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For tobacco companies, vaping crisis threatens a market that could save them - Financial Post

By Victor Ferreira

The Canadian tobacco industry is warning against “knee-jerk” reactions that would lead to additional regulation in the wake a growing series of respiratory illnesses in the U.S. and Canada that appear to be linked to vaping products.

Lawmakers, health groups and retailers have been swift to respond to a rash of suspected vaping-related illnesses in the U.S., where the Centers for Disease Control have reported 530 patients dealing with lung illnesses and seven deaths which have been linked to e-cigarette use. Michigan and New York have already banned flavoured e-cigarette products, which critics have targeted as being at the centre of underage use, while U.S. President Donald Trump has floated the idea of a federal ban. Walmart has also pulled all e-cigarette products from its shelves.

In Canada, meanwhile, at least three potential vaping related illnesses have been reported, including one in which a London, Ont., teenager was briefly placed on life support. Eight health groups have called for a flavoured product ban and a ban on advertisements to deal with what they’re labelling a “public health crisis.”

The Canadian vaping industry — in which sales are projected to hit $895 million in 2019 — is dominated by JUUL Labs Inc, but the national tobacco titans have also had a presence since it was legalized in 2018 and see it as a potential way to offset their shrinking cigarette businesses.

They say a complete ban on flavoured products risks sending smokers back to traditional cigarette use, which the companies and the government are working to reduce.

“Some health groups, which are making a lot of noise, are advocating for extreme measures we do not agree with,” said Eric Gagnon, the head of corporate and regulatory affairs at Imperial Tobacco Canada. “What you’re going to end up doing is if you ban the entire category of flavours, those consumers will shift to an illegal market, because there will be one, or they will go back to cigarettes.”

Health groups and lawmakers have both targeted flavour bans due to their popularity among underage vapers, who make up a significant percentage of those being stricken by lung illness. In the U.S. 16 per cent of the 530 reported cases of vaping-linked lung illness were contracted by people under 18 years old.

While there are regulations set out in the federal Tobacco and Vaping Products Act banning displays or promotions that could be appealing to youth, Gagnon said they’re not properly enforced.

He said he believes authorities should increase the enforcement of existing laws instead of introducing new ones, though he does support a complete ban on candy and confectionary flavoured vape products.

Through its Vype brand, Imperial did not have any of the candy or confectionary flavours that Gagnon highlighted for sale on its website. Most of Vype’s flavours are fruit-based, including “berry blast,” “mango wonder,” and “strawberry smash,” which Gagnon said help adults wean away from cigarettes.

Rothmans, Benson and & Hedges director of external affairs Jeff Gaulin said his company has only dipped its toes into the vaping space with its IQOS device — which vapourizes tobacco instead of using liquid nicotine — but sees a bright future there, one that isn’t dependent on flavours that are reminiscent of desserts.

“Vaping is not candy and you shouldn’t be going into a store and selecting a flavour like you’re at Baskin Robbins where it’s mocha madness and bubblegum and cotton candy,” Gaulin said. “That is clearly not appropriate.”

Still, Gaulin would not support a complete flavour ban. Rather, Gaulin suggested regulations tackling “open-system” vaping, in which consumers fill their e-cigarettes with flavoured liquids themselves instead of inserting cartridges into a pen (“closed system”).

According to the CDC, most of the cases in the U.S. involved patients who had vaped THC. Gaulin suspects that users may have been able to mix THC into their pens using the open system, although THC cartridges can also be acquired on the black market.

“Maybe we need to close those systems so they aren’t tampered with,” said Gaulin, who also recommended price increases and stronger enforcement.

Cynthia Callard, executive director of Physicians for a Smoke-Free Canada, has heard both suggestions before. A decade ago, the tobacco industry already used price increases to address the first hints of declines in cigarette sales and it has remained their strategy since, she said. The suggestion to increase enforcement is also a familiar one to Callard, who said tobacco companies had been pushing the enforcement angle on cigarettes long before vaping entered the market.

The individual proposals — banning candy flavours and the open system — are recommendations the tobacco industry is keen to make because neither would significantly impact them, she said.

A more effective solution, Callard said would be placing vaping products under the same regulations as tobacco products. Callard wants a flavour ban with few exceptions. She also wants an advertising black-out and regulations that would control nicotine levels in vaping products.

“They’ve argued the same thing over the past 14 years with respect to tobacco and youth smoking and promoted that what we really need is effective ways of stopping kids from buying cigarettes,” Callard said. “Stopping kids from buying cigarettes doesn’t stop kids from getting cigarettes.” 

About RBH

Rothmans, Benson and Hedges (RBH), a subsidiary of Philip Morris International Inc., is one of Canada’s leading tobacco companies. We are also leading the Unsmoke Canada conversation and helping Canadians go smoke-free.

We employ more than 780 people in seven offices and one manufacturing plant across Canada.

At RBH, we think big, start small, and move fast by celebrating diversity of opinions to ensure the best ideas win.