RBH: Federal action needed to protect Canadians from illegal tobacco market
Rothmans, Benson & Hedges Inc. (RBH) says Health Canada's third legislative review of the Tobacco and Vaping Products Act (2018), released last week, exposes weaknesses and overlooks key realities as illicit nicotine product sales continue to expand in Canada. The review follows a December 2025 evaluation that found Health Canada's dated IT systems limit its ability to track compliance, manage enforcement effectively, and analyze emerging trends.
"Effective law and regulatory enforcement are not optional; they are the foundation of our legal system and of any credible regulatory system. Right now, that foundation is under significant strain, given Canada's massive illicit market. Addressing these gaps, along with federal leadership on Canada's contraband problem, must be an immediate priority," says Milena Trentadue the managing director for Rothmans, Benson & Hedges Inc.
Canada has a much bigger problem with illegal tobacco and nicotine than most other wealthy countries, including those in Europe. According to a recent KPMG report, illegal and unregulated products now make up 38% of Canada's tobacco market. This costs Canadian governments up to $2.1 billion a year in lost tax revenue.
To put that in perspective, a 2025 KPMG report looked at 38 European countries and found that, on average, only about 10% of their tobacco market was illegal. Out of all those countries, 37 had smaller illegal markets than Canada, and only one tied with Canada.
Illicit tobacco and nicotine products are a public health concern because there are no controls on product quality, ingredients, packaging, or youth access. By focusing solely on legal industry actors, the TVPA review misses the mark on keeping Canadians safe and ensuring regulatory compliance.
It fails to address—or acknowledge—that contraband sales exceed those of any individual regulated industry actor and that these illicit products disregard government health regulations, taxes, criminal law, and Health Canada's own tobacco cost-recovery charges, which fund important cessation programming, research, education campaigns, TVPA enforcement activities, and support for First Nations, Inuit and the Métis Nation.
Health Canada's TVPA review found that online sales of vaping products have grown since the TVPA took effect in 2018 and are expected to continue rising, requiring "robust" and "innovative" compliance strategies and expanded enforcement tools to address online non-compliance in a "digital era." This acknowledgement appears only in the third review of the TVPA, even though the legislation was introduced, debated, and passed in the digital era. The review also does not recognize the growth of online contraband tobacco sales by organized criminal groups.
"Health Canada's review makes clear that enforcement has not kept pace with the growth of Canada's illicit market. Without enforcement, regulations and laws fail to protect Canadians, leaving a country where criminals and illegal actors face too little risk and have too much opportunity," said Kory McDonald, corporate affairs head for Rothmans, Benson & Hedges Inc.
Besides this TVPA review, Canada's enforcement approach to illicit and non-compliant tobacco and nicotine products has seen few visible public updates in more than a decade. The last public RCMP report on coordinating the fight against illicit tobacco was released in 2011. The legislative review identifies a need for stronger enforcement tools, but it stops short of calling for what is truly needed: federal leadership and action using existing regulatory, legal, and enforcement powers to tackle the massive illicit market that ignores the TVPA and threatens public health.
