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Industry reacts to Health Canada’s proposed vaping regulations

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While the Convenience industry agrees with Health Canada’s mandate to reduce youth vaping, Ottawa’s new proposed vaping regulations aimed at reducing the level of nicotine in vapour products will stand in the way of adult smokers looking to quit, while putting unrealistic expectation on c-store operators.

In a statement, Imperial Tobaccos said the proposal “will severely hinder the federal government’s ability to reach its stated objective of reducing the smoking rate in Canada to less than 5%  by 2035.”

Health Canada announced Friday it is proposing to lower the maximum nicotine concentration allowed for vaping products that are manufactured or imported for sale in Canada to 20 mg/ml. The current limit is 66 mg/ml, which would remain the maximum concentration allowed for any vaping products intended for export markets. The new rules would forbid the sale of any vaping product if the nicotine concentration listed on the packaging is higher than the new limit.

“Health Canada recognizes the concept of offering reduced risk products as a way to reduce exposure to the harmful chemicals caused by smoking. In addition, it recognizes vaping as a less harmful alternative to smoking,” said Eric Gagnon, VP of corporate and regulatory affairs at Imperial Tobacco Canada. “It is unfortunate that the government is considering a measure that will hinder vaping products from reaching their full potential as a less harmful alternative to smoking.”

The Convenience Industry Council of Canada agreed, calling Ottawa’s proposal “misguided,” and said that the move will push adult users back to tobacco, or to the illegal online market. Also, adult smokers considering transition will be discouraged: CICC member sales data shows that more than 80% of convenience store customers purchase the higher nicotine content product when beginning the transition to vape.

“Canada’s convenience stores are the primary destination for adult smokers looking to make a switch to a reduced risk product,” says CICC president and CEO Anne Kothawala. “Our sales data shows that smokers require sufficient nicotine concentration in order to successfully transition. Offering our customers this choice and encouraging them to make the switch is in line with Health Canada’s stated public health objective of reducing smoking rates.”

Imperial Tobacco says the government acknowledges this risk when it states, “it is anticipated that the vaping industry would experience the loss of sales to adult customers who choose to discontinue using vaping products rather than transition to vaping products that contain 20 mg/mL nicotine or below.”

While it could be debated whether or not the current cap of 66 mg/ml is appropriate, said Gagnon, “he proposed 20 mg/ml is too low and will not satisfy a portion of current Canadian vapers nor smokers seeking a less harmful alternative. It is hard to understand why the government would enact a policy measure knowing full well it will drive up the number of smokers in Canada.”

Nicotine caps will not solve the youth vaping issue, adds Kothawala. “We support the government’s goal of addressing youth vaping and are proud that our channel has a proven track record of retailing age-restricted products. Convenience stores are not the problem. Reducing youth vaping requires a multi-faceted approach that clamps down on the unregulated online market and provides for stiffer penalties for any retailers selling to minors. This policy will make it more likely that youth will access higher nicotine vaping products through illegal online markets.”

In addition, she says the the proposed implementation date of 15 days is “simply unworkable” for our retailers. “Previous implementation timelines have been months long – not days – which allow convenience stores to become compliant. This will impose significant costs on our industry at a time when businesses are struggling with both the economic and health impacts of COVID-19. Government has already acknowledged these challenges earlier this year when they provided a six-month extension to previous vape regulations and should apply the same approach in this case. We are calling on the government to reconsider their decision to limit nicotine concentrations and to increase the implementation period for retailers.”

The government says it is also thinking about added regulatory measures that would restrict flavours in vaping products, and make the industry give more information about their products, including details on sales, ingredients and research and development.

-With files from The Canadian Press

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CICC’s Anne Kothawala reflects on 2020: The year convenience returned to its roots

Screen Shot 2020-12-14 at 11.10.33 AMBetween the pandemic and evolving regulations on key categories, it’s been an extraordinary year of changes and challenges for the convenience industry. CSNC editor Michelle Warren talks with Anne Kothawala, president and CEO of the Convenience Industry Council of Canada, about how the convenience industry has adapted and evolved in 2020, plus the priorities moving forward. 

 

How did the industry fare during the early days of COVID-19?

 AK: The pandemic has shown us is that c-stores are an incredibly resilient industry. We responded quickly to the challenge. At the CICC, the first thing we did was to lobby governments to ensure that every single province and territory acknowledged convenience stores to be an essential service. We also established a COVID-19 working group: It was a huge investment of time, but it was amazing to see the degree to which competitive issues were set aside to share information on dealing with the pandemic. Some of our members were able to share not only best practises from a Canadian context, but also from the U.S., Europe and other parts of the world. 

 

What was top of mind for your members?

 AK: First and foremost, our members were thinking about how do they protect our staff and our customers? That was mission-critical from the first day. How do we access PPE? How do we work quickly to install Plexiglas shields? Then, we turned to complying with the patchwork of mask regulations at the municipal level: Were they mandatory, or were they not? Having customers coming from one municipality where masks were optional and shop in a different municipality where masks were required was creating massive confusion. 

 

What were the early lessons?

 AK: Everyone quickly realized that the product mix needed to change. With more people working from home and big line-ups at grocery stores, people were going to their convenience store, ironically, for the things that they used to go to their convenience store for, like bread and milk and eggs. Kudos to our vendor partners, who quickly adapted and supplied our stores with the products that customers wanted. Whether they were independents or chains, the convenience industry really filled that role of being core to the community. 

 

Looking ahead, what are some of the focus areas?

AK: At the CICC, we continue to advocate for fewer restrictions on the products that we are permitted to sell, as well as minimizing the regulatory burden on our industry. There’s no question that everybody’s expenses have gone up—you have to retool your store, provide masks to your staff, install Plexiglas. So what are we going to do to make up for it in terms of revenues? In the case of Ontario for instance, let’s make sure that the government follows through on their commitments for beer and wine in convenience stores. Despite the fact that government is obviously focused on COVID-19 related issues, they have nonetheless, to their credit, recognised that this is now more important than ever. I have no doubt the government will follow through; it’s just a question of timing. Chances are that it will be timed before a long weekend, perhaps Canada Day next year!

 

How are your members grappling with evolving vaping regulations? 

AK: Vaping has obviously been a problem for our industry. The only silver lining is that the federal government will at some point introduce regulations with respect to both nicotine strength and flavours. This keeps getting delayed, but the latest that we’re hearing is that draft regulations can be expected early next year.

We hope that the federal government will realise some of the mistakes the provinces have made. Unfortunately, the vaping issue is no longer about harm reduction or offering choice to adult smokers who want to switch. Instead, it has become about solving the youth vaping problem. People thought because kids go to convenience stores and convenience stores sell vape products, therefore we should not let convenience stores sell vape products. Never mind that we sell all sorts of age-restricted products and have the strongest track record on age verification. We want to continue to be able to offer choice to our customers. If we have adult smoking customers who come into our stores to purchase cigarettes and they want to try vaping as an alternative, they should be able to do that in the place where they buy the cigarettes—it only makes sense.

 

Speaking of cigarettes, contraband tobacco continues to eat into profits at the c-store level: Any updates there?

AK: Through our committee and other members, we started getting calls from people in government who were noticing that the convenience channel was bringing in a lot more tobacco tax revenue during the lockdown. We looked at which stores were generating more tobacco tax, and found they were close to reserves. When the reserves closed, our tobacco sales started to increase significantly, but as soon as they reopened our tobacco sales started to decrease. We know the importance of having third party verified research, so we’ve engaged Ernst & Young to do a comprehensive study on contraband tobacco across the country. We need much stronger public policy to address this issue because it can create a win-win: When demand increases in the legal sales channel, we’re remitting more taxes to government and the higher cost deters smoking. Convenience stores are not interested in Canadians taking up smoking, they’re just frustrated by trying to sell tobacco and collect the taxes when they’re faced with illegal, non-tax-collecting competition.

 

With people using less cash and instead opting to tap and pay—how is that impacting the industry?

AK: What the pandemic has done is really shone a light on a number of issues that were there before and that we’ve advocated on in the past. A good percentage of transactions were always being done by credit card and now that’s even higher. In the 2019 election, the federal government committed that they would remove the interchange fee from the tax component of purchases, but then the pandemic hit. We are continuing to hold their feet to the fire on that issue because it’s quite significant—that we have to pay an interchange fee on the taxes that we collect and remit for government seems a bit ridiculous.

 

The proposed ban on single-use plastics is hugely significant for the convenience industry—how big a focus is this for your members?

AK: The plastics issue is similar to the mask issue in the sense that, for a lot of CICC members, particularly those that operate nationally, the blizzard of provincial and municipal regulations on single-use plastics is difficult to figure out and expensive to comply with. The federal government is consulting on this and we’re going to be fighting for greater consistency and to ensure that any new regulatory regime isn’t overly burdensome for retailers and customers. It’s all encompassing. We’re going to be monitoring this issue very closely, participating in the consultations and potentially working with other, like-minded trade associations. 

 

We’ve definitely learned this year that c-stores have to be open to change—what are the opportunities here?

AK: It’s being more nimble and also returning to their roots as a community hub. That hub is going to become increasingly important as people spend more time at home and in their neighbourhoods. How do we make convenience stores a go-to destination? With most people working from home, should the local convenience stores stock some office supplies? Should they create offers timed to the morning or afternoon coffee break that customers normally would take with colleagues? How do you insert yourself in people’s new day-to-day lives and where are those opportunities?  It’s getting ahead of that and trying to predict where the customer is going: What are the things that they’re going to be looking to us for? Understanding these things will really help the convenience industry get through this and potentially even grow business.

Originally published in the November/December issue of Convenience Store News Canada. 


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CICC’s Anne Kothawala and Tony Chapman on the convenience industry’s resilience

Screen Shot 2020-05-05 at 12.07.07 PMConvenience Industry Council of Canada president and CEO Anne Kothawala joins Tony Chapman on his Chatter that Matters podcast to discuss the essential role of convenience during COVID-19.

As part of Chapman’s Small Business Matters series presented by RBC, the marketing and branding expert zeroed in on the resiliency of convenience stores as they respond and support communities during COVID-19.

“Our members and convenience stores generally really show they are resilient and innovative,” says Kothawala. “They have done things like change up their product mix and they are focusing more on basic groceries… they recognize they need to adapt to the current situation.”

Kothawala and Chapman also discuss:

  • The benefits and pitfalls of government supports
  • Gas prices
  • How manufacturers are adjusting
  • The work of distributors
  • And more.

Click here to watch the podcast.