Vol. 145, No. 21 — October 12, 2011

Registration

SOR/2011-178 September 22, 2011

TOBACCO ACT

Promotion of Tobacco Products and Accessories Regulations (Prohibited Terms)

P.C. 2011-926 September 22, 2011

Whereas, pursuant to section 42.1 of the Tobacco Act (see footnote a), the Minister of Health laid a copy of the proposed Promotion of Tobacco Products and Accessories Regulations (Prohibited Terms), substantially in the annexed form, before the House of Commons on June 9, 2011 and the House of Commons concurred on June 22, 2011 in a report from the Standing Committee on Health approving the proposed Regulations;

Therefore, His Excellency the Governor General in Council, on the recommendation of the Minister of Health, pursuant to section 33 (see footnote b) of the Tobacco Act (see footnote c), hereby makes the annexed Promotion of Tobacco Products and Accessories Regulations (Prohibited Terms).

PROMOTION OF TOBACCO PRODUCTS
AND ACCESSORIES REGULATIONS
(PROHIBITED TERMS)

INTERPRETATION

Definition of “cigarette”

1. In these Regulations, “cigarette” includes any roll or tubular construction that contains tobacco and is intended for smoking, other than a bidi, cigar, kretek or tobacco stick.

APPLICATION

Scope of prohibitions

2. The prohibitions in these Regulations that apply with respect to the terms “light” and “mild” also apply with respect to

• (a) any variations in the spelling of those terms as well as the spelling of other parts of speech and grammatical forms of those terms; and
  
• (b) any modifiers of those terms, including “extra” and “ultra”, as well as any abbreviation of those terms or modifiers.
  

PROMOTION

GENERAL

No promotion if terms on product

3. (1) A person must not promote a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if the tobacco product displays the term “light” or “mild” or promote such a tobacco product by affixing to it the term “light” or “mild”.

No promotion if terms on packaging

(2) A person must not promote a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if the package of the tobacco product displays the term “light” or “mild”.

No promotion if terms on accessories

(3) A person must not promote

• (a) an accessory that displays a brand element of a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if that accessory displays the term “light” or “mild”; or
  
• (b) a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters by affixing to an accessory a brand element of such a tobacco product if that accessory displays the term “light” or “mild”.
  

ADVERTISING

No advertising of product with terms

4. A person must not promote a bidi, cigarette, kretek, little cigar or tobacco stick, or cigarette tobacco, cigarette papers, tubes or filters by using the term “light” or “mild” in an advertisement of the tobacco product.

PACKAGING

No packaging of products with terms

5. A person must not package a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters, or have the tobacco product packaged by a third party, in a package that displays the term “light” or “mild”.

SALE

No sale of accessories with terms

6. A person must not sell an accessory that displays a brand element of a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if that accessory displays the term “light” or “mild”.

DISPLAYING AT RETAIL

No retail display of products with terms

7. (1) A person must not display, at retail, a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if the term “light” or “mild” is displayed on the tobacco product.

No retail display of accessories with terms

(2) A person must not display, at retail, an accessory that displays a brand element of a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if that accessory displays the term “light” or “mild”.

COMING INTO FORCE

Registration

8. (1) Subject to subsection (2), these Regulations come into force on the day on which they are registered.

After registration — four months

(2) Sections 6 and 7 come into force on the day that is four months after the day on which these Regulations are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

Tobacco use is the leading preventable cause of illness and premature death in Canada. It is responsible for at least one-fifth of all adult deaths, more than 37 000 people each year. Tobacco use is a known or probable cause of more than 30 debilitating and often fatal diseases of the lungs, heart, and other organs. It is estimated that the attributable health care costs in Canada are more than $4 billion a year. In a 2006 study, the Canadian Centre on Substance Abuse estimated that the annual societal costs reached $17 billion in 2002.

For many years, tobacco products, including cigarettes and little cigars described as “light” and “mild” have been popular in the Canadian market. In 2005, 133 of the 307 brands of cigarettes on the market displayed the terms “light” or “mild” on the products and/or the packaging. Currently, there are an estimated 20 brands of cigarettes and an estimated 15 brands of little cigars on the market that use the terms “light” and “mild” or variations thereof. These products, especially cigarettes, developed as early as the 1960s, altered product design to allow for more air to mix with the smoke, thereby allegedly making them less harmful to health. In 2005, 58% of Canadian smokers reported smoking light and mild cigarettes. Studies carried out by the Department of Health found that a significant portion of users of light and mild products believed they were less harmful to their health. A 2003 survey found that 37% of smokers of light or mild brands had switched from a regular brand for health reasons; 30% of those surveyed said that the light descriptor meant that the product contained less tar and nicotine, while 15% said the same for the mild descriptor. In a 2005 study, 25% of users indicated that they believed these products were less harmful to their health, while 22% smoked light and mild brands because they believed that there was a reduced risk to their health.

Research, including a 2001 report from the U.S. National Cancer Institute (NCI), found that the public’s perceptions of the light and mild tobacco products are not consistent with scientific findings on the relative harm of light and mild products versus regular tobacco products. The NCI examined the impact of changes in cigarette design and manufacturing, including the design features of light and mild brands such as vent holes and more porous paper, which are intended to allow more air to mix with the tobacco smoke. The report found that the epidemiological and other scientific evidence, including patterns of mortality from smoking-related diseases, did not indicate a benefit of changes in cigarette design and manufacturing to public health.

The report concluded that the overall harm to smokers’ health is influenced by two main factors: repeated exposure to tobacco smoke, and the interaction of the smoker with the cigarette. The first factor refers to the composition of tobacco smoke, which is a complex mixture of over 4 000 chemicals that a smoker is exposed to regardless of the design of the cigarette. The second factor refers to how an individual smokes. Each individual smoker smokes a cigarette differently in order to satisfy their need for nicotine. The report concluded that when a smoker smokes a light or mild product, the smoker changes his or her technique to get the needed amount of nicotine. This may include drawing on the cigarette more often or drawing more deeply to increase the amount of nicotine, or simply smoking more cigarettes. Smokers may also unconsciously cover the vent holes and porous paper with their fingers to reduce the amount of air that mixes with the smoke, which negates any potential benefit of those features. The harm to an individual smoker, therefore, is less an issue of cigarette design than a result of smoking behaviour and the overall exposure to tobacco smoke. Based on these factors, the NCI concluded that light and mild tobacco products are not less harmful than regular products.

In view of the misleading nature of products bearing the light and mild descriptors or variations thereof, the Government of Canada proposed to prohibit the terms “light” and “mild,” and any variations thereof, through Regulations which were pre-published in the Canada Gazette, Part Ⅰ, in August of 2007. Before the Regulations were pre-published, the Competition Bureau, investigating a complaint, reached an agreement with nine tobacco companies, representing approximately 98% of the Canadian cigarette market, to voluntarily remove the misleading terms from their products and packaging.

While the light and mild tobacco market has been radically altered by these agreements, tobacco reports show that approximately 20 brands of cigarettes on the market still display light and mild descriptors. While these brands account for only 2% of cigarette sales in 2009, their sales totalled more than 624 million units. The Regulations require that the prohibited terms be removed from these products, thereby ensuring that all smokers are protected from misleading and confusing information on tobacco products.

The Government has also chosen to expand the scope of the Regulations and include the approximately 15 brands of light and mild little cigars on the market. These products continue to mislead some tobacco users into believing that they are less harmful to health, and require addressing. Second, the agreements between the tobacco industry and the Competition Bureau stipulate that those agreements will remain in place until they are replaced by regulations. The Government, therefore, has a responsibility to enact regulations to replace these agreements. Finally, guidelines of the World Health Organization Framework Convention on Tobacco Control (FCTC) recommend that parties adopt and implement effective packaging and labelling measures to prohibit the promotion of tobacco products by any means that are false or misleading, including any term or descriptor such as “light” or “mild” and variations thereof.

Bans on the use of the terms “light” and “mild” in connection with tobacco products already exist in more than 40 countries, including Australia, Brazil, Chile, India, Israel, Peru, Thailand, Venezuela, the 27 countries of the European Union, and the countries that form the European Free Trade Association such as Norway and Switzerland. The United States, through a law signed in 2009, also prohibits the use of the terms “light,” “low,” “mild,” and other similar descriptors in tobacco product labels or advertising. As of July 22, 2010, the law prohibits manufacturers from producing or distributing any tobacco products labelled or advertised as “light,” “low,” “mild,” or any other similar descriptor.

Objectives

The removal of the terms “light” and “mild” supports one of the overarching objectives of the Tobacco Act, to reduce inducements to smoke.

The Regulations have four main objectives:

• To protect Canadians from misleading and confusing information on tobacco products, and ensure that they base their decision to smoke on more accurate information about the harmful effects of the product. Research suggests that some smokers may be disinclined to make serious smoking cessation efforts under the false belief that smoking light and mild cigarettes would result in less negative impacts on their health;
• To remove the competitive advantage that brands still using the terms “light” and “mild” have enjoyed since the agreements with the Competition Bureau were signed. As the only light and mild products on the market, these brands may have benefited from increased sales. The Regulations will ensure a level playing field by requiring that the prohibited terms are removed from all relevant products;
• To replace the Competition Bureau agreements, which stipulate that the voluntary removal of the prohibited terms will remain in effect until regulations are enacted; and
• To bring Canada into greater compliance with the FCTC guidelines.

Description

The Regulations prohibit the use of the terms “light” and “mild,” and variations thereof, on cigarettes, little cigars, bidis, kreteks, cigarette tobacco, tobacco sticks, cigarette papers, filters, and tubes. The prohibition applies to the products, the packaging, advertising, promotions, and retail displays. The Regulations do not require modifications to the design of tobacco products.

The Regulations also apply to tobacco accessories, defined in the Tobacco Act as a product that may be used in the consumption of a tobacco product, including pipes, cigarette holders, cigar clips, lighters, and matches; branded accessories are prohibited from displaying the terms “light” and “mild” and variations thereof.

No changes were made to the Regulations after their prepublication in the Canada Gazette, Part Ⅰ, on February 19, 2011.

Regulatory and non-regulatory options considered

Status quo

The option of maintaining the status quo was considered, but ultimately rejected as it would not allow the Government to meet its objectives described above.

Develop regulations to prohibit the terms “light” and “mild” and variations thereof — Option selected

This option was retained because it would allow the Government to meet all of its objectives, including the commitment to enact regulations to replace the agreements between the Competition Bureau and the tobacco industry.

Benefits and costs

Costs

Prior to the publication of the proposed Regulations in 2007, the Department of Health prepared an analysis to determine the costs of complying with those proposed Regulations. While that analysis no longer reflects the current market, it will be used here to estimate the compliance costs for those manufacturers that still have relevant products on the market. As there are only a small number of products that continue to use the light and mild descriptors, the costs of the proposal are now estimated to be so small that carrying out a new analysis was not considered cost-effective.

The cost analysis was prepared by TNS Canadian Facts, Social and Policy Research for the Department of Health in March 2007. Based on 2005 data, the analysis estimated that approximately 33% of tobacco brands sold in Canada, or 172 out of 526, would have been subject to the proposed Regulations at that time.

Industry costs

A survey sent to stakeholders formed the basis of the estimate of the cost of complying with the proposed Regulations. The survey asked a series of questions that led stakeholders to provide information on a variety of costs, including removing the terms “light” and “mild” from both the products and product packaging, potential inventory loss of product and packaging, and changes to relevant trademarks.

Despite repeated efforts to obtain information from industry sources, the response rates for the questionnaires remained low. In total, 10 completed questionnaires were received, including surveys from 5 manufacturers and 5 other respondents consisting of associations representing tobacco products retailers, tobacco workers, the packaging industry, and tobacco growers. As a result, the cost estimates were calculated based on a limited data set, but, for the purposes of the analysis, it was assumed that the data collected applied to the non-respondents. Data from responding organizations was extrapolated to the entire market on the basis of market share.

The major compliance costs identified by manufacturers in the cost survey were new packaging costs, including creating and producing new artwork, re-engraving printing cylinders and embossing dies, and inventory costs related to non-compliant packaging, including loss of inventory of both product and packaging. Other quantified costs included changes to advertising, Web sites, and possible costs associated to changes in trademarks. Manufacturers also cited possible costs such as changes to the distribution chain, but did not quantify them.

The cost analysis carried out in 2007 represented approximately 54 brands that were on the market at that time. The analysis calculated that the cost to industry of complying with the proposed regulations ranged from $1,717,500 with a 12-month transition to $2,125,500 with a 6-month transition.

By extrapolating costs from the original cost analysis, it can be estimated that the compliance costs of the approximately 20 brands of so-called “light” and “mild” cigarettes still on the market would range from $858,750 with a 12-month transition to $1,062,750 with a 6-month transition.

Costs to Government

The Regulations will not result in any additional costs to Government. Compliance monitoring will be done by existing compliance staff.

The full cost analysis is available upon request.

When the original cost analysis was carried out, little cigars were not included in the list of tobacco products which would be subject to the Regulations; therefore, the cost of compliance was not estimated for these products. Based on tobacco reporting, there may be as many as 15 brands of little cigars that display the terms “light” and “mild.” Given that many manufacturers of little cigars made changes to their products following the coming into force of the Cracking Down on Tobacco Marketing Aimed at Youth Act in October 2009, it is difficult to ascertain how many of these brands remain on the market, and therefore difficult to estimate the costs of compliance. The Department of Health continues to monitor the little cigar market to try to ascertain how many brands would be subject to the Regulations and to estimate the costs.

Benefits

The health benefits of the Regulations are very difficult to quantify. First, most products on the market removed the light and mild descriptors some time ago, and any health benefits that could be linked to the removal of those terms would have already been accrued. Second, the health benefits arising from the removal of the terms on the remaining products are expected to be small and, while the benefits of the Regulations are still expected to outweigh the costs, they may not warrant the cost of carrying out a benefits analysis. It is possible, however, to present a qualitative assessment of the anticipated benefits.

The Regulations are expected to result in health benefits for smokers. Public opinion research has shown that some smokers use light and mild products because they believe that they are less harmful than regular tobacco products. Research has also shown that at least some of these smokers would quit smoking rather than switch to a regular brand. The Regulations could result in improved health for those smokers who choose to quit based on the removal of the misleading information. Quitting smoking could lead to decreased tobacco-related mortality and morbidity for those users. There may also be health benefits to family and friends of those who choose to quit, due to decreased exposure to second-hand smoke. These improvements in health may result in reduced health care costs and reduced demand on the health care system.

Cost-Benefit Statement		Base Year	Final Year	Total (PV)	Average Annual
Quantified impacts $ (constant 2007 $)
Costs (labelling and inventory)	Tobacco industry	$858,750 to $1,062,750	$0	$858,750 to $1,062,750	$85,875 to $106,275
C. Qualitative impacts
Smokers	Improved health for those smokers who choose to quit based on the removal of the misleading information, including decreased tobacco-related mortality and morbidity
Canadians	Health benefits to family and friends of those who choose to quit, due to decreased exposure to second-hand smoke
Canadian society	Possible reduced health care costs and reduced demand on the health care system Possible other benefits such as increased productivity

Rationale

The selected option is the only one that will meet all of the Government’s objectives, thereby achieving the greatest overall benefit of the options considered. It will remove the terms “light” and “mild,” and their variations, from tobacco products, ensuring that all Canadians are protected from misleading information. It will level the playing field between tobacco companies, ensuring that no one enjoys an advantage in the market. It will bring Canada into greater compliance with the FCTC. Finally, it is the only option that fulfills the Government’s responsibility to enact regulations as set out in the Competition Bureau agreements. The selected option will achieve all of these objectives while imposing minimal costs on industry and Government.

The selected option is proportional to the degree and risk posed by light and mild tobacco products. The Regulations will ensure that misleading information is removed from all relevant tobacco products, and are expected to lead to health benefits that outweigh the minimal costs to industry.

The Regulations are consistent with international regulations and guidelines. More than 40 countries have already instituted similar regulations, and the FCTC guidelines recommend the removal of false and misleading information, and make specific reference to the terms “light” and “mild” and variations thereof.

Consultation

Report of the Standing Committee on Health and Concurrence by the House of Commons

The Regulations were laid before the House of Commons on June 9, 2011, with the Tobacco Products Labelling Regulations (Cigarettes and Little Cigars) and the Regulations Amending the Tobacco Products Information Regulations. The Standing Committee on Health held hearings on the three regulations on June 20, 2011. In their report presented to the House of Commons on June 22, 2011, the Committee recommended adoption of the three regulations without amendment.

The House of Commons concurred with the Committee report on June 22, 2011.

Prepublication — February 19, 2011

There were five submissions representing six organizations with respect to the prepublication on February 19, 2011, of the proposed Promotion of Tobacco Products and Accessories Regulations (Prohibited Terms): one from the tobacco industry, three from health-related non-governmental organizations (NGOs) and one from a provincial government department.

Industry

The tobacco industry argued that descriptors such as “light” and “mild” are neither false nor misleading. Their position is based on claims that smokers of low-tar delivery cigarettes generally obtain less tar from smoking than smokers of regular delivery products; the incidence rates among smokers for lung cancer and other smoking-related diseases have declined since the introduction of low-tar delivery cigarettes; and the vast majority of smokers do not believe that smoking “light” or “mild” cigarettes is better for their health.

The industry requested that the Department of Health recognize that, at the same time it is demanding the removal of the “light” and “mild” descriptors, it is responsible for the current requirement that information on tar and nicotine levels be collected and printed on packages. Industry also insisted that uniform implementation and enforcement of the Regulations are essential to prevent a competitive disadvantage.

Industry suggested that the Department of Health expand the scope of the regulatory proposal to correct what they view as misleading messages for other tobacco products. Specifically, they would like the Department of Health to make consequential amendments to the Tobacco ProductsInformation Regulations in relation to the health warnings applied to snus, a type of smokeless tobacco product. Industry believes that the existing health warning messages in relation to the health effect or health hazards of snus are misleading to consumers — because they do not reflect the findings of research conducted to date — and should be amended accordingly.

Health non-governmental organizations

The health NGOs supported the adoption of the proposed Regulations but observed that these measures alone will not eliminate tobacco package “deception” in Canada. They recommended prohibiting brand extensions, removing words, numbers or other signifiers of strength and moving to standardized and plain packaging.

An NGO also commented that the existing draft Regulations only prohibit the sale of a branded accessory that has a “light” or “mild” descriptor and recommended that the Government ensure that inspectors are able to seize illegally labelled products found on retail store shelves or stored by wholesalers.

Government

The provincial government department fully supported the proposed prohibition on the terms “light” and “mild” and variations of these and would also support a ban on the use of colours and terms such as “bold,” “smooth” and “rich” on packaging.

Government response

With respect to the comments from industry, research has shown that “light” and “mild” tobacco products are not less harmful than regular products and have not provided any benefit to public health. Research has also found that the public’s perceptions of the “light” and “mild” tobacco products are not consistent with scientific findings on the relative harm of “light” and “mild” products versus regular tobacco products. Studies have shown that many smokers switched to “light” or “mild” brands for health reasons, that many believed that the “light” descriptor meant that the product contained less tar and nicotine and that many believed these products were less harmful to their health. With respect to smokeless products including snus, scientific evidence supports the existing health warnings on tobacco products that are subject to the Tobacco Products Information Regulations, including the smokeless products. The Regulations apply to all manufacturers of cigarettes and little cigars, including importers, and will be enforced uniformly.

With respect to the comments from the health NGOs and the provincial government, the Regulations are meant specifically to address the problems created by the use of the descriptors “light” and “mild,” to meet the commitment to replace with regulations the voluntary agreement obtained by the Competition Bureau and to extend the prohibition of the descriptors to all cigarette and little cigar products available in Canada. The Department of Health believes that, under the Regulations, cigarette and little cigar packages displaying “light” or “mild” descriptors at retail could be seized by inspectors.

No changes have been made to the Regulations since they were proposed at prepublication.

First prepublication in the Canada Gazette , Part Ⅰ (August 2007)

Many of the provisions included in these Regulations were first prepublished in the Canada Gazette, Part Ⅰ, on August 4, 2007. The Government accepted comments from stakeholders for 75 days. A total of 18 comments were received from NGOs, industry, government organizations, and the general public. Eleven of the eighteen respondents supported or conditionally supported the proposal, six respondents opposed it, and one neither supported nor opposed it.

Industry

One industry respondent claimed that smokers are not confused or misled by the “light” and “mild” descriptors, and deemed the proposed Regulations unnecessary. Two industry respondents stated that the proposal would place a heavy financial burden on them by creating an undue impact on the cost of doing business in Canada and that it could take upwards of a year to implement the proposed changes. One industry respondent neither supported nor opposed the proposal, but sought to confirm that the proposed Regulations would mirror the agreements between the tobacco industry and the Competition Bureau, and would not introduce any additional requirements.

Non-governmental organizations

Comments on the 2007 proposed Regulations were received from nine NGOs. Many NGOs expressed support, but explicitly stated that they would encourage broader action on the issue, including prohibiting “replacement terms,” terms that the organizations felt the tobacco industry was using to replace “light” and “mild.” These included terms such as “smooth,” “bold,” and “rich,” as well as numerical values and package colours. Two NGOs claimed that the proposal would not achieve public health benefits, and recommended that it be replaced with a complete ban on all misleading descriptors and other devices.

Meetings with industry

The Department of Health held meetings with industry stakeholders on this issue, starting in 2001. A meeting was held with the three largest companies in 2003 to discuss the light and mild issue in more depth. A meeting with the same three companies took place in September 2006, where an overview of the proposed Regulations was provided along with estimated timelines for the coming into force and implementation of the proposed Regulations.

Notice of Intent (December 2001)

A government Notice of Intent (NOI) was published in the Canada Gazette, Part Ⅰ, on December 1, 2001. The NOI sought public input in the development of proposed regulations to prohibit the display of the terms “light” and “mild” and variations thereof on tobacco product packaging. A total of 35 submissions were received from various stakeholders. Generally, views expressed by industry stakeholders were against the proposal, whereas those received from the public health community were in support.

Implementation, enforcement and service standards

Most sections of the Regulations came into force on the day they were registered. Two provisions, those prohibiting the sale of an accessory displaying the prohibited terms and the display at retail of a product displaying the prohibited terms, will come into force four months after the Regulations are registered. This grace period is intended to minimize inventory loss by allowing manufacturers and retailers to sell existing inventory.

Compliance monitoring and enforcement will be undertaken by the Department of Health under the authority of the Tobacco Act. Compliance with these requirements will be monitored through inspections that will be undertaken to ensure that the prohibited terms are not used, in accordance with the Regulations. Penalties for non-compliance are defined in Part VI of the Tobacco Act.

Contact

Manager
Regulations Division
Office of Regulations and Compliance
Controlled Substances and Tobacco Directorate
Healthy Environments and Consumer Safety Branch
Health Canada
Address Locator: 3507C1
123 Slater Street
Ottawa, Ontario
K1A 0K9
Fax: 613-941-1551
Email: pregs@hc-sc.gc.ca

Footnote a
S.C. 1997, c. 13

Footnote b
S.C. 1998, c. 38, s. 3

Footnote c
S.C. 1997, c. 13