Vol. 150, No. 45 — November 5, 2016

Order Amending the Schedule to the Tobacco Act (Menthol)

Statutory authority

Tobacco Act

Sponsoring department

Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issues

Menthol cigarette use by youth smokers is of concern. According to the 2014–2015 Canadian Student Tobacco, Alcohol and Drugs Survey (CSTADS), 6% of students in grades 6 to 12 (grade 6 to secondary 5 in Quebec) [159 000 students] reported using cigarettes in the past 30 days, with almost half as many (3% or 67 000) reporting that they had used menthol cigarettes.

Youth who experiment with tobacco are at risk of graduating to established patterns of tobacco use and addiction. Preventing initiation of tobacco use by youth is recognized as one of the most effective means of reducing lifetime tobacco use and its associated health hazards. Measures are therefore being proposed to restrict the use of menthol in certain tobacco products to reduce their appeal among youth.

Background

Federal Tobacco Control Strategy

Tobacco use is the leading preventable cause of illness and premature death in Canada. It is a known or probable cause of more than 40 debilitating and often fatal diseases of the lungs, heart, and other organs, and is responsible for more than 37 000 premature deaths each year. According to the Canadian Centre on Substance Abuse, it is estimated that the attributable health care costs of tobacco use in Canada are more than $4 billion a year with the estimated societal costs of tobacco reaching $17 billion in 2002.

Despite decades of effort to reduce tobacco use, there are over 5 million tobacco users in Canada (including 4.2 million current smokers or 15% of all Canadians aged 15 and older). Most tobacco use begins during adolescence: 85% of adult daily smokers (age 25 and older) began by the age of 18. As measured in 2014–2015, the average age for smoking a cigarette for the first time was 13.5 years.

The Government of Canada’s Federal Tobacco Control Strategy (FTCS), introduced in 2001 and renewed in 2012, focuses on

The FTCS’s ultimate goal is to reduce tobacco-related death and disease among Canadians.

A key component of the FTCS is the Tobacco Act (TA), whose purpose includes the protection of young persons from inducements to use tobacco products and the consequent dependence on them. In order to achieve its objectives, the TA regulates the manufacture, access (including the sale), labelling and promotion of tobacco products. In 2009, Parliament amended the TA by adding a schedule of prohibited additives (the “schedule to the TA”) to restrict the use of flavours and other additives in the manufacture of certain tobacco products to reduce their appeal to young persons. The schedule to the TA identifies the tobacco products for which selected additives are prohibited, and then lists these selected additives: those with flavouring properties, sweeteners, colouring agents and several others that can be used to increase their attractiveness. Most flavour additives, with some exceptions, are prohibited in little cigars, cigarettes, blunt wraps (sheets of tobacco for rolling) and most cigars. Menthol is currently exempt from the list of prohibited additives.

Subsequently, amendments were made to the schedule to the TA (through the Order Amending the Schedule to the Tobacco Act, SOR/2015-126) and came into force in December 2015. The 2015 amendments extended the 2009 prohibition to specifically address additional types of cigars that were flavoured and had cigarette-like characteristics (cigars weighing more than 1.4 g but not more than 6 g, excluding the weight of any mouthpiece or tip, and cigars with tipping paper or a wrapper that is not fitted in spiral form). Specific exceptions were provided for additives used to impart traditional alcohol flavours to these cigars — specifically port, wine, rum and whisky.

Situation in Canadian provinces and foreign jurisdictions

Concern about the use of menthol in tobacco is shared by a number of provincial governments that have prohibited the marketing of tobacco products with flavours, including menthol. In May 2015, Nova Scotia became the first Canadian province, and the first jurisdiction in the world, to prohibit the sale of menthol-flavoured cigarettes and other menthol-flavoured tobacco products. Four other provinces followed suit, namely Alberta, New Brunswick, Quebec and Ontario, and amended their tobacco control legislation to address flavours and menthol in most tobacco products, with Ontario’s prohibition being the last one to come into effect, in January 2017. The combined provincial efforts address 75% of the menthol cigarette sales in Canada. A federal prohibition would support and extend the prohibition on the use of menthol in most tobacco products across Canada.

Other countries are also taking action. On May 20, 2016, the new Tobacco Products Directive became applicable in the European Union. The Directive requires its Member States to prohibit the sale of menthol cigarettes as of 2020. Ethiopia, Turkey and Moldova have also introduced legislation to ban menthol cigarettes.

Pursuant to the World Health Organization Framework Convention on Tobacco Control (WHO FCTC), a treaty ratified by Canada in 2004, the Partial Guidelines for implementation of its articles 9 and 10 provide guidance to Parties to the FCTC, among other things, on the regulation of the contents of tobacco products to reduce their attractiveness. These guidelines acknowledge that “masking tobacco smoke harshness with flavours contributes to promoting and sustaining tobacco use” and recognize that menthol is one of many flavouring substances used for this purpose.

Objectives

The proposed Order Amending the Schedule to the Tobacco Act (Menthol) [“the proposed Order”] would directly support one of the four objectives of the TA, namely “to protect young persons and others from inducements to use tobacco products and the consequent dependence on them.” This would be achieved by further reducing the attractiveness of tobacco products through limiting the availability of menthol-flavoured tobacco products in Canada.

By reducing inducements to tobacco use, the proposed Order is expected to primarily benefit youth that may be tempted to experiment with these products, which can lead them to becoming lifelong smokers. The proposed Order, in association with other tobacco control measures under the FTCS, would contribute to mitigating the health issues associated with smoking and reducing morbidity and mortality related to tobacco use.

Description

In order to achieve the objective outlined above, amendments to the schedule to the TA are proposed to remove the exception for menthol additives, i.e. menthol, l-menthol and l-menthone. Removing the exception would result in a prohibition of the use of these menthol additives in the manufacture of cigarettes, blunt wraps and most cigars (little cigars, cigars that have tipping paper, cigars that have a wrapper that is not fitted in spiral form and cigars weighing more than 1.4 g but less than 6 g, excluding the weight of any mouthpiece or tip) and their sale as manufactured. Removing the exception for menthol would also mean that the prohibition on the promotion of prohibited additives on tobacco product packaging would be applicable.

Benefits and costs

In 2015, the reported wholesale value of menthol cigarettes and cigars accounted for approximately $310 million, representing 4.5% of the total tobacco market; menthol cigarettes made up 98% of this amount. In the same year, the value of the Canadian cigarette market was approximately $6.4 billion and the cigar market was $203 million. Menthol cigarettes represented 4.7% of the value of cigarette sales and menthol cigars represented 4% of the value of total cigar sales.

The proposed Order would affect only provinces and territories that have not implemented a menthol ban, which at this time are British Columbia, Saskatchewan, Manitoba, Prince Edward Island, Newfoundland and Labrador, Nunavut, Yukon and the Northwest Territories. It is estimated that, based on 2015 sales in these provinces and territories, the proposed Order would affect $85 million in wholesale value of menthol cigarette sales in Canada. For menthol cigars, the size of the market that would be affected by the proposed Order is about $874,000.

Costs

The cost analysis takes into account the recent provincial bans on menthol in certain tobacco products. The following cost estimations therefore include data only from the provinces that have not implemented any ban on mentholated tobacco products. The primary source of information for this analysis is the industry data submitted to the Department of Health pursuant to the Tobacco Reporting Regulations (TRR). No data on blunt wraps sales was available, as this data is not required to be reported to the Department of Health.

The cost analysis assumes that the removal of mentholated tobacco products from the market would contribute to a reduction in the number of youth who would otherwise transition into long-term tobacco users. As with all youth tobacco use prevention activities, an expected result is a loss of future tobacco sales that are considered to be foregone profits. Foregone profits, as they relate to youth tobacco use prevention, have not been monetized for the proposed Order as it is difficult to extrapolate with accuracy the individual contributions of the various youth tobacco control activities that are currently being implemented in Canada by the various levels of government and health advocates.

The analysis for the purpose of the proposed Order also assumes that current consumers of menthol tobacco products, other than youth, would switch to alternate tobacco products after implementation of the menthol ban, i.e. they would switch to regular cigarettes or cigars, as a result of their addiction to tobacco products (Scenario A). Consequently, manufacturers and importers would not experience any significant loss in profits in the short term. In the event that the proposed Order encourages some adult menthol tobacco users to quit, an additional scenario (Scenario B) was considered with a 5% decrease in cigarette and cigar sales that would result in foregone profits. The results of the analysis of the costs based on the two scenarios are presented in tables 1 and 2 below.

Table 1: Summary of estimated costs of the proposed Order (Scenario A — No decrease in sales)

Cost Statement (Scenario A — No decrease in sales)

Monetized Impacts (2016 $), Discounted at 7%

 

Year 1

Year 5

Year 10

Undiscounted Total

Present Value

Annualized Average

Costs

Industry

One-time compliance costs (value of unsold inventories) — Cigars

17,500

17,500

17,500

2,490

One-time compliance costs (value of unsold inventories) — Cigarettes

846,550

846,550

846,550

120,530

Government

One-time compliance promotion costs

123,335

123,335

123,335

17,560

Recurring compliance monitoring and enforcement costs

16,650

16,650

16,650

166,495

116,940

16,650

Total costs

1,104,325

157,230

Qualitative impacts on costs

Stakeholder

Impacts

Description

Manufacturers and importers

Negative impacts

Manufacturers and importers may experience short-term operational disruptions during the transition.

Consumers

Negative impacts

There may be spillover effects on other categories of tobacco products not directly affected by the proposed Order, resulting in increased prices to consumers.

Retailers and wholesalers

Negative impacts

Retailers and wholesalers may experience a reduction in sales.

Table 2: Summary of estimated costs of the proposed Order (Scenario B — 5% decrease in sales)

Cost Statement (Scenario B 5% decrease in sales)

Monetized Impacts (2016 $), Discounted at 7%

 

Year 1

Year 5

Year 10

Undiscounted Total

Present Value

Annualized Average

Costs

Industry

One-time compliance costs (value of unsold inventories) — Cigars

17,500

17,500

17,500

2,490

Foregone profits from a decrease in cigar sales resulting from adult smokers quitting — Cigars

8,475

8,475

8,475

84,750

59,530

8,475

One-time compliance costs (value of unsold inventories) — Cigarettes

846,550

846,550

846,550

120,530

Foregone profits from a decrease in cigarette sales resulting from adult smokers quitting — Cigarettes

703,940

703,940

703,940

7,039,430

4,944,210

703,940

Government

One-time compliance promotion costs

123,335

123,335

123,335

17,560

Recurring compliance monitoring and enforcement costs

16,650

16,650

16,650

166,495

116,940

16,650

Total costs

6,108,065

869,645

Costs to industry

a. Tobacco manufacturers and importers

The proposed Order would apply to both domestically manufactured and imported tobacco products, meaning that manufacturers and importers would bear costs associated with changing their manufacturing or ordering procedures in order to meet the new prohibition. The main costs borne by manufacturers and importers would be related to (i) a one-time incremental cost associated with the value of unsold inventories and the cost to dispose of non-compliant products, and (ii) foregone profits if consumers no longer purchase similar tobacco products after the implementation of the menthol ban.

The proposed Order would allow a six-month implementation period that is expected to provide manufacturers and importers enough time to clear most of the inventories, given high turnover of cigarette sales. Sales data submitted pursuant to the TRR indicate that in provinces where menthol bans were implemented, only a small percentage of cigarettes (about 0.6% in Nova Scotia and 0.2% in Alberta) were being returned to the manufacturers as unsold products six months following the coming into force of the ban. For the purposes of the cost analysis, it was assumed that if approximately 1% of average monthly cigarette sales are returned each month as unsold product for six months following the implementation, the wholesale value of unsold inventories that would have to be disposed of would be $846,550 for cigarettes. Cigar sales generally have slower turnover rates. Based on a similar analysis, for mentholated cigars, assuming a 2% return rate on quarterly sales (double the rate of return of cigarettes), about $17,500 worth of inventory would have to be disposed of six months following the implementation date. The compliance costs are presented in Table 1 and Table 2 above.

In the event that the proposed Order encourages some adult menthol tobacco users to quit, an additional scenario (Scenario B), based on a 5% decrease in sales of cigars and cigarettes, was considered. The results of the analysis show that manufacturers and importers of impacted products may experience foregone profits of about $59,530 for cigars and about $4.94 million for cigarettes over the 10-year period of the analysis. The foregone profits are presented in Table 2 above.

b. Impacts on retailers and wholesalers

Retailers, consisting mainly of convenience stores and gas station retail stores, are estimated to number approximately 22 000 in Canada, according to a 2012 industry report. These retailers are not expected to be materially impacted by the proposed Order. Data analysis shows that 26.2% of the revenue of an average gas and convenience store comes from the sale of tobacco products, mainly cigarettes. A six-month implementation period would help retailers clear any existing stock of the impacted products or return their inventory to the wholesaler or manufacturer, depending on their respective agreements. Such an implementation period would therefore not result in a negative financial impact to retailers in the short term. According to 2013 data, there were a total of 142 tobacco wholesale establishments in Canada, most of them situated in Ontario and Quebec, that year. Wholesalers may be subjected to losses depending on the agreements they have with the manufacturers and importers of the affected tobacco products. Generally, wholesalers will have more stock at any point in time than retailers and will be at a higher risk of having to experience a loss on unsold products. It is expected that a six-month implementation period would mitigate these risks and allow wholesalers to clear their inventories or return them to the manufacturer or importer.

Cost to consumers

It is expected that there could be a spillover effect on other categories of tobacco products not directly affected by the proposed Order, resulting in increased prices to consumers. The magnitude of this potential price increase to consumers is difficult to estimate due to difficulties in estimating changes in consumer demand for both menthol tobacco products and products viewed as close substitutes (e.g. non-flavoured cigarettes instead of menthol ones). Specifically, the addictive nature of tobacco products makes it likely that most current menthol smokers would shift to non-flavoured cigarettes, which would negate any short-term profit losses to the tobacco industry. Given this observation, and for the purpose of this cost-benefit analysis, it is assumed that, if occurring at all, any incremental product price increase would be negligible and would not significantly impact consumers.

Cost to Government

Implementation of the proposed Order would require an investment of public sector resources. In particular, Health Canada would incur costs to monitor and enforce compliance with the proposed Order. Estimates for these costs are described below.

Compliance promotion: Health Canada’s baseline compliance and enforcement expenditures include both personnel and other costs, which are likely to change under the proposed Order. Additional costs would include those for labour allocated to informing industry representatives and instructing Health Canada inspectors about the new requirements, as well as the cost of developing and distributing fact sheets and other guidance documents that describe the new requirements. Additional outreach activities may be conducted during the first two years of implementation. Costs associated with all of these activities are estimated to have a present value of $123,335 over a 10-year period.

Compliance monitoring and enforcement: It is expected that the Government will incur incremental compliance monitoring and enforcement costs for the training of inspectors, ongoing site inspection and travel, sampling of tobacco products and analysis, investigations into alleged violations, and measures to deal with cases of non-compliance. These enforcement activities are estimated at a present value of $116,940. These costs are presented in Table 1 and Table 2 above.

The total cost to the Government for the compliance and enforcement regime is estimated at $240,274 in present value terms over the 10-year period of analysis. After this period, Health Canada anticipates that the costs associated with compliance monitoring and enforcement would return to baseline levels.

Summary of costs

The analysis estimates that the costs of the proposed Order would be $1.1 million over a 10-year period, which include Government costs of $240,274 and industry costs of $874,050, based on the assumption that there would be no decrease in sales of tobacco products (Scenario A). Alternatively, the costs of the proposed Order may be $6.1 million over a 10-year period, which include the foregone profits of about $59,530 for cigars and $4,994,210 for cigarettes, based on the assumption that there would be a 5% decrease in sales of tobacco products as a result of the proposed Order (Scenario B).

Benefits

Tobacco use is the leading preventable cause of premature death in Canada. It is considered to have a role in causing over 40 diseases and other serious health outcomes. As mentioned above, 37 000 people die in Canada from tobacco use every year. Canadians bear $4.4 billion in direct health costs and $17 billion in combined health and economic costs annually from tobacco use. Despite decades of effort to reduce tobacco use, there are over 5 million tobacco users in Canada.

Canada’s FTCS, put in place in 2001, is a comprehensive and collaborative approach between several government departments and agencies that has helped reduce tobacco use to an all-time low. Partners in the FTCS include Health Canada, the Public Health Agency of Canada, Public Safety Canada, the Royal Canadian Mounted Police, the Canada Border Services Agency and the Canada Revenue Agency. Each one of these federal partners plays a role in delivering key components of the Strategy. There is also ongoing cooperation between the federal government, the provinces and territories, municipalities, non-governmental organizations, community agencies and the private sector. The combined effort of many groups helps support tobacco control gains across the country.

The TA and its associated regulations have as purpose, among other things, to protect the health of Canadians, and particularly of young persons, from the health consequences of using tobacco products. In order to achieve its objectives, the TA imposes restrictions and prohibitions that notably apply to the tobacco industry and retailers. For example, the TA restricts access to tobacco by youth, restricts tobacco promotional activities, requires labelling to increase awareness of the health hazards of tobacco use and restricts the use of flavours in tobacco products that make them more appealing. Provincial and territorial legislation has also been enacted, namely prohibitions on tobacco sales to youth, the creation of smoke-free spaces, promotional restrictions at retail and, more recently, restrictions on flavours in tobacco products.

When taken together, these tobacco control initiatives have been shown to lead to decreases in smoking prevalence and changes in tobacco consumption, which result in a significant impact on the decline in disease incidence, mortality and disability caused by tobacco use and which, in turn, yield long-term economic benefits associated with these decreases. The economic benefits that result from decreased morbidity and mortality normally only materialize at least 10 years after a reduction in tobacco prevalence is observed.

In the period 2003–2013, the prevalence of past 30-day tobacco use decreased from 24% to 15% of the population (aged 15 years and over). In the same period, among 15- to 19-year-olds, the rate of past 30-day tobacco use for all tobacco products dropped from 22% to 11%. However, in the last three years of that period, the slope of this decline mostly plateaued.

It is expected that the proposed Order would contribute to reducing inducements to tobacco use associated with menthol in tobacco products. The anticipated decrease in experimentation with these mentholated products would support the FTCS and work with other factors in the environment that lead to a lower youth smoking initiation rate. This decrease would therefore contribute to reducing the number of youth who transition into lifelong tobacco users. The FTCS recognizes that preventing sustained tobacco use results in significant benefits in terms of disease prevention and lives saved.

The proposed Order would be consistent with actions undertaken or underway in certain Canadian provinces with respect to addressing the issue of menthol tobacco products that are attractive to youth. Canada would also be in line internationally with recent efforts taken by other countries to curb tobacco product attractiveness.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposed Order as there is no change in administrative costs borne by business.

Small business lens

The small business lens does not apply to this proposed Order as the costs to business of this proposed Order are less than $1 million annually.

Consultation

As per the Cabinet Directive on Regulatory Management, affected and interested parties were consulted during the development of this proposal in order to provide them with opportunities to comment.

Notice of proposed order to amend the schedule to the Tobacco Act (menthol)

Health Canada published the Notice to interested parties — Proposed order to amend the schedule to the Tobacco Act (menthol) in the Canada Gazette, Part I, on April 30, 2016, providing interested stakeholders with a 30-day period to comment on the proposal. A total of 100 stakeholders provided comments to Health Canada from the following sectors (with the number of responses given for each): local, regional, provincial and territorial health authorities (9); non-governmental organizations (NGOs) [23]; cigarette manufacturers (3); importers and distributors (1); retailer associations (2); associations of health professionals (2); academia (4); and members of the general public (56). The comments are summarized below for each sector, followed by Health Canada’s response to key issues raised.

Local, regional, provincial and territorial health authorities

All stakeholders in this group were supportive of the proposal. However, they also suggested that the scope of the proposal should be broader and more inclusive. Specifically, they requested that the proposed menthol ban be extended to all tobacco products, not only cigarettes, blunt wraps and most cigars. They also called for a total ban on all flavours in all tobacco products, to ensure that flavours could never be used as a marketing tactic by the tobacco industry.

One provincial health authority also pointed out that banning menthol in some tobacco products will result in an increase in the use of other flavoured tobacco products (including menthol tobacco products) given that flavours are popular with youth.

Non-governmental organizations

All 23 non-governmental organizations expressed support for the proposal, stating that it would strengthen the TA and protect youth from tobacco addiction. They called upon Health Canada to strengthen and broaden the scope of the current proposal to prohibit the use of all flavours, including menthol, in all tobacco products. They argued that not doing so would leave loopholes that could later be exploited by the tobacco industry.

Industry: Tobacco product manufacturers and importers

The three manufacturers and the one importer who provided comments were all opposed to the proposal.

Two manufacturers and the one importer argued that the menthol ban will cause current menthol users to seek alternatives in order to get their preferred product, which could increase contraband activities and result in a loss of tax revenues for the Government. They also stated that the proposal targets tobacco products that have been traditionally associated with adult use and that the proposal will prevent adults from purchasing their desired product in a legal manner. They indicated that taking menthol out of tobacco products would have little effect on limiting youth access to tobacco products. Additionally, they stated that there is a lack of scientific evidence to support a ban on menthol and that the data on youth smoking rates used in the proposal are misinterpreted and misleading and do not demonstrate that menthol is the cause of youth smoking initiation or prevalence. They also asserted that Health Canada has not offered any new data to justify a menthol ban since the last amendment to the schedule to the TA in 2015.

Finally, all three manufacturers and the one importer stated that if this amendment is to be adopted, the proposal should allow a coming-into-force period of between 9 and 15 months after final publication in order for them to comply with the new legislation and to dispose of non-compliant products.

Retailer associations

Two retailer associations provided comments that were aligned with those from industry, which was opposed to the amendment. They argued that the proposed ban will unfairly impact adult smokers and will not help reduce youth access to and consumption of age-restricted tobacco products, which should be the Government’s priority. Both associations stated that the demand for mentholated tobacco products will persist, regardless of the federal ban, which would in turn encourage the illegal tobacco market and contraband activities. In addition, they mentioned that the data used to justify the proposal is misleading and is over two years old, and that the proposal presented the same statistics that were used in the 2015 amendment, in which menthol was specifically excluded.

The retailer associations were also in favour of an extended coming-into-force period should the proposed Order be adopted. One association requested a two-year transition period in order to allow full compliance from distributors, while the other proposed a multi-year transition period in order to decrease the financial impact and ensure retailer compliance. They requested a four-year transition period similar to what the United Kingdom allowed for their regulations banning menthol in cigarettes and cigarette tobacco.

Associations of health professionals

The two associations of health professionals expressed their support for the proposal. They both commented that the proposal could be strengthened by extending the menthol ban to all tobacco products and going even further by banning all flavours in all tobacco products.

Academia

All four comments received from academia stakeholders were supportive of the proposed menthol ban. They also all suggested that the ban be extended to cover all tobacco products and that all flavours be banned in all tobacco products, not just menthol. They stated that the legislation would be stronger with a full flavour ban on all tobacco products, and were concerned that by limiting the ban to certain tobacco products, tobacco companies could introduce menthol into other types of tobacco products not covered by the ban.

General public

A total of 56 comments were received from the general public. Only two members of the general public were not supportive of the ban, with one being neutral on this specific issue, and the other arguing that the proposal will encourage contraband and could cause current menthol users to seek potentially more dangerous alternatives.

With regard to the members of the general public supporting the menthol ban, 48 out of 56 stakeholders suggested that the scope of the proposal be extended in order to include a ban on menthol in all tobacco products, and ideally a ban on all flavours in all tobacco products. Some of these stakeholders argued that the proposal does not go far enough, and that it will leave loopholes that could later be exploited by tobacco companies, thus undermining the objective of the proposal. They stated that by eliminating all flavours in all tobacco products, Canadians and youth across the country will have equal protection against inducements of tobacco use.

Response of the Department of Health to key stakeholder concerns
Prohibition of menthol and other flavours in all tobacco products

The proposed Order would prohibit flavours, including menthol, in close to 95% of the total value of tobacco product sales in Canada. The Department of Health plans to continue to closely monitor the use and sales of the remaining flavoured tobacco products on the Canadian market to determine if further action is warranted, including extending the ban to all flavours in all tobacco products.

Research data to support the proposed Order

As stated, the Department of Health continually monitors the market to determine trends in youth tobacco use. The most recent 2014–2015 CSTADS results presented in this statement show that menthol use by youth continues to be a concern that warrants action. The available research suggests that removing menthol would reduce youth inducements to tobacco use that would result in a decrease in the number of youth experimenting with mentholated tobacco products. It is also anticipated that a decrease in experimentation with menthol tobacco products would contribute to a lower smoking initiation rate and therefore lead to a reduction in the number of youth who transition into long-term tobacco users. Preventing sustained tobacco use will result in significant benefits in terms of disease prevention and lives saved.

Youth access to tobacco products

With regard to industry concerns about youth access to tobacco, the Government of Canada already has a number of restrictions in place. The TA prohibits the furnishing of tobacco products to youth under the age of 18. Sustained efforts in reducing or eliminating social sources of tobacco products remain a key element of protecting youth under the FTCS.

Increase in contraband products

The Government of Canada has a number of measures to combat the illicit trade in tobacco. The 2014 federal budget provided $91.7 million over five years for the Royal Canadian Mounted Police to enhance its efforts to combat contraband, and for the deployment of new technology at the Canada–United States border to target cross-border smuggling and related criminal activities. These efforts would also address any increased demand for contraband menthol tobacco products that may result due to the proposed Order.

Delay of coming into force

Manufacturers and importers requested a longer coming- into-force period. Based on previous tobacco control interventions, including those that prohibited flavour additives, a 180-day period was a sufficient amount of time for the tobacco industry to comply with new restrictions. As well, allowing menthol to remain on the Canadian market any longer than six months would undermine the purpose of this proposed Order.

Rationale

Youth are experimenting with menthol cigarettes. According to the 2014–2015 CSTADS, 6% of students in grades 6 to 12 (grade 6 to secondary V in Quebec) [159 000 students] reported using cigarettes in the past 30 days, with almost half as many (3% or 67 000) reporting that they had used menthol cigarettes.

While no specific data is available on the proportion of youth who use cigars and blunt wraps that contain menthol, the demonstrated interest of youth in menthol cigarettes, and in flavoured tobacco products in general, makes it reasonable to infer that youth would find them appealing as well. This is supported by the observation that youth use cigars and blunt wraps. The results of the Canadian Tobacco, Alcohol and Drugs Survey (CTADS) 2013 indicate that, compared to adults, a higher proportion of youth aged 15 to 19 years of age are using cigars. According to CTADS, 4.3% of youth aged 15 to 19 years (about 91 000 youth) reported using little cigars/cigarillos in the past 30 days as compared to 2.1% of adults aged 25 years and over (about 520 000 adults). The 2014–2015 CSTADS results further show that 2% of students in grades 6 to 12 (grade 6 to secondary V in Quebec) had used blunt wraps in the past 30 days (39 000 students).

Menthol in tobacco products has numerous pharmacological effects, one of them being to mask the irritating effect of tobacco smoke, making it easier to inhale, which facilitates experimentation among novice users. Promoting experimentation among youth increases the potential for continued tobacco use that leads to addiction and an increased risk of tobacco-related diseases.

In 2016, the World Health Organization Study Group on Tobacco Product Regulation published an advisory note entitled “Banning Menthol in Tobacco Products” that reviewed the available literature on menthol use in cigarettes and other tobacco products. The note concluded that, among other things, “menthol cigarettes promote experimentation and progression to regular use to a greater extent than non-menthol cigarettes among youth.”

The cost-benefit analysis conducted for this proposal estimates that the costs would be outweighed by the benefit of removing inducements to tobacco use associated with menthol. The anticipated decrease in experimentation with these products would support the FTCS and work with other factors in the environment that lead to a lower youth smoking initiation rate, therefore contributing to a reduction in the number of youth who transition into long-term tobacco users. The FTCS recognizes that preventing sustained tobacco use results in significant benefits in terms of disease prevention and lives saved.

Concern about the use of menthol in tobacco is shared by a number of provincial governments. A federal prohibition would extend the prohibition on the use of menthol in most tobacco products across Canada.

Implementation, enforcement and service standards

Coming into force

The proposed Order would come into force 180 days after the day on which it is published in the Canada Gazette, Part II. This transition period is expected to provide time for an orderly transition in the marketplace and would also help mitigate profit losses in the short term.

Compliance promotion and outreach activities

Compliance promotion activities aimed at informing manufacturers, importers/distributors and retailers of the affected tobacco products would be conducted in order to increase their level of awareness of the proposed Order and to assist in achieving compliance. These activities would include developing and distributing information materials (e.g. fact sheets, copies of the amended schedule to the TA) during routine inspections, and/or conducting information sessions to describe the amendments to the schedule to the TA.

Enforcement

Compliance monitoring and enforcement activities targeting the affected tobacco products would be undertaken by tobacco inspectors in the Department’s Regulatory Operations and Regions Branch under the authority of the TA. The Department would actively monitor compliance along the supply chain, including manufacturers, importers and retailers. Compliance and enforcement strategies would be consistent with the current overall approach to other prohibitions set out in the TA or its regulations.

Service standards

Responses to enquiries regarding the proposed Order will be provided in a timely manner.

Contact

Mr. Mathew Cook
Manager
Scientific Regulations Division
Tobacco Products Regulatory Office
Tobacco Control Directorate
Health Canada
Address Locator: 0301A
150 Tunney’s Pasture Driveway
Ottawa, Ontario
K1A 0K9
Fax: 613-948-8495
Email: hc.pregs.sc@canada.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to subsection 7.1(1) (see footnote a) of the Tobacco Act (see footnote b), proposes to make the annexed Order Amending the Schedule to the Tobacco Act (Menthol).

Interested persons may make representations concerning the proposed Order within 75 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Mathew Cook, Manager, Scientific Regulations Division, Tobacco Products Regulatory Office, Tobacco Control Directorate, Healthy Environments and Consumer Safety Branch, Health Canada, 150 Tunney’s Pasture Driveway, Ottawa, Ontario K1A 0K9 (email: hc.pregs.sc@canada.ca).

Ottawa, October 27, 2016

Jurica Čapkun
Assistant Clerk of the Privy Council

Order Amending the Schedule to the Tobacco Act (Menthol)

Amendment

1 The portion of item 1 of the schedule to the Tobacco Act (see footnote 1) in column 1 is replaced by the following:

Item

Column 1

Additive

1

Additives that have flavouring properties or that enhance flavour, including

  • — additives identified as flavouring agents by the Joint FAO/WHO Expert Committee on Food Additives in the Committee’s evaluations, as published from time to time in the WHO Technical Report Series
  • — additives identified as generally recognized as safe (GRAS) flavouring substances by the Flavor and Extract Manufacturers Association (FEMA) Expert Panel in its lists of GRAS substances referred to as "GRAS 3" to "GRAS 24" and subsequent lists of GRAS substances, as published from time to time, if any

The following additives are excluded:

  • — benzoic acid (CAS 65-85-0) and its salts
  • — butylated hydroxytoluene (CAS 128-37-0)
  • — carboxymethyl cellulose (CAS 9000-11-7)
  • — citric acid (CAS 77-92-9) and its salts
  • — ethanol (CAS 64-17-5)
  • — polyoxyethylene sorbitan monolaurate (CAS 9005-64-5)
  • — fumaric acid (CAS 110-17-8)
  • — glycerol (CAS 56-81-5)
  • — guar gum (CAS 9000-30-0)
  • — n-propyl acetate (CAS 109-60-4)
  • — paraffin wax (CAS 8002-74-2)
  • — propylene glycol (CAS 57-55-6)
  • — glycerol esters of wood rosin (CAS 8050-31-5)
  • — sodium acetate anhydrous (CAS 127-09-3)
  • — sodium alginate (CAS 9005-38-3)
  • — sorbic acid (CAS 110-44-1) and its salts
  • — triacetin (CAS 102-76-1)
  • — tributyl acetylcitrate (CAS 77-90-7)

Coming into Force

2 This Order comes into force on the 180th day after the day on which it is published in the Canada Gazette, Part II.

[45-1-o]