The launch last month of (yet another) VUSE disposable vaping device is a reminder of how favourable marketing opportunities are for vaping manufacturers in Canada, and how important it is for provincial and federal regulators to better control this market. This post identifies three key measures governments should take to better protect youth from the marketing activities displayed in this VUSE launch.
Introducing VUSE 8000
VUSE GO 8000 is the fifth variant of BAT-ITL's disposable vapes to be introduced in less than 24 months. The first (VUSE GO) was launched in Canada in October 2022, followed by successively larger versions. It has been less than a year since BAT launched VUSE GO 5000 .
According to the trade news agency 2Firsts, Canada is the first and currently the only country in which this format is for sale. Other countries have imposed speed restrictions on the entry of new products - in the EU, for example, governments must be given 6 months notification of new product launches.
#1: Flavours are used to recruit young users. A federal flavour ban is needed.
In June 2021, Health Canada proposed a ban on all e-liquid flavourings other than tobacco and mint-menthol. Thirty-five months and two ministers later -- despite a tentative 're-consultation' - the final regulation remains in limbo. Associate Minister of Health and Minister for Addictions and Mental Health, (Ya'ara Saks) has largely said nothing about this (or any other nicotine-related issue) since assuming responsibility for these files in July 2023.
Not surprisingly, tobacco and nicotine companies are continuing to flood the market with youth-friendly flavours. As shown below, the VUSE 8000 is offered in 10 flavours: 1 tobacco flavour, 2 mint-menthol flavours and 7 other flavours that would have been banned had Health Canada not backed down from flavour restrictions.
The World Health Organization has recently repeated its call for restrictions on flavours as part of its World No Tobacco Day messaging. The decision by the federal health ministers to ignore this issue in their World No Tobacco Day messaging has deepened concerns has deepened concerns that there is no intention to finalize the flavour regulations.
The price of a mg of deliverable nicotine as delivered by VUSE 8000 ($0.10) is less than half of the price of BAT-ITL's older EPOD system ($0.023), and two-thirds the price of nicotine in the VUSE XL disposable e-cigarette introduced last year ($0.16).
Federal taxes on vaping liquids have been in effect since October 2022, and will be subject to an inflationary increase on July 1. Some provincial governments have already imposed their own vaping taxes, and others will be joining the federal system at the beginning of next month. In Ontario, for example, vaping taxes will increase on July 1 from $1 (federal) to $2.24 (joint federal-provincial) per unit taxed. The tax unit is 2 ml or less for the first 10 ml and 10 ml after that.
VUSE 8000 shows how this tax planning can be undermined even before it is put in place, and how low vaping taxes mean the companies can continue to use technical improvements to lower the cost of nicotine. The federal intention that taxes would be "an effective means to help curtail harmful consumption of these products" has been undermined.
The figure below shows how taxes make up a much smaller proportion of the purchase price for vaping products than they do for cigarettes - even after the upcoming price increase. With no minimum price for nicotine (as there is for alcohol), the companies have been able to use design innovations to continually lower the cost of nicotine use, as shown in the figure below.
This calculation of price and tax per milligram of nicotine delivered (using the methods which produce the highest yields for cigarette emissions) illustrate that it is taxes which are the main reason that e-cigarettes are so much cheaper than conventional cigarettes. Through finance ministries, governments can raise taxes on e-cigarettes significantly without being concerned about making smoking cheaper than vaping. Through health ministries, they can impose minimum pricing or other price controls on nicotine (in cigarettes or e-cigarettes).
#3. Manufacturers have created economic incentives for social supply. Price regulation would stop this practice.
The e-cigarette prices stated above are the sales price charged by BAT-ITL on its own website for the purchase of individual products. For those who buy regularly and in quantity, however, the company reduces prices by 35%.
The purchase of a single 5000 puff disposable product is $25.99 on the BAT-ITL website (and $29.99 in convenience stores), but for those who purchase between 15 and 30 such products online in a month, the price is only $16.89. With 200 mg of nicotine per device, this brings the cost per mg of deliverable nicotine on this devices from $0.13 to $0.08.
A dangerous consequence of allowing this price discounting is the opportunity it creates for retail distribution through social sources. A young entrepreneur selling into high schools who is able to purchase 15 to 30 such products in a month will pay only $16.89 per unit, but can compete with corner stores with a 78% mark-up.
In other words, a 19 year old who can finance a $507 initial purchase of 30 VUSE 5000 vapes can sell them to under-age friends at the convenience store price and make almost $400 per month.
