Ottawa should stop profiting from youth vaping and start reducing it.

Weedless Wednesday is an annual occasion to acknowledge the harms of tobacco industry products and to commit to individual and societal action to reduce them.

With the dissolution of Parliament clearly on the horizon, today is an occasion to reflect on the failure of the federal government’s failure to ameliorate the problems they caused when they adopted a free-market approach to vaping products in 2018.

Their reforms invited cigarette companies to expand the nicotine market by selling vaping products. The initial ‘light touch’ regulations adopted by the Trudeau government imposed few conditions on the marketing or design of these devices. It allowed these disreputable companies to reinvent their market and to recruit new generations to nicotine addiction.

This approach reversed decades of progress in protecting young people from experimenting with and becoming addicted to nicotine. Canada has experienced no overall change in rates of nicotine use since the Trudeau government came to power in 2015.

The impact of this federal policy was an immediate spike in youth vaping which continues to persist. More than one in five Canadian  youth are vaping by the time they leave high school (with 13% doing so daily), and by the time they are in their early twenties more than one in four are using some form of nicotine.

At a population level, liberalizing the vaping market did not result in more Canadians quitting smoking. It did result in more young people using nicotine. Health Canada’s surveys show that this change in policy resulted in a much greater increase in vaping among non-smoking youth than it has among smokers trying to quit.

The government was slow to apply brakes to the marketing or nicotine strength of these products, and even slower to implement other measures it proposed to protect youth. Tobacco and nicotine companies continue to lure young people with fun-flavours and gimmicky designs and to allow promotions for these on websites and social media to which young people have access.

Health Canada officials have advanced regulations to restrict vape flavours, to require age-gating of vaping e-retailers and to curb the use of designs. These have lain dormant on Health Canada’s regulatory plan or have been dropped altogether.

Abandoning these reforms was a political choice. Flavour restrictions, for example, were initially drafted in 2021 but preparation of the final version was delayed for over three years. It was scheduled for submission to cabinet last May, but Minister Saks did not push it forward after she met with representatives of the vaping industry in May. Despite her October assurance that the measures would be finalized “as quickly as possible,” she has given no sign that this will happen before the election.

Actions taken by other federal ministers have also failed to protect youth. The federal tax on vaping products was promised as a way to address youth vaping, but failed to contain measures to prevent manufacturers from adjusting their pricing and products to keep prices low. It now costs less than a quarter to inhale a milligram of nicotine.

This government makes money on youth vaping. Last year federal revenues from vaping taxes had more than doubled to $485 million. Young people, who make up 40% of the market, provided $200 million. The $75 million which came from high-school aged children is more than twice as much as Health Canada spent on all activities to reduce smoking or vaping.

The Trudeau government’s vaping policies have already harmed a generation of Canadian kids. Time is running out before this failure becomes their public health legacy.

Feds pocket $74+ million from kids' vaping

As reported here earlier, the federal Public Accounts that were tabled on the last day Parliament sat before Christmas provide details on the excise taxes collected by various federal agencies. This blog reports on the evolving role of vaping taxes as a source of federal revenues and the disproportionate amount provided by young people.

Tobacco tax revenues are down, but new vaping taxes have mostly made up the difference

In the 2023-2024 fiscal period, federal revenues from tobacco were $2.6 billion, down from $3 billion the year before. The introduction of a federal vaping taxes in the fall of 2022  however has helped the federal government to maintain its revenues from nicotine use. Vaping tax revenue grew from $184 million in its first half-year of implementation to $486 million last year. 

The combined federal revenues on nicotine products was just over $3 billion, only a little lower than in recent years.

Kids are paying 15% of federal vaping taxes

The youthfulness of Canadian vapers is documented in federal surveys of smoking and vaping behaviour, such as the last Canadian Tobacco and Nicotine Survey which was conducted into January 2023. 

For every 20 Canadians who vape, 8 are under 25 and 3 are under 19 years of age. This proportion holds with respect to both daily and occasional use, as shown in the table below. By contrast, in the general population, 9 out of 10 Canadians are over 25 years of age. 

In the absence of better data, we can use the age distribution of the vaping population to estimate the share of vaping taxes (and vaping product sales!) that are made by each age group. 

• Children aged 15 to 19 provided $74.302 million in federal vape tax revenues (15.3%)
• Young adults aged 20 to 24 provided $123.7 million (25.5%)
• Adults over age 25 provided $287.9 million. (59.2%)

This crude method likely underestimates the amount of tax paid by children. Children under 15 were not included in the CTNS survey, but some are known to vape, therefor the actual proportion of children who vape will be larger than the survey estimates. Also, the vaping tax is not equally assessed on all vaping products, with a higher rate is placed on those products (pods, disposables) that are favoured by young people.

Vape taxes can be a health intervention only if they affect affordability 

Taxes on harmful products are understood to be an effective and an efficient way of reducing consumption, which is why they are strongly supported by health experts. Tobacco taxes have a convincing history of  helping reduce smoking rates. But it is not the taxes, per se, which impact product use, but rather the resulting increase in product prices that they produce. Tobacco companies have generally increased their prices in response to new taxes, although they sometimes blunt their impact by absorbing some of the tax for a period of time. The belief and expectation that taxes will be passed on to the consumer is one reason that many health economists have not seen it necessary to include price controls with tobacco taxes. 

With vaping taxes, the expectation that prices would proportionately increase has not been met. Since taxes were introduced in Canada, the companies have been able to modify their production costs or product designs in ways that the price of vaping has fallen DESPITE the introduction of new taxes. For this reason, vaping taxes without price controls may prove to be ineffective as a health measure, although effective as a source of government revenue.

The image below displays the tax and price for one mg of deliverable nicotine sold by Imperial Tobacco in Ontario in January 2025.  From a package of 20 cigarettes that costs $14.69, a single cigarette costs $0.73 cents of which $0.37 is tax. This cigarette contains 2.4 mg of deliverable nicotine giving a tax of $0.15 and a price to consumer of $0.31 per mg of deliverable nicotine.

The nicotine in the different VUSE products made by the same company are subject to somewhat different vaping taxes, depending on volume of liquid they contain. The price of a mg of deliverable nicotine in the package of older-fashioned VUSE epods (containing 76 mg of nicotine and subject to $2.24 in taxes) is not so different than its cigarette equivalent. VUSE Pods are taxed at $0.06 cents per mg of nicotine, with a cost to the consumer of $0.26 per mg, which is about ten cents more per mg of nicotine than it was before the vaping tax was introduced. 

The nicotine in the nicotine devices introduced to the market since the federal tax came into force is less than half the price of the Vuse e-pod. The Vuse GO 8000 was introduced this past summer. It contains 300 mg of nicotine and is now subject to $13.44 in taxes. The tax per mg of nicotine  is $0.045 cents and the consumer price per mg is $0.12 cents.

In short, manufacturers were able to overcome the impact of the vaping tax by redesigning their products to deliver nicotine in a less costly way. The first generation of VUSE disposables has been withdrawn from vaping shops, to be replaced by products which have defeated the health benefit of the vape tax.

When it comes to vaping regulation, Addictions Minister Saks continues to ignore advice from her Medical Officer of Health

Yesterday Canada's Chief Medical Officers repeated their call for strengthened regulation of vaping products. The Council of Chief Medical Officers of Health includes the senior health officer of each Canadian jurisdiction outside of Quebec. This includes Dr. Theresa Tam, who is the federal government's lead public health professional.

Their message to federal, provincial and municipal governments is pasted below. This is their fourth statement on vaping and the first issued by the Council in four years - their last statement on vaping was in January 2020. 

It was delivered as Minister Saks continues to delay finalizing regulations to restrict vaping flavours. Notably the very first recommendation of these MOHs was for her to "ban all flavoured nicotine vaping products as has been done in PEI, NS, NB, NWT, Nunavut and Quebec." 

Among the other 8 recommendations to the federal government are other issues where this government has failed to move forward with regulations - including product design and age controls. They also call for other measures supported by health advocates, such as raising the minimum age of purchase to 21, banning internet sales and otherwise regulating them as equivalent to tobacco products.

The Council does not think Canadians should be encouraged in a general way to use vaping products as cessation aids at this time: "Population level messaging should continue to focus on approved and evidence-based smoking cessation methods, including greater emphasis on unassisted cessation. Nicotine vaping product manufacturers should be encouraged to submit their products for review and possible approval as smoking cessation aids."

These public health experts think the primary focus is on protecting youth. "... the main goal for the regulatory approach to nicotine vaping products should be reducing the access to, and appeal of, these products among young people."

Time is running out for this government. If she continues to reject the advice of Canada's senior medical officers of health, the Minister of Addictions will set a harmful precedent for her successors.

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Statement from the Council of Chief Medical Officers of Health on Nicotine Vaping in Canada as part of National Non-Smoking Week

January 20, 2025

Although significant progress has been made in the past several decades in reducing smoking rates in Canada, the Council of Chief Medical Officers of Health (CCMOH) want to highlight that smoking continues to pose a significant risk to the health of Canadians, with over 46 000 people dying from smoking-related causes each year. This National Non-Smoking Week, from January 19-25, we recommend that Canadians needing support to deal with nicotine addiction should speak to their health care provider and seek out proven cessation therapies, such as medication, or approved nicotine replacement therapies. There are also actions municipal, provincial/territorial, and federal jurisdictions can take, outlined below.

In August 2024 the federal government introduced a Ministerial Order requiring certain nicotine products, including nicotine pouches, to only be sold behind the counter in pharmacies, along with other restrictions. This is an important and necessary step towards protecting youth; however, the Order did not address nicotine vaping products and their risks.

At this time, we continue to remain significantly concerned by the continued high rates of nicotine vaping among Canadian youth. In follow up to our previous position statements on this issue (July 2014; April 2019, October 2019 and January 2020), we provide the following as updated regulatory and policy recommendations that we believe are necessary to be taken by federal, provincial/territorial and municipal governments to address this ongoing public health threat. We acknowledge that governments have already taken steps to implement some of these recommendations.

The overarching objectives of these recommendations are to protect young people from encouragements to use nicotine vaping products by regulating such products as equivalent to tobacco products, and to encourage people who smoke and are seeking assistance to reduce or end their use of tobacco products to use approved cessation methods.

Population level risks of nicotine vaping for youth and those who do not smoke are a primary concern and should be a key focus in regulatory action.

Therefore, the main goal for the regulatory approach to nicotine vaping products should be reducing the access to, and appeal of, these products among young people. This should entail strategies such as strengthened restrictions on marketing, limiting flavoured products to tobacco flavour only, preventing underage youth access via online purchases, and increased penalties and stronger enforcement for sales to minors and of flavoured products.

Population level messaging should continue to focus on approved and evidence-based smoking cessation methods, including greater emphasis on unassisted cessation. Nicotine vaping product manufacturers should be encouraged to submit their products for review and possible approval as smoking cessation aids.

Note: This statement pertains only to nicotine vaping products as CCMOH has released a related statement on cannabis vaping on January 6th, 2020.
Opportunities for Federal and Provincial/Territorial jurisdictions

Federal action would be preferred to create national consistency, but provinces/territories can consider individual action

• ban all flavoured nicotine vaping products as has been done in PEI, NS, NB, NWT, Nunavut and Quebec. Regulatory exemptions for a minimum set of flavours could be provided for products regulated as cessation aids through the Food and Drug Act
• ban the sale of disposable nicotine vaping products
• building on the federal regulations regarding maximum nicotine concentration, adopt other appropriate standards regarding nicotine delivery (e.g. temperature/wattage, use of nicotine salts) as evidence on vaping products evolves
• regulate all constituents of nicotine vaping product liquids based on potential to cause harm when inhaled rather than ingested
• Ensure clarity of jurisdiction and oversight for novel nicotine vaping products including novel delivery mechanisms to ensure that they are appropriately regulated
• continue to tax vaping products in a manner consistent with maximizing youth protection while providing some degree of preferential pricing as compared to tobacco products. In addition, implement an oversight mechanism to ensure tax stamped products are incompliance with the Tobacco and Vaping Products Act
• consider making age 21 the minimum sales age for both tobacco and nicotine vaping products
• assess options to regulate on-line sales of nicotine vaping products such as:
• ban the online sale of nicotine vaping products
• limit the online sale of nicotine vaping products to retailers who have a Canadian vendors license
• create requirements for age-verification of internet purchases of nicotine vaping products that are the same as those required for cannabis

• enhance surveillance and reporting of nicotine vaping product use and population health impacts

Opportunities for Federal Jurisdiction

• consider a ban on the advertising/marketing/promotion/sponsorship of nicotine vaping products that have not been approved as cessation products. As this is being considered, ensure strong enforcement of federal restrictions on the advertising/marketing/promotion/sponsorship of nicotine vaping devices
• Population level messaging should continue to focus on unassisted cessation, as well as approved smoking cessation methods, which at this time does not include nicotine vaping products. Manufacturers should be encouraged to submit their products for review and possible approval as smoking cessation aids
• require plain and standardized packaging along with health risk warnings for nicotine vaping products, as well as plain and standardized design of nicotine vaping products
• Further limit mechanisms and pathways for online advertising of nicotine vaping products, and require any advertising is not appealing to children/youth
• enhance compliance, enforcement and public reporting of the provisions of the Tobacco and Vaping Products Act and its regulations

Opportunities for Provincial/Territorial Jurisdictions

• Ban all point-of-sale advertising of nicotine vaping products with an exception for specialized vaping product stores accessible only to those of minimum age
• require a vendor’s licence for those selling nicotine vaping products
• include vaping as part of provincial smoke-free restrictions
• routinely use youth test purchaser programs for all tobacco and nicotine vaping product retail locations
• ensure compliance with restrictions on flavoured nicotine vaping products through strong inspection and enforcement
• restrict the density of tobacco and nicotine vaping product retail sites and ban the sale of nicotine vaping products and devices within at least 250m of a school

Opportunities for Municipal Jurisdictions

• include vaping as part of municipal smoke-free restrictions, and include all public recreational spaces within their smoke-free zones
• restrict the density of tobacco and nicotine vaping product retail sites and ban the sale of vaping products and devices within at least 250m of a school

Along with these policy and regulatory actions we recommend that federal, provincial and territorial governments continue to work collaboratively to:

• enhance public awareness and educational initiatives on the risks of nicotine vaping products targeted at youth, parents, educators and health care professionals
• establish comprehensive cessation initiatives for people with nicotine addiction (smoking and/or vaping), especially for youth
• continue to monitor and research the short and long-term health effects of nicotine vaping products
• continue to support research on the effectiveness of nicotine vaping products in supporting smokers to end or reduce their use of all nicotine-containing products
• research the effectiveness of policy approaches to address youth nicotine vaping
• explore partnerships with First Nation, Inuit, and Métis communities to achieve mutual objectives related to a reduction in smoking and nicotine vaping rates

The Council of Chief Medical Officers of Health includes the Chief Medical Officer of Health from each provincial and territorial jurisdiction, Canada's Chief Public Health Officer, the Chief Medical Officer of Public Health of Indigenous Services Canada, the Chief Medical Officer from the First Nations Health Authority, and ex-officio members from other federal government departments.

Canadian tobacco tax revenues in 2024.

On Tuesday December 17th the federal government tabled the Public Accounts the fiscal year 2023-2024 and posted the documents on its website. 

Buried in the second volume (on page 387 and 474) were details on revenues from Excise taxes, including on tobacco and vaping products. Similar information is provided (with differing levels of precision) in the Public Accounts published by each Canadian province and territory.

An updated fact-sheet showing tobacco tax revenues can be downloaded here, as can an updated table of tobacco tax rates in Canada and estimates of the average amount of tobacco taxes paid per smoker in different Canadian jurisdictions.   Data from these and other sources are described below. 

Tobacco tax revenues continue to fall for all but one governments - especially when inflation is taken into consideration.

Between April 1, 2023 and March 31, 2024 the federal government collected $2.6 billion in excise taxes on tobacco products, and $486 million from taxes on vaping products. (Revenues from GST on these products are not separately reported). 

Added to the $3.24 billion in tobacco taxes collected by provincial and territorial governments, the total government revenue from tobacco excise taxes between April 1 2023 and March 31 2024 was $5.845 billion. This is 9% lower than the previous year and 30% lower than in 2018 when combined federal-provincial-territorial tax revenues exceeded $8.3 billion. 

The drop in revenue is greater when inflation is taken into consideration. The real value of tobacco taxes to Canadian governments last year was even lower than in 1990-91, during the contraband crisis.

Only one province - Quebec - saw an increase in tobacco tax revenues last year. 

Quebec was the only province with higher tobacco tax revenues in 2023-24 than the previous year (its revenues increased by 12%). In February 2023 it imposed a $8 per carton tax increase and followed up with a $2 increase in each of March 2024 and January 2025.

The impact of the first of these increases is reflected in the 2023-24 public accounts. In 2023-24, Quebec collected $95 million more in tobacco taxes than the previous year - a 12% year-over-year increase.

All other provinces experienced declines from 18% to 6%:  Alberta and New Brunswick (18%); Manitoba (16%), Newfoundland (15%), Nova Scotia (14%), Prince Edward Island and Saskatchewan (12%), British Columbia (10%), Ontario (6%). 

Tobacco taxes are down because of a drop in tobacco sales

Although Health Canada has not provided data on tobacco sales for the years after 2021, it does release the information informally. 

Health Canada reports that the number of cigarettes reported sold by manufacturers in 2023 was 16.2 billion, 12% lower than in 2022 and  37% lower than in 2018, when 25.8 billion cigarettes were reported sold. 

Sales of other tobacco products have similarly decreased. (Vaping products are not considered tobacco products by Health Canada and sales information on these has not yet been released). 

 

The drop in sales and taxes can only be partly attributed to falling smoking rates.

Statistics Canada monitors smoking rates in Canada through the Canadian Community Health Survey. It reports that in 2023 there were 3.6 million Canadian smokers, down 6% from the 3.8 million reported in 2022 previous year and down 30% from the 2018 estimate of 4.9 million smokers.

In 2023, Statistics Canada transitioned from reporting for ages 12+ to reporting for ages 18+. For 2022 they provided estimates for both age groups and the change in age range reduced the estimated number of smokers by only 7,300.

The falling number of daily and occasional smokers only partly explains the reduction in sales and tax revenues. Both increased illicit trade and the substitution of some cigarettes by vaping products likely contribute to this trend. 

There were 6% fewer cigarettes (including roll-your own) sold per smoker in 2023 than in 2022, and 13% fewer than in 2018. 

Tax revenues collected per smoker are falling 

Canadian smokers pay an average of $2 per day to the federal government, and between $1.64 and $3.70 per day to Canadian provinces. Tax revenues on a per-smoker basis are falling at a steeper rate in some provinces than in others.