opinion research included the testing of several potential health warnings. The study showed that the statement “Vaping products contain nicotine, a highly addictive substance” in English and “Les produits de vapotage contiennent de la nicotine. La nicotine est une substance qui crée une forte dépendance” in French were preferred, as they were deemed to be simple, clear and factual.

Health Canada’s response to key stakeholder concerns

Regulating vaping products in the same manner as tobacco products

Numerous stakeholders have called for tobacco-like restrictions to apply to vaping products, i.e. to prohibit all advertising of vaping products with certain exceptions. Tobacco use is the leading preventable cause of premature death and disease in Canada. It plays a role in causing diseases and serious health outcomes, leading to immeasurable suffering for thousands of Canadians, their family and friends.

This regulatory proposal brings vaping promotion restrictions much closer to those in place for tobacco. However, there are some differences because Health Canada has approached the regulation of vaping products as a separate product category from tobacco products. While vaping products are harmful, the best available scientific evidence suggests that they are less harmful than cigarettes for smokers who switch completely from tobacco to vaping products. The proposed Regulations were designed to maintain adult smokers’ continued access to commercial communications on vaping products. Giving people who smoke access to less harmful options than cigarettes could help reduce health risks and possibly save lives.

A large number of former smokers (over 20 000) have written to Health Canada giving testimonials on how vaping products have helped them quit smoking. Similar observations have been reported in peer-reviewed research papers. For example, in a randomized trial conducted in the United Kingdom published in 2019, footnote 8 vaping products were found to be more effective for smoking cessation than nicotine-replacement therapy, when both products were accompanied by behavioural support.

Other non-regulatory action to address youth vaping

Non-regulatory action was also suggested by stakeholders to address youth vaping. Health Canada has launched a youth-oriented public education campaign with national reach to increase awareness about the harms and risks associated with vaping product use among youth. In addition, grants and contributions funding of $14 million has been allocated over four years to address tobacco use and youth vaping through the Substance Use and Addictions Program. New investments are being made for additional research and surveillance activities. Health Canada continues to work with its provincial and territorial counterparts in areas of shared jurisdiction.

Modern treaty obligations and Indigenous engagement and consultations

The proposal is not expected to impact modern treaties with the Indigenous peoples of Canada. Analysis regarding possible differential impacts on Indigenous persons is set out in the “Gender-based analysis plus (GBA+)” section below.

Instrument choice

Option 1: Baseline scenario

This option would maintain the existing legislative regime with respect to promotion, i.e. there would be no further federal restrictions on vaping product promotions. The TVPA implemented a tailored approach to vaping product promotion to protect youth and non-users of tobacco products. Many forms of promotion are prohibited under the TVPA. However, the legislation does not restrict advertising that would be considered brand preference and information advertising from appearing in most public places. This includes promotions at points of sale, which would include the display of vaping products and their packaging. Finally, this option would not require that health warnings be placed on vaping product advertising.

This option would leave youth exposed to a considerable amount of vaping product promotion, since advertising could continue to appear in public places, including online, in any publications and broadcast media, and in any locations that are not subject to provincial and territorial restrictions on vaping promotion. This option would not respond to evidence that suggests that young persons exposed to vaping product promotion and product displays are more likely to try and to use vaping products regularly.

Therefore, the status quo is not considered to be an appropriate option.

Option 2: Partial restrictions on vaping promotions as proposed in the Notice of Intent

This option would consist of new regulatory measures to restrict the placement of advertising of vaping products in certain specific places, such as in parks or near schools, or media, such as social media, that are associated with young persons. This option would also prohibit the display of vaping products at retail establishments accessible to youth, limit the content of advertising and require a health warning on all advertisements. This approach was outlined in the Notice of Intent consultation that was launched in February 2019.

Under this option, there would be a reduction of advertising that could induce youth to use vaping products, but youth could still be exposed to vaping product promotions inadvertently through broadcast media at certain times, in certain public places and in print publications, including online, even if the media, places and publications do not contain any youth-oriented material. Also, the definition of youth-oriented programming or publication was considered, but was found to be too subjective for regulated parties to apply and for Health Canada to enforce.

This option would not prevent vaping product advertising in most public places or in publications that could still be seen or accessed by youth.

Option 3: Recommended option — Proposed Vaping Products Promotions Regulations

This option would generally prohibit all advertising that can be seen or heard by youth and only allow exceptions for certain forms of advertising that are limited in their potential to appeal to or be seen or heard by youth. These exceptions would be limited to publications that are addressed and sent to a named adult, publications that are provided to adults on request at a retail establishment, and visual advertisements that only indicate the availability and price of vaping products in a prescribed form.

Advertising and display of vaping products in places where young persons do not have access, such as vape shops, bars, casinos and online locations that effectively prevent youth access, would not be subject to the prohibitions on advertising and promotion set out in the proposed Regulations, maintaining adult access to promotional messaging about vaping products.

All vaping advertisements (other than signs at points of sale that indicate the availability and price in the prescribed form) would have to convey a health warning. These measures would support the TVPA objective of enhancing public awareness of the health hazards of vaping product use.

This option is recommended since it is the most reasonable approach to support the objective of protecting youth from inducements to use vaping products. This option also leaves room for the vaping product industry to communicate with adults that are interested in receiving or accessing vaping product information through commercial promotion.

Benefits and costs

The proposed Regulations would result in total incremental costs estimated at $6.2 million present value (PV) over 10 years (or $0.9 million annually), consisting of $2.7 million (or $387,658 annually) in industry costs and $3.5 million (or $496,023 annually) in government costs. The monetized costs to industry are associated with complying with the proposed prohibition on the display of vaping products at points of sale where they could be seen by youth and with the proposed requirement that a health warning be conveyed in advertisements of vaping products. The government costs are associated with the costs to monitor and enforce compliance with the proposed Regulations.

Due to data limitations, there are other costs that could not be monetized and were therefore analyzed qualitatively. These qualitative costs include the potential profit losses for the vaping and the advertising industries, and the impact on adults who smoke who will now be exposed to less advertising inciting them to use vaping products as an alternative to tobacco products.

Despite the costs of the proposed Regulations, the total benefits are expected to outweigh the total costs. In general, the benefits result from public health gains related to reducing the burden of diseases and death on the public health system as a result of nicotine addiction that may lead to tobacco use. More specifically, they result from the (i) reduced inducements to youth to use vaping products that may result in preventing young persons from initiating the use of vaping products and becoming addicted to nicotine that may lead them to become regular smokers; and (ii) enhanced public awareness about the health effects and the health hazards of using vaping products that would enable adults to make an informed choice regarding the use of these products, including avoiding exposure to nicotine.

Analytical approach

The Cabinet Directive on Regulation requires departments to analyze the costs and benefits of federal regulations. To measure these impacts, the benefits and costs are estimated by comparing the incremental change from the current regulatory framework (i.e. the “baseline scenario”) to what is anticipated to occur under the new regulatory approach (i.e. the “regulatory scenario”). The proposed Regulations would come into effect in 2020. The period of analysis for this cost-benefit analysis (CBA) covers the 10-year period from 2020 to 2029. As per Treasury Board of Canada Secretariat guidelines, footnote 9 the CBA only assesses incremental impacts directly related to a regulatory requirement. A 7% discount rate is used to estimate the present value of the incremental costs and incremental benefits. All values reported for the 10-year period are expressed in 2019 constant dollars.

The regulatory impacts in this analysis have been estimated using two approaches: quantitative analysis, where possible, and qualitative analysis. Because of data limitations at the time of preparing the analysis, several assumptions were made in the CBA that have not been validated by stakeholders. Health Canada is seeking input on this CBA in order to update its analysis. A summary of the CBA is provided herein. A copy of the full CBA report is available upon request from hc.pregs.sc@canada.ca.

Overview of the vaping industry in Canada

According to a 2016 market study, the vaping product market in Canada was estimated to be approximately $510 million. footnote 10 Vaping products are sold in three main categories of stores: vape shops (60%), online (20%) and gas station and convenience stores, grocery stores, drugstores and mass merchandisers (20%). In 2018, ECigIntelligence estimated that there were around 1 100 vape stores. footnote 11 Around 180 of those stores (16%) are likely large businesses as they are franchises with nine stores or more.

Overview of vaping product users in Canada

According to the 2017 Canadian Tobacco, Alcohol and Drugs Survey, 3% (863 000) of Canadians aged 15 years and older reported using an e-cigarette in the past 30 days. Among these users, 65% (557 000) were current smokers, 20% (173 000) were former smokers and 15% (133 000) were never smokers. Of these never smokers, 58% (77 000) were youth aged 15 to 19 and 33% (45 000) were young adults aged 20 to 24.

Assessment of costs and benefits

It is anticipated that the vaping industry, the advertising industry, people who smoke or vape and Health Canada will be impacted by the proposed Regulations. Eight provinces, namely British Columbia, Manitoba, Ontario, Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador, have legislation in effect related to vaping products that include restrictions on the advertising and the display of vaping products at retail establishments. Alberta and Nunavut have no provincial legislation in place for vaping products. Saskatchewan, Northwest Territories and Yukon have introduced legislation that would include vaping product provisions that are currently awaiting royal assent, at the time of drafting this Regulatory Impact Analysis Statement. For the purposes of the CBA, Alberta, Saskatchewan and the Territories were considered to be most impacted by the proposed Regulations. The costs associated with the proposed Regulations are described below.

Quantitative costs of the proposed Regulations

Costs associated with Part 1 of the proposed Regulations (Advertising and Point of Sale Promotion)
Vaping industry costs — Gas and convenience stores

1. Costs to gas and convenience (G&C) stores to remove vaping products from the view of young persons by purchasing and installing cabinets

In the baseline, the proposed requirement of removing vaping products from the sight of young persons in G&C stores where youth have access is already in place in many provinces across Canada. However, G&C stores in Alberta, Saskatchewan and the Territories would be impacted by the proposed Regulations and may assume incremental costs. Most of these G&C stores already have closed cabinets behind the counter that are used to store tobacco products to comply with provincial and territorial tobacco legislation. G&C store operators can use these cabinets to store their vaping products out of sight in order to comply with the proposed Regulations. Where there is no room in cabinets, it is assumed that retailers will find space under the counter. If the space is limited under the counter, it is expected that the retailers would keep limited supply up front and the rest in their storage room as they do for other products.

It is to be noted that industry-reported cigarette sales in Canada have declined by 18% from 2013 to 2018. These declines have occurred in all provinces and were well distributed across the country. It is assumed that the G&C stores in Alberta, Saskatchewan and the Territories would very likely use their existing tobacco cabinets to store vaping products due to space becoming available as a result of the declining sales of tobacco products.

Nevertheless, as a conservative estimate for the purposes of the analysis, it is assumed that 5% of the G&C stores located in Alberta, Saskatchewan and the Territories would purchase and install new cabinets in order to comply with the proposed Regulations. There are an estimated 2 475 G&C stores in these jurisdictions. It is assumed that the purchase cost of a cabinet is $1 000, including shipping costs. The installation cost is estimated at $200. It is anticipated that the impacted G&C stores will assume incremental costs associated with purchasing and installing closed cabinets to remove vaping products from the sight of young persons. This cost is assumed to occur in 2020. The total incremental cost is estimated at $148 500 PV.

Costs associated with Part 2 of the proposed Regulations (Required Information in Advertising [Health Warning])

2. Costs of adding a health warning on posters and product catalogues — Vape shops that promote their own vaping products

In the baseline, Quebec already requires the display of health warning statements on advertisements of vaping products. Businesses in Quebec would not be impacted by the proposed Regulations. In 2018, there were an estimated 1 100 vape stores in Canada, among which 330 were located in Quebec. footnote 12

The vape shops that make their own vaping liquids generally promote their own products by making their own indoor posters and product catalogues. Once the proposed Regulations come into force, it is anticipated that these vape shops would assume incremental costs associated with putting a health warning on in-store posters and product catalogues. Health Canada does not specify how the warning statement is to be added on the product catalogue. It is assumed that the above-mentioned vape shops will comply with the requirements in the most cost-effective way by applying a sticker on their existing stock of product catalogues. These vape shops will also need to have a health warning added to their professionally designed, laminated wall-sized posters.

It is estimated that 30% of vape shops make their own vaping products and advertise the vaping products by using indoor posters and catalogues. Those vape shops would assume incremental one-time costs associated with applying a sticker on product catalogues and updating indoor posters for the first time. When the product catalogues and in-store posters need to be re-produced next time, there would be no incremental costs as vape shops would have already incorporated the required warning in the catalogues and in-store posters. It is assumed that the average price of commissioning a professionally designed, high quality and wall-sized poster is $400. It is also assumed that there will be three indoor posters and three product catalogues in each store. The one-time incremental cost associated with acquiring indoor posters with a warning statement is estimated at $277,200 PV, while the one-time incremental cost associated with applying a health warning statement sticker to the product catalogue is estimated at $3,465 PV.

The total incremental costs associated with adding a health warning for vape shops that make their own products are estimated at $280,665 PV.

3. Costs of designing and printing posters and brochures with the health warning — Large manufacturers and importers

The large manufacturers and importers provide posters and brochures to vape shops and G&C stores that sell their vaping products. Once the proposed Regulations come into force, the manufacturers and importers would assume incremental costs as a result of adding a health warning to the brochures and indoor posters.

It is assumed that the price of designing a brochure is $600 (trifold brochure) and the brochure’s life cycle is three months. The design cost to the 50 large manufacturers and importers is thus $30,000. The large manufacturers and importers will provide approximately 300 brochures to each vape shop and G&C stores selling their products. The cost of printing those brochures in one life cycle is estimated at $139,583. The incremental cost associated with designing and printing brochures is estimated at $169,583 PV.

The large manufacturers and importers will assume a cost to provide three posters each to 770 vape shops to replace existing materials at a cost of $400 per poster. The incremental cost associated with designing and printing indoor posters with the health warning for vape shops is estimated at $924,000 PV. In total, the incremental costs for the large manufacturers and importers to add a health warning on posters and brochures are estimated at $1,093,583 PV.

4. Cost of website design to include health warning — Businesses that advertise vaping products on their websites

Businesses would be required to display a health warning on their websites that promote or sell vaping products. As of February 2019, there were approximately 600 online businesses across Canada (except for Quebec). Quebec prohibits online advertising and sale of vaping products. The proposed Regulations would impose specific requirements in the presentation of a health warning on websites. Those online businesses would need to redesign their websites in order to include the health warning as per the requirements set out in the proposed Regulations; therefore, they will assume incremental costs.

It is assumed that the average cost of website design is $2,000 per business. It is estimated that the one-time incremental cost associated with including a health warning on websites will be $1,200,000 PV.

Government costs — Health Canada

5. Costs of implementation, enforcement and compliance activities

Implementation of the proposed Regulations would require an investment of public sector resources. In particular, Health Canada would incur incremental costs for implementation activities and to monitor and enforce compliance with the proposed Regulations. Estimates for these costs are described below.

Implementation activities would include the development of compliance and enforcement (C&E) policy and procedures for the proposed Regulations; the development of C&E assessment tools; the warning letter templates; the preparation of fact sheets (external), internal guidelines and compliance promotion plans; and the development of training and associated training materials and training delivery to inspection staff.

Compliance promotion: Health Canada’s baseline expenditures with regard to compliance promotion with the TVPA, which include both personnel and other costs, are likely to change under the proposed Regulations. Additional costs are measured based on the opportunity costs of employee resources. This would include time spent by staff informing industry and instructing Health Canada inspectors about the new requirements, as well as the cost of developing and distributing fact sheets and other guidance documents that describe the new requirements. Additional outreach activities may be conducted during the first two years of implementation.

It is expected that the Government of Canada (Health Canada) would incur incremental costs of compliance monitoring and enforcement for the following: training of inspectors, ongoing site inspection and travel, analysis of advertisements, investigations into alleged violations, and measures to deal with cases of non-compliance. The initial implementation costs are estimated at approximately $327,000 PV. These are to be coupled with ongoing outreach and compliance and enforcement costs of approximately $3,156,855 PV over 10 years. The total government resource costs are thus estimated at $3.5 million PV over 10 years (or $496,023 annually).

Qualitative costs of the proposed Regulations

If approved, when the proposed Regulations come into force, vaping product promotions will be prohibited where they could be seen or heard by youth with specific exceptions. The cost impacts are explained below.

6. Potential profit loss — Retail industry, vaping industry and advertising industry

Once the proposed Regulations come into force, vaping product advertising will be prohibited at points of sale, in publications, online, in broadcast media (e.g. TV and radio) and on social media platforms that are accessible to youth. This measure will impact businesses in the vaping industry in all provinces and territories except Quebec, which already prohibits these forms of promotion. The restrictions, which are meant to protect youth, may also result in fewer adults being exposed to vaping advertisements and lead to a loss of profits to the vaping industry due to reduced sales to these individuals.

a. Retail industry — G&C stores

The proposed Regulations will also restrict vaping product advertising, including their display at points of sale that are accessible by youth. It is anticipated that there would be some incremental revenue impacts on G&C stores where provincial legislation does not already restrict vaping promotions at retail. Thus, point of sale vaping promotions in Alberta, Saskatchewan and the Territories would be restricted if the proposed Regulations are implemented. The potential cost impact related to the reduced ability to advertise at these points of sale could result in a reduction in the sale of vaping products. The proportion of these reductions may not be significant as the proposed Regulations create exceptions that permit the display of signs about the availability and price of vaping products and permit advertising in brochures that can be made available to adults by request. However, Health Canada does not have the data necessary to quantify this cost at this time.

b. Vaping industry — Manufacturers and importers

Once the proposed Regulations come into force, vaping product manufacturers and importers will no longer be permitted to advertise in broadcast media where youth have access. However, many of these manufacturers and importers sell their products through vape shops, which will continue to be allowed to advertise vaping products to adults, and will therefore not be impacted by the proposed Regulations. It is anticipated that the vaping product manufacturers and importers who sell their products through G&C stores may experience some profit loss as a result. However, Health Canada does not have the data necessary to quantify this cost at this time.

c. Advertising industry

Canada already has a strong regulatory framework for vaping products in place through the TVPA, which prohibits, among other things, advertising that appeals to youth. Vaping product advertising is a relatively small segment in the advertising industry in Canada. However, once the proposed Regulations come into force, vaping advertising that can be seen or heard by youth would be prohibited, while exceptions to allow the advertising of vaping products to adults would be maintained although in more limited forms. It is anticipated that advertising agencies employed by the vaping industry might experience some profit loss, as this stream of business will be impacted as a result of the restrictions on advertising. However, Health Canada does not have the data necessary to quantify this cost at this time.

7. Potential cost impact on adults who smoke

Advertising restrictions may lower awareness of vaping products that are available on the market among adults who smoke. This may result in fewer of them making the switch to a less harmful alternative than cigarettes. However, this would be mitigated by the continued in-store display of signs that indicate the price and availability of vaping products and in-store brochures available to adults upon request.

8. Impact on competitiveness — G&C stores

After implementation of the proposed Regulations, except for advertisements that are limited to signs on availability and price and brochures that can be provided to adults on request, G&C stores would lose most of their ability to proactively advertise or promote vaping products.

However, G&C stores sell types and brands of vaping products that are different from those available at vape shops. footnote 13 The vaping products sold in G&C stores are mostly from large tobacco manufacturers who have a long-standing and well-established business relationship with these retailers. These large tobacco manufacturers have promoted their products inside G&C stores and outside the retail environment, where they are not prohibited by provincial legislation. G&C stores also sell tobacco products to individuals who are most likely to also purchase vaping products.

The proposed advertising and display ban at retail establishments would impact the ability of new entrants to gain vaping product market share through the G&C stores channel. New market entrants may prefer vape shops and online channels for product launches, given a greater ability to display and advertise vaping products to adults in those spaces. The current dominant companies might also increase their efforts to sell their products through vape shops that prevent youth access, or step up efforts to open their own brand-specific vape stores that prevent youth access. Hence, it is expected that the proposed Regulations could have a negative impact on the competitiveness of G&C stores in this product category if the current business model continues to operate in the future.

Benefits of the proposed Regulations

1. Public health benefits

Canada’s Tobacco Strategy is a comprehensive and collaborative approach between several government departments and agencies. Partners in the Strategy include Health Canada, the Public Health Agency of Canada, Public Safety Canada, the Royal Canadian Mounted Police, the Canada Border Services Agency and the Canada Revenue Agency. Each one of these federal partners plays a role in delivering key components of the Strategy. There is also ongoing cooperation between the federal government, the provinces and territories, municipalities, non-governmental organizations, community agencies and the private sector. The combined effort of many groups helps support tobacco control gains across the country, which have resulted in a significant impact on the decline in disease incidence, mortality and disability caused by tobacco use and which, in turn, yields long-term economic benefits associated with these decreases.

2. Benefits associated with Part 1 — Advertising and Point of Sale Promotion

Part 1 of the proposed Regulations would reduce youth exposure to vaping product promotion by means of advertising and display of the vaping products. This is expected to protect young persons and non-users of tobacco products from inducements to use vaping products, which can lead youth to an addiction to nicotine and to becoming regular smokers. In addition, in an environment where commercial advertising of vaping products is restricted, the proposed Regulations could amplify the effectiveness of Health Canada’s or the provinces’ education campaigns that inform youth and non-users of tobacco products about the risks of vaping.

3. Benefits associated with Part 2 — Required Information in Advertising

Part 2 of the proposed Regulations would require that a health warning be conveyed in vaping product advertisements. Enhancing public awareness about the health effects and health hazards of using vaping products would enable adults to make an informed choice regarding the use of these products. Furthermore, adults who are also parents or mentors of young persons would be informed about the health effects and health hazards of using vaping products, which would enable them to reinforce the messaging about the harms of vaping products to young persons.

Summary

The proposed Regulations are estimated to result in a total incremental cost of $6.2 million PV over the 10-year period (or $0.9 million annually). The public health benefits resulting from the proposed Regulations, including the potential benefit of protecting young people from inducements to use vaping products, are considerable, even if they cannot be directly quantified. It is expected that these benefits would outweigh the costs of the proposed Regulations. The following table provides a detailed cost-benefit statement.

Cost-benefit statement
 

Base Year
2020–2021

Year 4
2023–2024

Year 8
2027–2028

Year 10
2029–2030

Total Present Value

Annualized Average

A. Quantified impacts (2019 constant dollars, CAN$)

Costs

Costs to G&C stores

Purchase and installation of cabinets

148,500

0

0

0

148,500

21,143

Costs to vape shops that promote their own products

Updating indoor posters — health warning

277,200

0

0

0

277,200

39,467

Apply stickers to product catalogues — health warning

3,465

0

0

0

3,465

493

Costs to large manufacturers and importers that provide brochures and posters to vape shops and G&C stores

Produce new brochures — health warning

169,583

0

0

0

169,583

24,145

Update new posters — health warning

924,000

0

0

0

924,000

131,557

Costs to businesses that advertise vaping products on their websites

Web design — health warning

1,200,000

0

0

0

1,200,000

170,853

Total industry costs

2,722,748

0

0

0

2,722,748

387,658

Costs to Government

Implementation

327,000

0

0

0

327,000

46,557

Compliance and enforcement

225,000

450,000

450,000

450,000

3,156,855

449,465

Total government costs

552,000

450,000

450,000

450,000

3,483,855

496,023

Total costs of proposed Regulations

3,274,748

450,000

450,000

450,000

6,206,602

883,681

Costs to small businesses

2,390,253

0

0

0

2,390,253

340,318

B. Qualitative impacts

Benefits

  1. Reduced inducements to youth to use vaping products may result in preventing young persons and non-users of tobacco products from initiating the use of vaping products and becoming addicted to nicotine that may lead them to becoming regular smokers.
  2. Enhanced public awareness about the health effects and the health hazards of using vaping products would enable Canadians to make an informed choice regarding the use of these products, including avoiding one’s exposure to nicotine.

Costs

  1. Businesses in the vaping industry, advertising industry and retail industry in all provinces and territories except Quebec would be negatively impacted as a result of loss of profits or revenue.
  2. G&C stores would lose most of their ability to proactively advertise or promote vaping products and this would have a negative impact on their competitiveness with regard to the sales of vaping products. The market share of G&C stores would be negatively impacted as new entrants would promote their products at other retail outlets such as vape shops or online.
  3. Adults who smoke may become less aware of vaping products that are available on the market. This may result in fewer of them making the switch to a less harmful alternative than cigarettes. However, the continued in-store display of signs indicating the price and availability of vaping products and brochures available to adults upon request would help mitigate this potential social cost.

Notes:

  1. The time period for the analysis is 10 years from 2020-2029. The discount rate used for the analysis is 7%.
  2. Numbers may not add up due to rounding.
Sensitivity analysis

A sensitivity analysis was conducted to show the estimated incremental costs resulting from the proposed Regulations at a 3%, 7% and 10% discount rate (7% was used in this analysis). At a 3% discount rate, the total cost would be $6.8 million PV over 10 years, while a 10% discount rate would result in a $5.9 million PV incremental cost over the 10-year period. As indicated in the cost-benefit statement, the 7% discount rate results in a net cost of $6.2 million PV over 10 years.

Small business lens

It is estimated that approximately 84% of vape shops, 87.5% of manufacturers and importers and 99.4% of G&C stores in the vaping industry are small businesses as per the Treasury Board of Canada Secretariat definition. footnote 14 G&C stores that are small businesses in the vaping industry would be impacted by the proposed Regulations. G&C stores would potentially assume some reduced sales from fewer adults who smoke being exposed to vaping advertisements as a result of the restrictions on in-store advertising. It is anticipated that the vape shops that are small businesses would likely be less impacted by the proposed Regulations regarding their in-store promotional activities given the advertising and point of sale promotion restrictions would not apply as long as youth do not access their facilities. However, as vape shops generally use advertising by means of brochures, their websites and possibly social media, they would be impacted by the proposed Regulations in order to comply with proposed requirements. Some of the manufacturers and importers would potentially be impacted, as they may assume compliance costs after the implementation of the proposed Regulations.

It is anticipated that an estimated 1 339 small businesses will potentially assume incremental costs associated with the proposed requirement of adding a health warning on advertisements of vaping products and the purchasing and installation of cabinets for vaping product storage. The small vape shops that promote their own products would assume the incremental costs of updating indoor posters and adding health warning stickers to catalogues and brochures. The small online retailers would assume the incremental costs of redesigning their websites, and the small manufacturers and importers would assume the incremental cost of updating posters and brochures for vape shops and G&C stores. The G&C stores would assume the incremental cost of purchasing and installing cabinets for vaping product storage. It is estimated that the total one-time cost would be $2,390,253 PV over 10 years (or $340,318 annually). Thus, the incremental cost per impacted small business would be $3,045 PV over 10 years (or $434 annually).

In developing the proposed Regulations, approaches that would balance the minimization of regulatory burden to business with the protection of youth from inducements to use vaping products were considered.

In order to protect youth, the proposed Regulations would require, soon after they are made by the Governor in Council, that the vaping industry remove all advertisements that can be seen or heard by youth. The vaping industry would also be expected to modify any existing advertising material that would be permitted or to design new advertisements to convey the required health warning.

Flexible option

It is estimated that the proposed Regulations would affect 1 339 small businesses, which are composed mostly of small manufacturers, vape shop owners and G&C store retailers. These businesses would be required to remove any advertising that can be seen or heard by youth, at their locations or online, and to ensure that any remaining vaping advertising conveys a health warning.

Providing additional time for small businesses to comply with the Regulations was considered. However, a delayed implementation period for small businesses was deemed to be counter-effective in addressing the youth vaping problem. Therefore, the development of a flexible option was not performed.

Small business lens analysis — Impacts on all small businesses in the vaping industry
Small Business Lens Summary

Number of small businesses impacted

1 339

Number of analytical years

10

Base year for costing

2019

Small Business Lens Summary

Compliance Costs

Annualized Value ($)

Present Value ($)

Purchase and installation of closed cabinets (G&C stores)

21,016

147,609

Update of indoor posters (vape shops)

33,152

232,848

Application of stickers on product catalogues (vape shops)

414

2,911

Production of brochures (manufacturers and importers)

21,127

148,385

Production of indoor posters (manufacturers and importers)

115,112

808,500

Redesign of websites (online retailers)

149,496

1,050,000

Total

340,318

2,390,253

Administrative costs

None

0

0

Total

0

0

Total costs (all impacted small businesses)

340,318

2,390,253

Cost per impacted small business

434

3,045

Note: The table above refers to compliance cost impacts only. Small businesses will experience potential impacts on profits should the proposed Regulations impact their sales.

One-for-one rule

There is no administrative burden on businesses as a result of the proposed Regulations. Therefore, the one-for-one rule does not apply.

Regulatory cooperation and alignment

The following section describes any alignments with legislation in other jurisdictions that govern the types of promotion that are targeted by the proposed Regulations.

Part 1 — Advertising and Point of Sale Promotion
Provincial legislation

Promotion at retail establishments is already restricted in the eight provinces that have vaping legislation. British Columbia, Manitoba, Quebec, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador, with Saskatchewan awaiting royal assent, prohibit the display and advertising of vaping products at retail establishments where youth have access and have requirements in place for the signs that show the availability and price of vaping products at retail establishments.

With regard to advertising outside the retail environment, Manitoba, Prince Edward Island and Saskatchewan (awaiting royal assent) restrict the advertising of vaping products on vehicles, buildings or outdoor structures such as billboards. Ontario prohibits advertising of vaping products in places of entertainment, such as cinemas and restaurants. The other jurisdictions (British Columbia, Alberta, New Brunswick, Nova Scotia, Yukon, Nunavut, and Northwest Territories) have no measures in place to further restrict advertising in public places other than at retail establishments.

Quebec prohibits online sale of vaping products and only allows vaping advertising in newspapers and magazines that have an adult readership of least 85%.

The proposed Regulations would further restrict vaping product advertising in Canada. They would prohibit vaping advertising everywhere where it can be seen or heard by young persons, including any public signage (billboards, bus shelter advertisements, etc.), on social media platforms, on TV, on radio and in all publications including those online, unless they are addressed and sent to an adult identified by name or only accessible to adults. The federal measures would include restrictions on the promotion and display of vaping products at retail establishments that are accessible to youth in any province or territory that does not legislate in these areas. In particular, online advertising and point of sale promotions would be regulated across Canada under the proposed Regulations.

International

Article 20(5) of the Tobacco Products Directive 2014/40/EU of the European Union requires member states to introduce restrictions on the advertising of e-cigarettes. While the Directive does not impose any rules on promotion or advertising of e-cigarettes that does not have “cross-border effects” and leaves regulation of such advertising to member states, the European Commission has implemented the same rules for cross-border advertising and promotion of e-cigarettes as the ones currently existing for tobacco products. These rules prohibit most cross-border promotional activity and include the following:

Part 1 of the proposed Regulations would not negatively impact the entry of new vaping products from other countries into the Canadian market. These importers would be limited in the same manner as new domestic vaping products manufacturers.

Part 2 — Required Information in Advertising (Health Warning)
Provincial legislation

All advertising across Canada would be subject to the requirements of Part 2 of the proposed Regulations, with the exception of advertising in provinces that require the display of a health warning on applicable advertisements.

Among the Canadian provinces, only Quebec requires a health warning on permitted vaping product advertisements in its jurisdiction. Online sale or advertising of vaping products is prohibited in Quebec. Hence, as per the exception set out in Part 2, the proposed requirements to convey the health warning in vaping advertisements would not apply to Quebec, a province that already requires a health warning.

International

The United States requires the following health warning to be displayed on all vaping product advertisements: “WARNING: This product contains nicotine. Nicotine is an addictive chemical.” However, advertising material from the United States displaying the above warning would not satisfy the requirements of the proposed Regulations, except where they can benefit from the exception set out in section 31 of the TVPA regarding imported publications.

The proposed Regulations aim, among others, to raise awareness of the hazards related to vaping products in general, not just those associated with nicotine. Therefore, the proposed Regulations were designed in such a manner that the harms would be conveyed on advertisements of all vaping products, irrespective of whether or not they contain nicotine.

The proposed Regulations would not align with measures in the United States that are less restrictive for vaping promotions and that require a different health warning in advertisements of vaping products.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus (GBA+)

These proposed Regulations are not expected to have any negative impacts on particular groups of Canadians on the basis of sex, gender, race, or ethnicity. However, it is likely that some population groups could be differentially impacted.

Sex differences relating to vaping

There are significant sex differences in vaping prevalence among youth aged 15 to 19 in Canada. In 2017, 8% of male youth and 4% of female youth had used an e-cigarette in the past 30 days. The same sex difference exists among Canadian students, with past-30-day use of e-cigarettes being higher among male (12%) than female (8%) students.

The 2019 public opinion research study Vapers Panel Survey to Measure Attitudes and Behaviours Regarding Vaping Products footnote 15 provides some insight on the attitudes and behaviours of Canadian regular vapers aged 15 years and older. Select findings regarding vaping information and advertising among regular vapers are the following:

The survey also revealed that male and female regular vapers were equally likely to recall having seen or heard vaping advertising or promotional material in the past 30 days. Female regular vapers were more likely than male regular vapers to recall having encountered vaping advertising or promotions through social media.

Other vulnerable population groups

It is generally observed that older adolescents/young adults and more educated groups are more likely to try a vaping product, which is a common pattern among early adopters of technologies. In Canada, 29% of young adults aged 20 to 24 had tried an e-cigarette in 2017 compared to 13% of adults aged 25 years and older.

Canada’s Tobacco Strategy recognizes that certain groups of Canadians face smoking rates that are considerably higher than the general population and require more targeted action to ensure no one is left behind in Canada’s efforts to reach less than 5% of tobacco use by 2035. In particular, the prevalence of smoking among Indigenous peoples is approximately 2 to 5 times higher than among non-Indigenous Canadians; the smoking prevalence among LGBTQ+ persons is estimated to be in the ranges between 24% and 45% across different groups; and prevalence is higher in certain trades: for example, more than one third of construction workers smoked in 2011 (34%), followed by mining and oil and gas extraction workers (29%) and transportation and warehousing workers (29%). The evidence is clear that smoking is more prevalent in the lowest income groups and is a leading cause of health inequalities.

The uptake of vaping products by people who smoke in these vulnerable groups could have the potential to reduce health inequalities if they completely switch to vaping. However, there is limited data on vaping product use among these populations in Canada. Health Canada will continue to monitor the population and the health inequalities impacts of tobacco use. Efforts by Health Canada, the Public Health Agency of Canada and Indigenous Services Canada to reach these groups with higher rates of smoking through increased resources in tobacco programs will continue.

Implementation, compliance and enforcement, and service standards

Compliance promotion and outreach activities aimed at informing manufacturers, importers, distributors and retailers of vaping products would be conducted in order to increase their level of awareness of the restrictions in this proposal and to assist in achieving compliance.

The Government of Canada would actively monitor compliance throughout the supply chain, including manufacturers, importers, distributors and retailers. If federal inspectors have reasonable grounds to believe that the proposed Regulations have been contravened, appropriate measures would be taken under the authorities of the TVPA, which could include warnings, compliance plans, penalties and seizures. Compliance and enforcement strategies would be consistent with the current overall approach to other prohibitions set out in the TVPA and its regulations.

This regulatory proposal does not relate to providing a service to the public or to industry; therefore, there are no service standards associated with this regulatory proposal.

Contact

Mr. Mathew Cook
Manager
Scientific Regulations Division
Tobacco Products Regulatory Office
Tobacco Control Directorate
Controlled Substances and Cannabis Branch
Health Canada
Address locator 0301A
150 Tunney’s Pasture Driveway
Ottawa, Ontario
K1A 0K9
Fax: 613‑948‑8495
Email: hc.pregs.sc@canada.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to section 33 footnote a of the Tobacco and Vaping Products Act footnote b, proposes to make the annexed Vaping Products Promotion Regulations.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to the Tobacco Products Regulatory Office, Tobacco Control Directorate, Controlled Substances and Cannabis Branch, Health Canada, 150 Tunney’s Pasture Driveway, Ottawa, Ontario K1A 0K9 (email: hc.pregs.sc@canada.ca).

Ottawa, December 13, 2019

Julie Adair
Assistant Clerk of the Privy Council

TABLE OF PROVISIONS

Vaping Products Promotion Regulations
Definition

1 Definition of Act

PART 1

Advertising and Point of Sale Promotion
Advertising — Requirements Related to Protection of Young Persons

2 Advertising — young persons

Point of Sale Promotion

3 Display — vaping product

4 Display — package

5 Display — brand element

6 Visual advertising — general conditions

7 Signs — specific conditions

PART 2

Required Information in Advertising
Health Warning

8 Advertising

9 List of health warnings

10 Exception — amended list

11 Single health warning

12 Official languages

Attribution

13 Attribution of health warning

Presentation of Required Information
General Requirements — Visual Advertising

14 Definition of display area

15 Required information — placement

16 Required information — visibility and legibility

17 Requirement — rectangular border

18 Display area

19 Display — health warning

20 Official languages — placement

21 Health warning — legibility

22 Attribution

23 Attribution — legibility

General Requirements — Audio Advertising

24 Required information — placement

25 Requirements

26 Attribution

Specific Requirements — Video Advertising

27 Required information

28 Required information — audio and visual components

29 Minimum duration

Specific Requirements — Text Message Advertising

30 Non-application of sections 14 to 29

31 Required information — display

32 Required information — visibility and legibility

33 Official languages — display

34 Health warning — legibility

35 Attribution

36 Attribution — legibility

Coming into Force

37 30th day after publication

SCHEDULE

Vaping Products Promotion Regulations
Definition

Definition of Act

1 In these Regulations, Act means the Tobacco and Vaping Products Act.

PART 1

Advertising and Point of Sale Promotion
Advertising — Requirements Related to Protection of Young Persons

Advertising — young persons

2 (1) For the purposes of section 30.701 of the Act, a vaping product or a vaping product-related brand element must not be promoted by means of advertising done in a manner that allows the advertising to be seen or heard by young persons.

Exceptions

(2) Subsection (1) does not apply to the following types of advertising:

Point of Sale Promotion

Display — vaping product

3 (1) For the purposes of section 30.8 of the Act, a vaping product must not be displayed, at the point of sale, in a manner that allows it to be seen by young persons.

Exception — provincial legislation

(2) Subsection (1) does not apply to a point of sale that is a retail establishment where vaping products are sold if provincial legislation that applies to the retail establishment prohibits vaping products from being displayed in a manner that allows them to be seen by young persons.

Display — package

4 (1) For the purposes of section 30.8 of the Act, the package of a vaping product must not be displayed, at the point of sale, in a manner that allows the package to be seen by young persons.

Exception — provincial legislation

(2) Subsection (1) does not apply to a point of sale that is a retail establishment where vaping products are sold if provincial legislation that applies to the retail establishment prohibits the packages of vaping products from being displayed in a manner that allows the packages to be seen by young persons.

Display — brand element

5 (1) For the purposes of section 30.8 of the Act, a thing that displays a vaping product-related brand element must not be displayed, at the point of sale, in a manner that allows the brand element to be seen by young persons.

Exception — provincial legislation

(2) Subsection (1) does not apply to a point of sale that is a retail establishment where vaping products are sold if provincial legislation that applies to the retail establishment prohibits, directly or indirectly, vaping product-related brand elements from being displayed in a manner that allows them to be seen by young persons.

Visual advertising — general conditions

6 (1) For the purposes of section 30.8 of the Act, a vaping product or a vaping product-related brand element must not, subject to subsection (2) and section 7, be promoted by means of visual advertising at the point of sale unless the following conditions are met:

Exception — visibility

(2) Subsection (1) does not apply in respect of visual advertising that is not visible to young persons.

Signs — specific conditions

7 (1) For the purposes of section 30.8 of the Act, a vaping product or a vaping product-related brand element must not, subject to subsections (2) and (3), be promoted by means of a sign at a point of sale that is a retail establishment where vaping products are sold, unless the following conditions are met:

Exception — provincial legislation

(2) Subsection (1) does not apply if provincial legislation that applies to the retail establishment governs signs promoting vaping products.

Exception — visibility

(3) Subsection (1) does not apply in respect of signs that are not visible to young persons.

PART 2

Required Information in Advertising
Health Warning

Advertising

8 (1) For the purposes of section 30.7 of the Act, a vaping product or a vaping product-related brand element must not be promoted by means of advertising unless it conveys the health warning that is required under section 9 about the product and its emissions and about the health hazards and health effects arising from the use of the product and from its emissions.

Exceptions

(2) Subsection (1) does not apply to the following types of advertising:

List of health warnings

9 The promotion of a vaping product or a vaping product-related brand element by means of advertising must convey one of the health warnings set out in the document entitled List of Health Warnings for Vaping Product Advertising footnote c, as amended from time to time and published by the Government of Canada.

Exception — amended list

10 Despite section 9, if the List of Health Warnings for Vaping Product Advertising is amended, an advertisement may convey a health warning that was set out in the previous version of the List for a period of 60 days after the day on which the new version of that List is published by the Government of Canada.

Single health warning

11 Every promotion of a vaping product or a vaping product-related brand element by means of advertising must convey a single health warning.

Official languages

12 (1) Every health warning that is conveyed in advertising must be conveyed in both official languages.

Exception

(2) However, in the case of advertising that is done in only one official language, the health warning may be conveyed in that language.

Attribution

Attribution of health warning

13 The promotion of a vaping product or a vaping product-related brand element by means of advertising must attribute the health warning to its source in accordance with section 22, 26 or 35.

Presentation of Required Information
General Requirements — Visual Advertising

Definition of display area

14 For the purposes of section 15, subsection 17(1) and sections 18 and 19, display area, in respect of visual advertising, means the portion of the surface area of an advertisement on which the information required under this Part can be displayed. It includes the portion of the surface area of the advertisement that, from the edge that is in the horizontal plane and that forms the upper limit of the advertisement, occupies at least 20% of the surface area of the advertisement that is visible at first sight to consumers or, in the case of the visual component of video advertising, 100% of the surface area of the advertisement.

Required information — placement

15 The information required under this Part and conveyed in visual advertising must be displayed on the display area.

Required information — visibility and legibility

16 Required information that is conveyed in visual advertising

Requirement — rectangular border

17 (1) Required information that is conveyed in visual advertising must be enclosed within a rectangular border that must be displayed on the display area in such a manner that it demarcates the information from any other information displayed on the advertisement.

Appearance — rectangular border

(2) The border must be the same colour as the type of the health warning and form a continuous line that has a uniform width of 3% of the length of the shortest side of the rectangle.

Display area

18 Only the required information and the rectangular border referred to in section 17 may be displayed on the display area.

Display — health warning

19 The health warning must be centred in the display area, oriented parallel to the upper limit of the visual advertisement, and must occupy not less than 60% and not more than 70% of the display area.

Official languages — placement

20 If a health warning is conveyed in both official languages, each version must be displayed immediately beside, below or above the other version, and the two texts must not be combined.

Health warning — legibility

21 (1) The health warning that is conveyed in visual advertising must be displayed in a standard sans serif type that

Characters in text

(2) Each character in the text of the health warning must have the same font and type size.

Text of health warning

(3) The health warning must be displayed in such a manner that

Attribution

22 The attribution “Health Canada” must be displayed immediately beside or below the English version of a health warning that is displayed in visual advertising, and the attribution “Santé Canada” must be displayed immediately beside or below the French version of the health warning.

Attribution — legibility

23 (1) The attribution of a health warning

Attribution — characters in text

(2) Each character in the text of the attribution must have the same font as the text of the health warning.

Attribution — visibility

(3) The attribution must be displayed in a type that, as illustrated in the schedule, has an x-height that is equal to that of a lower case letter displayed in the text of the health warning.

General Requirements — Audio Advertising

Required information — placement

24 The information required under this Part and conveyed in audio advertising must be conveyed at the end of the audio advertising and must not be combined with any other information.

Requirements

25 The following requirements apply to the health warning that is conveyed in audio advertising:

Attribution

26 The attribution “This is a Health Canada warning:” must immediately precede the English version of the health warning that is conveyed in audio advertising, and the attribution “Ce message est une mise en garde de Santé Canada :” must immediately precede the French version of the health warning.

Specific Requirements — Video Advertising

Required information

27 The information required under this Part and conveyed in video advertising must be conveyed at the end of the video advertising.

Required information — audio and visual components

28 In the case of video advertising that includes an audio and a visual component, the audio and visual components of the required information must be conveyed simultaneously.

Minimum duration

29 In the case of video advertising that does not include an audio component, the minimum duration of the display of the health warning must be

Specific Requirements — Text Message Advertising

Non-application of sections 14 to 29

30 Sections 14 to 29 do not apply to information required under this Part that is conveyed in text message advertising.

Required information — display

31 Required information that is conveyed in text message advertising must be displayed at the beginning of the text message advertising.

Required information — visibility and legibility

32 Required information that is conveyed in text message advertising

Official languages — display

33 If a health warning is conveyed in both official languages, each version must be displayed before or after the other version.

Health warning — legibility

34 (1) The health warning that is conveyed in text message advertising must be displayed in a standard sans serif type that is not compressed, expanded or decorative.

Characters in text

(2) Each character in the text of the health warning must have the same font and type size.

Text of health warning

(3) The health warning must be displayed in such a manner that

Attribution

35 The attribution “Health Canada” must be displayed immediately after the English version of the health warning that is displayed in text message advertising, and the attribution “Santé Canada” must be displayed immediately after the French version of the health warning.

Attribution — legibility

36 The attribution of a health warning

Coming into Force

30th day after publication

37 (1) Subject to subsection (2), these Regulations come into force on the 30th day after the day on which they are published in the Canada Gazette, Part II.

60th day after publication

(2) Sections 3 and 4 come into force on the 60th day after the day on which these Regulations are published in the Canada Gazette, Part II.

SCHEDULE

(Subsection 23(3))

ILLUSTRATION — STANDARD SANS SERIF TYPE

Illustration — standard and serif type