Canada Tightens Regulation on E-Cigarette Production and Sales

Nov.08.2022
Canada Tightens Regulation on E-Cigarette Production and Sales
Canada strengthens regulations for e-cigarette production and sales including a new excise stamp and consumer tax.

Canada is strengthening its regulatory system for the production and sale of electronic cigarette products.


Starting October 1st, manufacturers and importers of e-cigarettes in Canada are required to obtain a license or register with the Canada Revenue Agency, affix a vaping excise stamp on their products, and pay a consumption tax. From October 1st to December 31st, there will be a transition period, after which only stamped e-cigarette products can be sold at retail stores. These changes stem from amendments to the 2001 Excise Tax Act and its 2022 Federal Budget Regulations.


Robert Kreklewetz, an indirect tax, customs, and trade lawyer at Millar Kreklewetz LLP, stated that these changes, from a tax perspective, essentially mean that the federal government is treating electronic cigarettes as tobacco products.


A federal excise tax of $2.91 is imposed on 20 packs of cigarettes, while approximately two milliliters of vaping liquid would require a $1 tariff. He added that this applies to nicotine-free e-liquids.


Kreklewetz stated that when e-cigarettes first emerged, like with any new technology, the government's response and action was slow. There was a lack of regulation from a product perspective, creating a bit of a wild west situation. Similarly, there was a lack of regulation from a taxation perspective, with the exception of federal sales tax, treating e-cigarettes like any other commodity. However, there was no specific consumption tax or cigarette system in place for e-cigarettes. But now, all of that has changed.


Canada also regulates electronic cigarette products through the Tobacco and Vaping Products Act and the Food and Drugs Act, and has established regulations that limit the concentration of nicotine and prescribe packaging and labeling standards.


Kreklewetz stated that tax policies are typically aligned with public policies. He proposed imposing a consumption tax, also known as a sin tax, on electronic cigarettes because they are a less harmful alternative to smoking. This would reduce incentives for smokers to switch to electronic cigarettes.


The Canadian Ministry of Health has stated that the health risks of chemicals found in electronic cigarette products, including the main liquids used in them - vegetable glycerin and propylene glycol - are still not fully understood. While these chemicals are considered safe for use in cosmetics and sweeteners, inhaling them over a long period of time is considered "unknown and still being evaluated." Similarly, the chemicals used to flavor the vaping oils are typically used by food manufacturers and are safe for consumption, but the effects of inhaling these chemicals have not yet been thoroughly tested.


Certainly, nicotine is highly addictive. The Canadian Department of Health warns that nicotine addiction in children and adolescents can "affect memory and attention," "alter the development of their brains," lower impulse control, and cause cognitive and behavioral issues.


The Canadian Department of Health has stated in its resource on "e-cigarettes and quitting smoking" that while the best choice for smokers is to quit smoking altogether, switching to e-cigarettes will "reduce your exposure to harmful and carcinogenic chemicals" and involve "short-term health improvements." E-cigarette products only contain "a small fraction of the 7,000 chemicals found in tobacco smoke," the Canadian Department of Health noted. When using e-cigarettes to quit smoking, some evidence suggests that they are associated with higher success rates.


Kreklewetz stated that if electronic cigarettes are viewed as a means for current smokers to quit smoking and switch to nicotine replacement products, then every dollar of tax paid on electronic cigarettes is simply an economic deterrent to quitting smoking. If the cost of vaping is the same as smoking, then why would anyone want to switch?


He said, "This is the vague logic that I see in the new tax system. The federal government's way of working these days is depleting new sources of revenue. Therefore, people may see the e-cigarette tax more as a tax grab than good public policy.


Statement:


This article is compiled based on third-party information and is intended solely for industry exchanges and learning.


This article does not reflect the opinion of 2FIRSTS, and 2FIRSTS cannot confirm the authenticity and accuracy of the content. The translation of this article is only intended for industry exchange and research purposes.


Due to limitations in our ability to translate accurately, this article may not fully reflect the original text. Please refer to the original article for the most accurate representation.


2FIRSTS is fully aligned with the position and statements of the Chinese government on all domestic, cross-strait and international issues.


The copyright of compiled information belongs to the original media and author. If there is any infringement, please contact us for deletion.


This document has been generated through artificial intelligence translation and is provided solely for the purposes of industry discourse and learning. Please note that the intellectual property rights of the content belong to the original media source or author. Owing to certain limitations in the translation process, there may be discrepancies between the translated text and the original content. We recommend referring to the original source for complete accuracy. In case of any inaccuracies, we invite you to reach out to us with corrections. If you believe any content has infringed upon your rights, please contact us immediately for its removal.

South Korea's Tax Policy on Solid Nicotine Vapes Sparks Debate as Tobacco Industry Urges Urgent Regulation of Synthetic Nicotine
South Korea's Tax Policy on Solid Nicotine Vapes Sparks Debate as Tobacco Industry Urges Urgent Regulation of Synthetic Nicotine
South Korea’s low tax on solid nicotine vapes has raised concerns over tax avoidance, but industry players note the products are already regulated and have minimal market share. The real regulatory gap, they argue, lies in synthetic nicotine, which remains largely unregulated amid slow legislative progress.
May.14 by 2FIRSTS.ai
South Korea to Tighten Synthetic Nicotine Regulations: Reclassifies as Tobacco, Bans Online Sales and Flavor Additives
South Korea to Tighten Synthetic Nicotine Regulations: Reclassifies as Tobacco, Bans Online Sales and Flavor Additives
The South Korean National Assembly has proposed expanding the definition of tobacco, restricting online sales of e-cigarettes, and tightening regulations on synthetic nicotine in an effort to protect youth health.
Jun.13 by 2FIRSTS.ai
South Australia Implements Strictest Vaping Law in the Country, With Fines Reaching $4.3 Million
South Australia Implements Strictest Vaping Law in the Country, With Fines Reaching $4.3 Million
South Australia enforces Australia’s strictest anti-illicit tobacco and vaping law, with fines up to $4.3 million for commercial-scale violations.
Jun.11 by 2FIRSTS.ai
BAT Plans to Appoint New Chairman, Successor Expected by 2026
BAT Plans to Appoint New Chairman, Successor Expected by 2026
British American Tobacco is seeking a successor for chairman Luc Jobin, who will step down in 2026 due to governance rules.
Jun.10 by 2FIRSTS.ai
New York bill to ban flavored nicotine pouches withdrawn temporarily
New York bill to ban flavored nicotine pouches withdrawn temporarily
New York proposed bill to ban flavored nicotine pouches, including ZYN, to prevent youth appeal, facing industry resistance.
Apr.18 by 2FIRSTS.ai
U.S. ITC Reopens PAX Labs Case Against STIIIZY, ALD; Domestic Industry Status at Center of Dispute
U.S. ITC Reopens PAX Labs Case Against STIIIZY, ALD; Domestic Industry Status at Center of Dispute
The U.S. International Trade Commission (ITC) has announced a partial review of a key ruling in PAX Labs' patent infringement case against STIIIZY and ALD, focusing on whether the economic prong of the "domestic industry" requirement was properly assessed. While the commission previously found some of PAX's patents valid and infringed, it ruled that PAX had not demonstrated sufficient U.S. economic investment to establish a domestic industry, and therefore did not find a violation.
May.20 by 2FIRSTS.ai