Sunday, 18 October 2015

E-Cigarettes: BAT seeks to infuence a federally abandoned regulatory field

Although e-cigarettes are more and more frequently seen on Canadian streets, from a policy-setting point of view, they seem to have dropped from view.
  • None of the political parties addressed them during the current election campaign.
  • None of the health groups included them in their requests to parties (at least among those that are public or known to me).
  • There was virtually no media coverage during the election period.
  • And certainly the Minister of Health and Health Canada were entirely mute on what they thought should be done. As they have been for more than six years. 
A policy void that has lasted 6 years - even in defiance of parliamentary directives. 

The sale of electronic cigarettes which contain nicotine is not legal in Canada. This was made clear by the government in an advisory issued in March 2009.

Whether or not this is a good policy is a question of debate, although the debate in Canada has been less vigorous and more civil than in other quarters. (Our own position in favour of tying increased e-cigarette use to decreasing use of combustibles was forwarded earlier this year.)

Provincial governments grew antsy with the lack of federal action, and pushed the Minister of Health for action during their annual meeting in the autumn of 2014. Her response was to punt the issue to a parliamentary committee for review.

The Standing Committee of the House of Commons began its review with an appearance by Health Canada officials almost exactly a year ago. Their appearance was a masterful display of the skill of saying nothing. Sadly, the much greater talents of the individuals involved in developing solid regulatory responses to health threats was not allowed to be shown. Another example of the muzzling of scientists, perhaps.

On March 10th, the Standing Committee on Health presented its report Vaping: toward a regulatory framework for cigarettes, and requested that the government respond to its 14 recommendations within the 120 days as required by the House Standing Orders.
109.  Within 120 days of the presentation of a report from a standing or special committee, the government shall, upon the request of the committee, table a comprehensive response thereto, and when such a response has been requested, no motion for the concurrence in the report may be proposed until the comprehensive response has been tabled or the expiration of the said period of 120 days.
The deadline set by this requirement was after the House had risen for the summer and the current parliament had effectively been dissolved. Nonetheless, the parliamentary requirement for a response was valid, and the Ministry should have tabled a response on July 21st, the date set for 'adjournment tabling.'

Health Canada officials would almost certainly have prepared a response for this date, as the decision to act in contempt of a parliamentary requirement is (hopefully) not one that would be taken lightly within government departments.

Nonetheless, the government's response to the committee's strong desire for regulations was never tabled.

We will never know what the department's recommendations were. The views of the department are considered "advice to the minister" and will not be available to the public. The recommendations of Health Canada's policy experts are thus still literally a state secret.

A policy void that has lead to a vibrant illegal market

There are three large markets for illegal inhalable products in Canada:
  1. the market for illegal cigarettes (BAT estimates that 1 in 5 cigarettes sold in Canada is on the black market). These generally are not visible in formal retail environments, but are sold under the counter or through informal channels
  2. the marijuana market, which has recently surfaced at a retail level in British Columbia.
  3. the e-cigarette market, which is supplied through informal and formal retailers, including public retail fronts. Established convenience stores and other retail chains have generally not participated.  

The open marketing of marijuana and e-cigarettes is made possible by enforcement decisions of Health Canada and others to effectively turn a blind eye. Letters may be sent. Threats may be made. But no one shuts the storefronts down.

A policy void that is not in tobacco industry's interests

All of the multinational tobacco companies are scrambling to develop next generation products. In their view, there is no one e-cigarette, but rather a suite of innovations and "next generation products".  BAT has provided a most illuminating review of its understanding of e-cigarettes as one part of a new product portfolio in a recent investor presentations its marketing strategy.

The Canadian market for "next generation products" is blocked for companies which want to be seen to be operating within the law and which need large (legal) distribution and marketing channels.

For this, they need Health Canada to legitimize (instead of ignore) the e-cigarette market.

A policy void that has attracted TI interest

Not surprising, then, that one of their operational objectives is to be the ones who define the new regulatory framework. Or, as they put it to investors "lead the formalisation of NGPs (next generation products)".

Fore-warned,  hopefully, is fore-armed.