BEAMSVILLE, Ontario, Sept. 01, 2021 (GLOBE NEWSWIRE) — The Canadian Vaping Association (CVA) cautions the Government of Canada that restricting flavours in vape products will have unintended economic consequences in addition to increasing smoking rates. Flavour restrictions will put 1,400 Canadian small businesses at risk of closing, while disproportionately benefiting large foreign companies.
The proposal to restrict flavours states, “Between 85% and 95% of the total volume of vaping liquid sold in Canada is manufactured in Canada. Vaping liquid sold in bottles is almost exclusively manufactured in Canada, while vaping liquid sold in pre-filled pods is almost exclusively imported into Canada. The majority of these businesses, including manufacturers, are considered to be small under the Treasury Board of Canada Secretariat definition.” Subsequent commentary observed, “The Proposal disproportionately benefits large companies that blend their own flavours. Domestic companies will have increased reformulation costs and may face logistical barriers and additional costs.”
A report commissioned by Health Canada found that around 90% of adult vapers use a flavoured product. Should flavour restrictions be pursued by Health Canada, the specialty vape stores that rely on flavoured products will be eliminated from the market. As of 2019, specialty vape stores accounted for 60% of all vape sales (49% specialty stores and 21% online). If flavour restrictions or a ban are introduced, hundreds of thousands of vapers will return to smoking or turn to the black market and future adoption by current smokers will be lessened. Such policies would eliminate around half of the vaping tax base and divert money that otherwise would have remained in Canada to foreign suppliers or criminals.
A flavour ban would eradicate $660,000,000 in revenue from independent vape businesses, greatly reducing GST/PST revenue already collected by the provinces and federal government. The elimination of specialty stores will also reduce corporate and payroll tax collection. The associated supply chain partners and the taxes collected along the supply chain will also be impacted.
“Given the fragile state of the Canadian economy, it is confounding that regulation is being proposed that will decimate domestic small businesses and 7000 jobs. Not only is vaping a public health benefit, but the industry also contributes significantly to the tax base. The proposed flavour restrictions should be discarded and instead Canada should focus on increased enforcement of the strong existing regulation to protect youth,” said Darryl Tempest, Executive Director of the CVA.