Canada Gazette, Part I, Volume 156, Number 25: Vaping Products Reporting Regulations

June 18, 2022

Statutory authority
Tobacco and Vaping Products Act

Sponsoring department
Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

In 2018, Parliament amended the Tobacco Act, the Canada Consumer Product Safety Act (CCPSA) and the Food and Drugs Act (FDA) to address the harms and potential benefits of vaping products. The amendments to the Tobacco Act included new provisions to regulate the manufacture, sale, labelling and promotion of vaping products, as well as a name change to the Tobacco and Vaping Products Act (TVPA).

The availability of information in the public domain about vaping products is limited. The vaping market is evolving rapidly with the constant introduction of new vaping product technologies and novel product characteristics. Health Canada needs to timely access a variety of data to better understand the impact of vaping product use on the health and safety of Canadians. More specifically, access to relevant information (especially information that is not publicly available) about the vaping product market and their contents is needed to inform the development of regulations in support of the purpose of the TVPA, which includes preventing vaping product use from leading to the use of tobacco products by young persons and non-users of tobacco products. Such data is also needed to help advance policies and programs that further the objectives of Canada’s Tobacco Strategy (CTS), including helping people who smoke to quit tobacco and protecting youth and non-users from nicotine addiction.

Background

Canada’s Tobacco Strategy

Tobacco use is the leading preventable cause of disease 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 approximately 48 000 premature deaths every year in Canada. Tobacco products contain nicotine, a highly addictive substance that is responsible for tobacco dependence and consequent repeated long-term use resulting in chronic exposure to harmful chemicals. Health and economic costs associated with tobacco use in Canada were estimated at $12.3 billion for the year 2017.

CTS features broad, population-based approaches to achieve the ambitious target of less than 5% tobacco use prevalence by 2035. The Strategy also recognizes that targeted approaches are needed to reach specific populations with high levels of tobacco use. The main themes of the CTS include helping Canadians quit smoking and protecting youth and non-tobacco users from nicotine addiction.

Health Canada has collected information on tobacco products since 1989 pursuant to the former Tobacco Products Control Regulations and since 2000, under the Tobacco Reporting Regulations (TRR). The TRR establishes requirements for reporting of information on the sales, manufacturing processes, ingredients, constituents, emissions, research and development activities as well as promotional activities by tobacco manufacturersfootnote 1.

Information collected pursuant to the TRR, has been used to inform policy decisions and has helped implement effective tobacco control strategies to protect the health of Canadians. For example, ingredients data informed tobacco product regulation, especially with regard to additives including flavours that appeal to youth. Health Canada also relies on tobacco product sales data to evaluate the impact of tobacco control measures and to identify emerging tobacco use trends.

The TRR support the Government of Canada’s approach to tobacco control and the goals of CTS by providing Health Canada with timely and relevant information about tobacco products.

Vaping products are not subject to the TRR.

Vaping — A new legislative framework

In 2015, the House of Commons’ Standing Committee on Health tabled its report Vaping: Toward a Regulatory Framework for E-Cigarettes. Parliament responded to the report with a new legislative framework, former Bill S-5, An Act to amend the Tobacco Act and the Non-smokers’ Health Act and to make consequential amendments to other Acts, which received royal assent on May 23, 2018. As a result, vaping products are subject to the TVPA and either the FDA or the CCPSA, depending on whether the product is marketed for therapeutic use. The TVPA applies to vaping products, including those regulated under the CCPSA and FDA, except where they are expressly excluded from the TVPA (e.g. Regulations Excluding Certain Vaping Products Regulated Under the Food and Drugs Act from the Application of the Tobacco and Vaping Products Act). Vaping products containing cannabis are also excluded from the application of the TVPA as they are regulated under the Cannabis Act.

Regarding vaping products, one of the overall objectives of the TVPA is to prevent vaping product use from leading to the use of tobacco products by young persons and non-users of tobacco products. Specifically, it aims to:

  • protect young persons and non-users of tobacco products from inducements to use vaping products;
  • protect the health of young persons and non-users of tobacco products from exposure to and dependence on nicotine that could result from the use of vaping products;
  • protect the health of young persons by restricting access to vaping products;
  • prevent the public from being deceived or misled with respect to the health hazards of using vaping products; and
  • enhance public awareness of those hazards.

Vaping products include vaping devices, vaping parts and vaping substances. Most vaping devices consist of parts such as a battery, a heating element, a tank or reservoir, and a mouthpiece. They work by heating a vaping substance or mixture of substances to form a vapour, which then condenses to an aerosol that is inhaled by the user. Vaping substances are generally composed of propylene glycol and/or glycerol (sometimes referred to as vegetable glycerin), flavouring ingredients and nicotine.

In keeping with the objectives of the TVPA, and in light of the rapid rise in youth vaping from 2017 to 2019footnote 2, Health Canada developed a comprehensive suite of regulatory initiatives to address youth vaping, including

Vaping product information

The world has seen a rapid rise in the popularity of vaping products since they became commercially available in 2006. Vaping product technology continues to evolve and there have been many changes to vaping device designs since their introduction. Vaping product designs include refillable and non-refillable cartridges and pods, modular and customizable configurations, and devices with variable power settings. A large number of vaping substances are available in Canada and new formulations are continually being introduced with new flavours and different forms of nicotine such as nicotine salts.

Health Canada has made significant investments in surveillance activities, market and public opinion research to better understand vaping trends. This includes the purchase of sales data from third parties specializing in market research data. While informative, the sales data is limited to a sample of vaping product sales at the retail level (not wholesale data from manufacturers), which can be used to project market size. In addition, the purchased sales data does not provide information on the characteristics of vaping products sold (such as flavour and nicotine concentration). To determine the contents of vaping products, Health Canada has undertaken laboratory analysis of selected vaping products to characterize their chemical contents and analyze their emissions. Vaping product manufacturers do not publicly release ingredients data and it cannot be purchased from external sources. The dynamic and changing nature of the vaping market makes it difficult to get an accurate picture of market changes.

Objective

The proposed Vaping Products Reporting Regulations (proposed Regulations) seek to provide Health Canada with vaping product-related information that would help to better understand the impact of these products and further the objectives of the TVPA. One of these objectives is to prevent vaping product use from leading to the use of tobacco products by young persons and non-users of tobacco products.

The proposed Regulations would provide Health Canada with access to additional information, some of which can only be obtained from vaping product manufacturers, which would supplement its ongoing research and surveillance activities. In particular, the additional information would be used together with other information that Health Canada collects to:

  • better understand the vaping product market, including product types and designs popular with Canadians, especially youth
  • monitor vaping product sales trends over time
  • identify the ingredients in vaping substances that are heated to form the vapour inhaled by users
  • support internal research efforts regarding vaping products and share information where possible with external stakeholders
  • interpret the impact of tobacco control measures and to identify emerging vaping use trends.

The proposed Regulations would also help further the objectives of the CTS, which include helping people who smoke to quit tobacco and protecting youth and non-tobacco users from nicotine addiction.

Description

Subsection 7.3(1) of the TVPA requires manufacturers to submit information that is required by the regulations to the Minister, in the form, manner and time specified by the regulations. The required information pertains to vaping products, their emissions and any research and development related to vaping products and their emissions, regardless of whether the vaping products are for sale.

The proposed Regulations would require manufacturers of vaping products to provide Health Canada with information on their vaping product sales and ingredients. Retailers would not be required to report information unless they “manufacture” vaping products, as per the definition set out in the TVPA.

The proposed Regulations would require manufacturers to submit the following:

Report on Sales — This report would contain information on sales of vaping products by brand sold in Canada and for export. The Report on Sales would be required to be submitted on a quarterly basis.

The Report on Sales would be required for the following vaping product types:

  • Vaping substances
  • Vaping devices that contain a vaping substance
  • Vaping parts that contain a vaping substance
  • Vaping devices that do not contain a vaping substance, and
  • Vaping parts that do not contain a vaping substance.

The required sales reporting on vaping parts that do not contain a vaping substance would be limited to the following vaping parts:

  • a part that contains, or that is intended to contain, a source of energy
  • a part that is a reservoir, including a tank, cartridge or pod, for a vaping substance that also contains an aerosol-generating component, and
  • a part that contains a microprocessor.

Manufacturers would also be required to submit sales information for each brand of kit sold in Canada and for export. A kit would be defined as a package that contains two or more of the types of vaping product referred to above or two or more brands of vaping product of the same type with different characteristics such as flavour or nicotine concentration.

This report would include information on the number of vaping product packages sold, or products sold (for those sold without a package), as well as the number of units in a vaping product package, the volume of vaping substance per unit of vaping product, the total volume of vaping substance sold and the total value of the sales in Canada (in Canadian dollars). Sales would be broken down by province/territory and for the whole of Canada. Sales of exported vaping products would also be required by country of export.

Report on Ingredients — This report would contain information on the ingredients of vaping substances by brand sold in Canada.

An ingredients report would be required one month after the first complete quarter of the year after the coming into force of the proposed Regulations for each brand of vaping product or kit sold in Canada that is a vaping substance or that contains a vaping substance. For new brands, manufacturers would be required to submit an ingredient report on or before the day the vaping product is first sold in Canada.

A Report on Ingredients would be required for the following vaping product types:

  • Vaping substances
  • Vaping devices that contain a vaping substance, and
  • Vaping parts that contain a vaping substance.

This report would also be required for each of those types of vaping products contained in a kit.

Ingredient information would include the concentration of each ingredient and substance used to make a vaping product substance. If any ingredient or vaping substance is made of more than one substance, information on each of those substances would have to be submitted. Manufacturers that do not know the contents of their ingredients or substances would have to contact their suppliers to ensure the information is submitted to Health Canada.

For both sales and ingredients reports, manufacturers would also be required to include:

  • For each brand of vaping product reported, a unique product identifier, its brand name or brand family name, its flavour name, nicotine concentration and any other additional brand elements or descriptive term that distinguishes the vaping product from other vaping products in the report.
  • The name of the manufacturer, the name of the individual who prepared the report and their contact information. This would include an attestation that the information in the report is true and complete to the best of their knowledge and belief and is provided in good faith.

Electronic Submission — The sales and ingredient reports would be submitted to Health Canada in an electronic format. Manufacturers would be required to use forms prescribed by the Minister that are incorporated by reference in the proposed Regulations. Manufacturers would be required to use the forms without modifying their format, except as indicated in the form. The required use of electronic forms is expected to assist manufacturers in completing their reports and ensure the consistent reporting of information.

The proposed Regulations would not apply to vaping products and kits, including vaping products in kits that would be subject to an authorization, including a licence, issued under the FDA.

Regulatory development

Consultation

Health Canada published a consultation document, Proposals for the Regulation of Vaping Products, on August 25, 2017, setting out proposals to regulate vaping products in Canada. It provided a 60-day comment period that closed on October 27, 2017. The document proposed ten separate measures to regulate vaping products under the TVPA. Of the ten measures proposed, Proposal #5 set out information that could be required for vaping products.

PROPOSAL 5: Health Canada proposes manufacturers be required to report the information set out below at the frequency specified:
INFORMATION FREQUENCY
The name of the business and contact person Annually
Details about each vaping device or liquid, including the product name, model number and nicotine concentration Upon introduction of each product, and annually thereafter
Details about the design of each vaping device, including engineering drawings and information about the materials and components used Upon introduction of each product, and annually thereafter
Contents of vaping liquids, including quantities of each ingredient Upon introduction of each product, and annually thereafter
Information on research and development activities Annually
Information on promotional activities Annually
Sales data for each product Quarterly

A total of 105 comments were received across nine stakeholder groups: academics; the general public; other levels of government (municipal, provincial and territorial); the health products industry; the vaping industry; the tobacco industry; non-governmental organizations (NGOs); public health groups; and retailers (including vape shops). A Consultation summary: proposals for the regulation of vaping products is available online.

Approximately half of respondents who commented on Proposal #5 supported requiring vaping product manufacturers to provide information on their products. Supporters included municipal/provincial/territorial governments, public health groups and NGOs, as well as some retailers and other members of the vaping industry. A number suggested additional items to be reported (e.g. emissions testing), and some suggested reporting be more frequent. Others suggested reporting requirements for vaping products should be similar in scope to those required for tobacco products pursuant to the TRR. A majority of vaping industry stakeholders expressed concern that the proposal was too restrictive. They argued vaping products are an important harm reduction tool and, in order to achieve their potential health benefits, should not be overregulated. They argued reporting regulations would be too burdensome for smaller vaping industry players, forcing them underground.

In response to some of the concerns expressed, vaping product reporting regulations are being developed in a stepwise approach. The proposed Regulations would only require sales and ingredient reports. Additional vaping reporting requirements, including elements identified in the 2017 consultation document such as information on research and development and on promotional activities, are currently under consideration for future amendments to the proposed Regulations. This stepwise approach is designed to avoid increasing the administrative burden on vaping manufacturers all at once and to spread the impact on Health Canada’s compliance monitoring activities over time. The ability of manufacturers to absorb the burden of additional reporting requirements will be considered during the development of any future amendments.

The proposed Regulations were included in Health Canada’s Forward Regulatory Plan in the fall of 2017. Reporting requirements were also considered during parliamentary hearings on former Bill S-5, An Act to amend the Tobacco Act and the Non-smokers’ Health Act and to make consequential amendments to other Acts in 2018, including consideration of the new manufacturer reporting obligations for vaping products.

Modern treaty obligations and Indigenous engagement and consultation

An initial Assessment of Modern Treaty Implications concluded this proposal does not impact modern treaties with Indigenous peoples of Canada.

Instrument choice

Option 1 — Baseline scenario (No reporting regulations, maintain current research and surveillance activities)

This option would not introduce any reporting regulations for vaping products sold in Canada or for export. Health Canada would rely on data obtained from current research and surveillance activities. This includes the purchase of vaping product sales data from third parties and the sampling of products to conduct laboratory characterization of their contents. Complete market sales data and detailed ingredient information is not released by vaping product manufacturers, nor is it available from external sources.

This option would not provide access to timely and relevant information to inform decisions on policies, programs and regulations for vaping products. The dynamic and changing nature of the vaping market makes it difficult to get an accurate assessment of market changes with current data sets. Therefore, the status quo is not considered an appropriate option.

Option 2 — Voluntary reporting for vaping products

This option would ask vaping product manufacturers to voluntarily provide information about their vaping products to Health Canada. Due to the nature of the information that would be requested and because of the costs involved in preparing and submitting reports, manufacturers are unlikely to voluntarily comply.

This option is not considered suitable. Health Canada would not be able to collect complete sales and ingredients information that would inform the development of policies, programs and regulations for vaping products.

Option 3 (Recommended) — Reporting regulations to require manufacturers to report sales and ingredients information

This option would implement the proposed Regulations to require vaping product manufacturers submit detailed information to Health Canada on their sales and vaping product ingredients.

This option is recommended as it would provide a more complete picture of vaping product sales and products available in Canada and the full disclosure of vaping product ingredients. This detailed information is not available from public sources or through the purchase of data sets from third parties.

This option is recommended as it would provide timely access to relevant information to support the purpose of the TVPA through regulations and to inform the development of policies and programs with respect to vaping products.

Regulatory analysis

Benefits and costs

Summary of cost-benefit analysis

It is anticipated that the proposed Regulations would impact Canadians, vaping product manufacturers in all provinces and territories and Health Canada.

The information received pursuant to the proposed Regulations would be used to better understand the impact of vaping products and further the objectives of the TVPA. One of these objectives is to prevent vaping product use from leading to the use of tobacco products by young persons and non-users of tobacco products.

The information would also help further the CTS objectives, which include helping people who smoke to quit tobacco and protecting youth and non-tobacco users from nicotine addiction.

Implementation of the proposed Regulations would require an investment of public sector resources. One-time and ongoing costs to Health Canada for implementation, compliance monitoring and enforcement activities are estimated at $2.0M (PV) present value over the 10-year period or approximately $0.29M in annualized value.

The reporting requirements in the proposed Regulations would result in costs to vaping product manufacturers for the preparation of sales and ingredient reports, including estimated costs for electronic sales tracking systems. Total administrative and compliance costs to the vaping product manufacturers are estimated at $2.9M present value over the 10-year period or about $0.4M in annualized value.

Total quantified costs to vaping manufacturers and government are estimated at $4.9M (PV) for the 10-year period or $0.7M annualized.

Quantitative and qualitative costs are explained in further detail in the following sections.

Analytical approach

The Cabinet Directive on Regulation requires departments to analyze the costs and benefits of federal regulations. Benefits and costs are estimated by comparing the incremental change from the current regulatory framework (i.e. the baseline scenario) to what is anticipated to occur under the new regulatory approach (i.e. the regulatory scenario).

Total costs of the proposed Regulations are expected to be less than $1 million nationally in average annual costs. For this proposal, a qualitative assessment of the costs and benefits has been undertaken. Costs and benefits have been quantified and/or monetized to the extent that data is available.

The proposed Regulations are expected to come into effect in 2023. This cost-benefit analysis (CBA) covers the 10-year period from 2023 to 2032. A 7% discount rate is used to estimate the present value of the incremental costs. All values reported for the 10-year period are expressed in 2021 constant dollars. Incremental benefits have not been quantified, but are expressed qualitatively.

Baseline and regulatory scenario

Under the baseline scenario, reporting regulations for vaping products in Canada would not be introduced. Information on vaping product sales available to Health Canada would continue to be incomplete, and detailed information on vaping product ingredients would continue to be unavailable. Vaping product reporting requirements are in place in one province (British Columbia), as described in the Regulatory Alignment section.

The baseline scenario will be revisited if the proposed Order Amending Schedules 2 and 3 to the Tobacco and Vaping Products Act (Flavours) that was pre-published in the Canada Gazette Part I on June 19, 2021, comes into force. The proposal to restrict vaping product flavours, if implemented, would impact the number of flavoured vaping product brands available in Canada. This means that the analysis presented below may overstate the baseline number of brands sold in Canada used to estimate the costs of the proposed Regulations.

Under the regulatory scenario, the proposed Regulations would require vaping product manufacturers to submit sales and ingredients reports to Health Canada for vaping products sold in Canada. Health Canada would have access to important information that would support the purpose of the TVPA and would further the objectives of CTS.

Quantitative and qualitative impacts are described in the following sections.

Quantitative impacts

It is assumed that there are up to 235 vaping product manufacturers impacted by the proposal, 225 of which are small businesses, as per the Treasury Board of Canada Secretariat definition. It is further estimated that there are up to 10 brands per manufacturer, for a total estimate of approximately 2,350 brands on the market, including 90 vaping device brands. It is assumed that there is zero growth in the number of brands and manufacturers in the vaping market. The total number of brands in the Canadian market is expected to remain unchanged, with new brands being introduced as other brands are discontinued.

Precise information on the vaping market is currently unavailable to Health Canada. The proposed Regulations are an attempt to remedy this. Estimates of costs to vaping product manufacturers are therefore based on analysis of information from purchased market data and commissioned research reports. Estimates of the number of brands and manufacturers are based on analysis of a report by Euromonitor Internationalfootnote 3. Estimates of time to complete reports are based on testing of report templates by Health Canada subject matter experts and market research incorporating industry inputfootnote 4.

Costs of vaping product reporting by manufacturers are calculated based on the estimated total number of manufacturers and brands sold in Canada. Existing reporting in one province is not expected to reduce this cost because specific reporting templates will be mandated for sales and ingredient reports and submitted electronically to Health Canada. Descriptions of each industry cost item are described as follows.

Report on Sales: Vaping product manufacturers would be required to submit quarterly sales reports for vaping products that are vaping substances or that contain a vaping substance and for vaping devices and specific parts that do not contain vaping substances. Detailed information would be required to be broken down by province and territory and for export by country of destination. It is assumed these reports would take 40 minutes to prepare, quarterly, per brand, for 2,350 brands. The reports are expected to be prepared by an accountant at a labour cost of $48.19 per hourfootnote 5.

Report on Ingredients: Vaping product manufacturers would be required to submit ingredients reports for existing and new vaping products that are vaping substances or that contain a vaping substance. It is assumed that ingredient reports would take two (2) hours to prepare, per brand, for 2,256 brands (excludes devices and parts that do not contain vaping substances), at the above-referenced labour cost of $48.19 per hour. While zero growth in the vaping market has been assumed, new brands may be introduced. Therefore, the estimate is calculated based on reports for 10 brands per manufacturer in the first year, and 1 brand per manufacturer as an ongoing cost in subsequent years, for 96% of the 235 manufacturers (this accounts for the exclusion of the 4% of brands that are devices and parts that do not contain vaping substances).

Electronic sales system: A survey of the vaping industry indicated a one-time purchase of hardware and ongoing maintenance of software for an electronic sales system may be necessary for vaping product manufacturers that do not already have a system in place to compile sales data electronically. It is assumed that up to 20% of the 225 small manufacturers (45) would need to invest in such a system. The 45 firms will incur a one-time cost for hardware of $2,172, and annual costs for maintenance of the software of $825. These costs are based on market research (Industrial Economics, Incorporated, 2018), and are adjusted to 2021 dollars using the Canadian Consumer Price Index.

Public sector resources to administer the proposed Regulations, including resources to review submitted information and compliance and enforcement activities, are described below.

Government costs: The implementation of the proposed Regulations would require a minor investment of public sector resources, in the form of one-time and ongoing costs to Health Canada. These costs would include labour and non-labour costs to administer the proposed Regulations.

It is estimated that Health Canada would incur costs of $379K in the first year, comprising of costs related to compliance promotion to inform manufacturers of the new reporting requirements, the development of compliance and enforcement procedures, the monitoring of reports for compliance, trend analysis and the maintenance of internal filing systems to track the reports. In years 2 to 10, the costs for monitoring of reports for compliance, trend analysis and maintenance of internal filing systems, estimated at $249K, are expected to continue as recurring costs.

These activities would be performed by the same Health Canada teams that verify and analyze tobacco reports pursuant to the TRR. Additional costs to administer vaping reports will be absorbed through existing budget allocations and efficiencies that have been achieved through experience with tobacco reports.

Incremental costs by each type of activity are summarized in Table 1 below.

Cost-benefit statement
  • Number of businesses impacted: 235
  • Number of years: 10, 2023 to 2032
  • Base year for costing: 2021
  • Present value base year: 2023
  • Discount rate: 7%
Table 1: Monetized costs
Impacted stakeholder Description of cost Base year 2023 Year 5 2027 Final year 2032 Total (PV) Annualized value
Government Government costs: implementation, compliance monitoring activities and analysis of the reports $378,963 $249,492 $249,492 $2,004,462 $285,390
Industry Sales reports submitted quarterly for all vaping products $302,010 $302,010 $302,010 $2,176,090 $309,826
Ingredient report submitted one-time (vaping products containing vaping substances) $217,436 $21,744 $21,744 $359,101 $51,128
Electronic sales system (software) $37,137 $37,137 $37,137 $279,096 $39,737
Electronic sales system (hardware) $97,730 $0 $0 $97,730 $13,915
Industry costs, subtotal $654,314 $360,891 $360,891 $2,912,017 $414,606
All stakeholders Total costs $1,033,277 $610,383 $610,383 $4,916,479 $699,996
Qualitative impacts
Positive impacts

The information collected under the proposed Regulations would complement other sources of data used by Health Canada to better understand the impact of vaping product use on the health and safety of Canadians. For example, the information would supplement ongoing research and surveillance activities to identify health hazards that could result from vaping product use.

It is likely that Canadians would indirectly benefit from the information received under the proposed Regulations. For example, the information is expected to provide insights into vaping market sales trends and vaping product ingredients. Collecting tobacco product information pursuant to the TRR, for example, resulted in improved decisions on tobacco control policies, programs and regulatory activities.

The collected information would inform the development of regulations that support the purpose of the TVPA, including preventing vaping product use from leading to the use of tobacco products by young persons and non-users of tobacco products. The information would also inform the development of policies and programs to help further the CTS’ objectives, in particular those aimed at helping Canadians quit smoking and protecting youth and non-tobacco users from nicotine addiction. The CTS features broad, population-based approaches to achieve the target of less than 5% tobacco use prevalence by 2035 to reduce the death and disease burden of tobacco use.

Negative impacts

New firms entering the market would incur the aforementioned first-year costs for electronic sales systems. It is acknowledged that some new entrants may incur this cost despite the assumed zero growth in the vaping market, i.e. some new manufacturers enter while some manufacturers exit for a net zero growth. Due to lack of available data and uncertainty of future market trends, this cost has not been estimated.

Small business lens

According to the limited information available about the vaping product market, most of the vaping product manufacturers impacted by the proposed Regulations are small businesses. Of the approximately 235 businesses impacted by these changes, it is estimated that 225 are considered to be small businesses according to the Treasury Board of Canada Secretariat definition.

The small business lens applies, as there are impacts on small businesses associated with the proposed Regulations. These are limited to vaping product manufacturers. Retailers would not be directly impacted by the proposed Regulations, unless they also manufacture vaping products. The small business costs are not large in aggregate. It is anticipated that costs would be larger for the estimated 20% of small businesses that do not have electronic sales systems in place already.

As described in the regulatory development section of this document, vaping product reporting regulations are being developed in a step-wise approach as an attempt to minimize the administrative burden placed on vaping manufacturers at any one time. The impact of additional vaping reporting requirements will be considered if future amendments are brought forward.

Additional flexibility considered

It is estimated the proposal would affect 225 small businesses, the majority of the estimated 235 total manufacturers in Canada. Modified compliance or administrative requirements for small businesses would severely limit the quality and accuracy of information collected pursuant to the proposed Regulations. For instance, less frequent sales reporting was considered for small businesses, such as annual reporting instead of quarterly. More frequent reporting provides insights into market changes throughout the year and changes that result from measures implemented by various Canadian jurisdictions to address vaping product use. The additional flexibility options considered would introduce significant gaps in the development of a whole of market data set. Therefore, a flexible option was not developed.

Incremental costs to all small businesses in the vaping industry

Small businesses will be impacted by the proposed Regulations through incremental administrative and compliance costs. The total costs to all impacted small businesses are estimated at $2.80 million PV over 10 years (or about $0.40 million in annualized value).

The estimated incremental cost of the proposal per impacted small business in the vaping industry is $12K PV over 10 years (or about $1.8K in annualized value).

Small business lens summary
  • Number of small businesses impacted: 225
  • Number of years: 10 (2023 to 2032)
  • Base year for costing: 2021
  • Present value base year: 2023
  • Discount rate: 7%
Table 2: Compliance costs
Activity Annualized value Present value
Electronic sales system (software) $39,737 $279,096
Electronic sales system (hardware) $13,915 $97,730
Total compliance cost $53,652 $376,826
Table 3: Administrative costs
Activity Annualized value Present value
Sales reports $296,642 $2,083,490
Ingredient reports $48,952 $343,820
Total administrative cost $345,594 $2,427,310
Table 4: Total compliance and administrative costs
Totals Annualized value Present value
Total cost (all impacted small businesses) $399,246 $2,804,137
Cost per impacted small business $1,774 $12,463

One-for-one rule

The one-for-one rule applies since there is an incremental increase in administrative burden on business, and the addition of a new regulatory title (Vaping Products Reporting Regulations).

Administrative costs would arise from the proposed Regulations requiring vaping product manufacturers to prepare sales and ingredient reports, as listed in Table 1.

Calculations based on the Standard Cost Model methodology estimate regulatory changes will result in an annualized increase in total administrative costs to all businesses of approximately $146,765 or $624.53 per business (refer to Table 5). This estimate is expressed in constant 2012 Canadian dollars. Annualized values were calculated using a 7% discount rate over 10 years.

It is assumed ingredient reports would take two (2) hours per brand, 10 brands per company (20 hours total) at $41.42 per hour (2012 Canadian dollars) for 96% of the 235 companies (to account for exclusion of the 4% of the brands that are devices and parts that do not contain vaping substances).

While zero growth in the vaping market has been assumed, new brands may be introduced, to replace other brands that have been discontinued. Therefore, the cost is calculated based on reports for 10 brands per manufacturer in the first year, and 1 brand per business as an ongoing cost per year, for 96% of the 235 manufacturers (to account for exclusion of the 4% of brands that are devices and parts that do not contain vaping substances).

Ongoing costs for sales reporting is estimated based on 235 manufacturers, 40 minutes per brand, 10 brands per company (400 minutes total), on a quarterly basis, at a cost of labour of $41.42 (2012 Canadian dollars).

The overall impact of the proposed Regulations is a net increase in administrative costs.

Table 5: “One-for-One” Rule
Price year: 2012 CAD, Discounted to 2012.
Value in 2012 dollars
Annualized administrative costs $146,765
Annualized Administrative Costs per Business $624.53

Regulatory cooperation and alignment

Canada is a Party to the World Health Organization (WHO) Framework Convention on Tobacco Control (FCTC). While vaping products are not captured in the scope of the FCTC, the WHO issued a report in 2016 on vaping products (referred to as electronic nicotine delivery systems (ENDS) and electronic non-nicotine delivery systems (ENNDS) in this report). This report was in response to a request made by Parties to the FCTC. It contained a list of options that Parties that had not banned the importation, sale, and distribution of ENDS or ENNDS might consider in accordance with their national law to minimize health risks to users and non-users. One of the options proposed was to require manufacturers disclose product content to governments.

Provincial and territorial

To date, only one province, British Columbia, has put in place regulations requiring the vaping industry submit reports. One additional province, Quebec, and one territory, Nunavut, have legislation with regulatory authority to collect vaping product–related information. Below is a summary of the reporting requirements in these jurisdictions.

British Columbia

British Columbia introduced reporting requirements for vaping products through the E-Substances Regulation. Business owners (retailers and manufacturers) must submit a “Notice of Intent” if they plan to sell restricted e-substances. In addition, they must submit product, manufacturing and sales reports as required by the Minister. Product and manufacturing reports must be submitted at least six weeks before the restricted e-substance is first sold. Sales reports must be submitted annually. A Notice of Intent must also be submitted to the Ministry of Health prior to January 15 of each year that a retailer intends to continue sales.

The proposed Regulations are aligned with reporting requirements for vaping products in British Columbia. While the proposed Regulations require only manufacturers to provide information, British Columbia collects information from vaping retailers and manufacturers operating exclusively in the province.

Quebec

In 2015, the Tobacco Control Act was amended to include vaping products in the scope of the legislation, making them subject to the same provisions as tobacco products. The Act has authority to make regulations on standards relating to reports submitted to the Minister by tobacco and vaping manufacturers. Additionally, the Minister may, at any time require manufacturers and distributors to file a report if a new product, distribution method, or brand is introduced on the market or if required, in the opinion of the Minister, for reasons of public health. To date, Quebec has not implemented any regulations requiring such reports.

Nunavut

On May 28, 2021, the Tobacco and Smoking Act came into force in Nunavut replacing the former Tobacco Control and Smoke-Free Places Act. This legislation establishes regulatory authority requiring tobacco, vaping and shisha retailers to submit a report to the government. Failure to comply can result in fines for each day the contravention continues. To date, Nunavut has not implemented any regulations requiring such reports.

International
United States of America (USA)

Vaping products have been subject to the USA Federal Food, Drug and Cosmetic Act since 2016. The USA has put in place a rigorous pre-market regulatory regime. Vaping product manufacturers seeking to gain market access must file a Premarket Tobacco Product Application. Applications must include a full statement of the components, ingredients, additives, properties, principles of operation as well as any available data about health risks. Annual reports may also be required by the Food and Drug Administration as a condition for issuing a marketing-granted order.

European Union (EU)

As per the Tobacco Product Directive (PDF), EU manufacturers must submit an electronic notification to the Member State six months prior to a vaping product being sold in that Member State. The notification includes basic contact information, a list of ingredients, and emissions by product brand name and type, and information on the production process. Information on the components of the devices as well as data on the nicotine uptake are also required. Industry must submit sales information as well as marketing information, such as age preferences and mode of sale as well as market surveys, annually.

New Zealand

In 2020, New Zealand passed the Smokefree Environments and Regulated Products (Vaping) Amendment Act to regulate the safety of notifiable products, including vaping products and smokeless tobacco products. Pre-notification requirements include information on product safety and other applicable requirements. Contact information of the applicant (retailer), information on the product and its parts (including substances) and a declaration that the product meets all requirements, must be provided and renewed annually. In addition, any safety concerns or significant changes must be reported as soon as possible.

The proposed Regulations are aligned with information requirements in other countries that are either required to support a pre-market approval process or to meet post-market surveillance requirements.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.

Gender-based analysis plus

No gender-based analysis plus (GBA+) impacts have been identified for this proposal.

Rationale

The proposed reporting requirements for vaping products are similar, but not as comprehensive, to those already in place for tobacco products. Information collected by Health Canada under the TRR is used to inform various policy, program and regulatory decisions and to support the development of effective tobacco control strategies. It is expected the proposed Regulations would provide Health Canada with similar benefits, although with a more limited scope.

Vaping product sales and ingredients data would inform the development of policies, programs and regulations for vaping products. This would support the overall purpose of the TVPA, including preventing vaping product use from leading to the use of tobacco products by young persons and non-users of tobacco products. It would also further the CTS’ objectives, including helping people who smoke to quit tobacco and protecting youth and non-tobacco users from nicotine addiction.

The proposed Regulations would result in total costs to industry and government estimated at $4.92 million PV over 10 years (or about $0.70 million in annualized value). The monetized costs to the vaping product manufacturers are associated with the preparation of sales and ingredient reports (estimated at $2.91 million PV or $0.41 million in annualized value). The implementation of the proposal would result in one-time and ongoing costs to Health Canada from performing compliance, monitoring and enforcement activities, at an estimated cost of $2.0 million PV or $0.29M in annualized value. The costs to Health Canada would be absorbed through existing budget allocations and process efficiencies gained from experience with tobacco reports submitted pursuant to the TRR.

The proposed Regulations are aligned with reporting requirements for vaping products in British Columbia and information requirements in other countries collecting similar information.

Implementation, compliance and enforcement, and service standards

Implementation

The proposed Regulations would be made pursuant to the powers of the TVPA and would come into force upon its registration. After registration, vaping product manufacturers would be required to submit their first sales report and their initial ingredients report one month after the first complete quarter of the year. After the first report, sales reports would be required quarterly. Ingredients reports would be required each time a new brand is made available for sale in Canada.

Compliance promotion and outreach activities (including notices) informing vaping product manufacturers of the new requirements would increase awareness of the measures set out in the proposed Regulations and assist regulated parties in achieving compliance.

Compliance and enforcement

The Government of Canada will actively monitor manufacturers’ compliance with the proposed Regulations primarily through reviewing submitted reports for accuracy and completeness and finding instances where reports were due but not submitted. New manufacturers would be identified and contacted by Health Canada to inform them of their reporting obligations. Compliance promotion activities would be followed by compliance monitoring activities and a progressive enforcement approach.

Where federal inspectors have reasonable grounds to believe the proposed Regulations have been contravened, appropriate measures would be taken. These measures could include warning letters, compliance plans, or recommendations for prosecution. Compliance and enforcement strategies would be consistent with the current overall approach to other provisions set out in the TVPA. Every manufacturer who contravenes subsection 7.3(1) of the TVPA is guilty of an offence and liable on summary conviction to a fine not exceeding $50,000 or to imprisonment for a term not exceeding six months, or to both.

Service standards

The proposed Regulations do not relate to providing a service to the public or to industry. Therefore, there would be no associated service standards.

Transparency and international obligations

Canada is a Party to the FCTC. Article 5.3 of the Convention obliges Parties, in setting and implementing their public health policies with respect to tobacco control, to protect these policies from commercial and other vested interests of the tobacco industry in accordance with national law. Therefore, the Government of Canada must actively exclude tobacco industry influence with respect to tobacco control policy. Interested parties must declare any perceived or actual conflicts of interest with the tobacco industry when providing input to this consultation. If an individual is part of the tobacco industry, an affiliated organization or an individual acting on their behalf, they must clearly state so in their submission.

Perceived or actual conflicts of interest with the vaping and/or pharmaceutical industry are also of interest. Members of the vaping and/or pharmaceutical industry, an affiliated organization or an individual acting on their behalf are asked to clearly indicate this in their submission.

Contact

Mathew Cook
Manager
Scientific Regulations Division
Tobacco Products Regulatory Office
Tobacco Control Directorate
Controlled Substances and Cannabis Branch
Health Canada
Address Locator: 0301
150 Tunney’s Pasture Driveway
Ottawa, Ontario
K1A 0K9
Email: pregs@hc-sc.gc.ca

PROPOSED REGULATORY TEXT

Notice is given, under section 7.8footnote a of the Tobacco and Vaping Products Act footnote b, that the Governor in Council proposes to make the annexed Vaping Products Reporting Regulations.

Interested persons may make representations concerning the proposed Regulations within 45 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 the Tobacco Products Regulatory Office, Tobacco Control Directorate, Controlled Substances and Cannabis Branch, Health Canada, 150 Tunney’s Pasture Driveway, Ottawa, Ontario K1A 0K9 (email: pregs@hc-sc.gc.ca).

Ottawa, June 9, 2022

Wendy Nixon
Assistant Clerk of the Privy Council

Vaping Products Reporting Regulations

Interpretation

Definitions

1 The following definitions apply in these Regulations.

Act
means the Tobacco and Vaping Products Act. (Loi)
civic address
means
  • (a) for an address in Canada, the unit number, civic number, street name, municipality name, province name and postal code; and
  • (b) for an address outside Canada, the unit number, civic number, street name, municipality name, province or state name, postal or ZIP code and country name. (adresse municipale)
GTIN
means the Global Trade Item Number assigned by GS1 to a brand of vaping product or kit. (GTIN)
kit
means a package that contains
  • (a) two or more of the types of vaping product referred to in subsection 2(1); or
  • (b) two or more brands of vaping product of the same type, with different characteristics such as flavour or nicotine concentration. (trousse)
manufacturer
does not include an individual or entity that only packages, only labels or only distributes vaping products on behalf of a manufacturer. (fabricant)
unique product identifier,
in relation to a brand of vaping product or kit, means
  • (a) the GTIN; or
  • (b) the alphanumeric code referred to in subsection 3(3). (identifiant de produit unique)
vaping device
has the meaning assigned by paragraphs (a) and (b) of the definition vaping product in section 2 of the Act. (dispositif de vapotage)
vaping part
has the meaning assigned by paragraph (c) of the definition vaping product in section 2 of the Act. (pièce de vapotage)
vaping substance
has the meaning assigned by paragraph (d) of the definition vaping product in section 2 of the Act. (substance de vapotage)
year
means a calendar year. (année)

Application

Vaping products — retail sale

2 (1) These Regulations apply to each of the following types of vaping products that are intended for retail sale:

  • (a) a vaping part that does not contain a vaping substance and that is
    • (i) a part that contains, or that is intended to contain, a source of energy,
    • (ii) a part — including a tank, cartridge or pod — that is a reservoir for a vaping substance and that contains an aerosol-generating component, or
    • (iii) a part that contains a microprocessor;
  • (b) a vaping device that does not contain a vaping substance;
  • (c) a vaping part that contains a vaping substance;
  • (d) a vaping device that contains a vaping substance; and
  • (e) a vaping substance.

Kits — retail sale

(2) These Regulations also apply to kits intended for retail sale.

Non-application

(3) These Regulations do not apply to a vaping product or kit that is the subject of an authorization, including a licence, issued under the Food and Drugs Act authorizing its sale or to a kit that includes a vaping product that has been issued such an authorization.

Reports

General Requirements

Information

3 (1) These Regulations prescribe the information to be contained in reports that manufacturers of vaping products must submit to the Minister, as well as the form and manner in which the reports are to be submitted.

Content of reports

(2) In addition to the information required for each type of report set out in these Regulations, every report must contain the following information:

  • (a) the name of the manufacturer on whose behalf the report is submitted, as well as the telephone number, email address and civic address of its principal place of business in Canada;
  • (b) the name, telephone number and email address of the individual who prepared the report and, if that individual works for an entity other than the manufacturer on whose behalf the report is submitted, the name of the entity, as well as the telephone number, email address and civic address of its principal place of business;
  • (c) the date of the report; and
  • (d) in the case of a report on sales, the period covered by the report.

Unique product identifier

(3) For each brand of vaping product or kit that does not have a GTIN, the manufacturer must create an alphanumeric code of no more than 10 characters that will serve in reports as the unique product identifier for that brand.

Report on Sales

Brand information

4 (1) The report on sales must contain the following information for each brand of vaping product, other than a brand of kit, that a manufacturer sells during the period covered by the report:

  • (a) the unique product identifier;
  • (b) the type of vaping product;
  • (c) the brand name or the brand family name;
  • (d) in the case of vaping products contained in a package, the number of units of that brand of vaping product in the package;
  • (e) any additional brand element or any descriptive term that distinguishes the vaping product from other vaping products in the report; and
  • (f) in the case of a type of vaping product referred to in any of paragraphs 2(1)(c) to (e),
    • (i) the name of the vaping substance flavour,
    • (ii) the concentration of nicotine, if any, in milligrams per millilitre, and
    • (iii) the volume in millilitres of the vaping substance per unit of the vaping product.

Sales information

(2) The report must also contain the following information with respect to sales made by the manufacturer during the period covered by the report:

  • (a) in the case of vaping products contained in a package, other than a kit, the number of packages of each brand of vaping product sold in each province, throughout Canada and for export, or, if no packages of a brand have been sold during the year after the submission of the last report that included a sale for that brand, an indication to that effect;
  • (b) in the case of vaping products that are not contained in a package, the number of units of each brand of vaping product sold in each province, throughout Canada and for export, or, if no vaping products of a brand have been sold during the year after the submission of the last report that included a sale for that brand, an indication to that effect;
  • (c) in the case of vaping products sold in Canada, the Canadian dollar value, excluding any taxes, of the total sales of the vaping product in each province and throughout Canada;
  • (d) in the case of vaping products sold for export, the name of the country of destination and the Canadian dollar value of the total sales of the vaping product to that country; and
  • (e) in the case of a type of vaping product referred to in any of paragraphs 2(1)(c) to (e), the total volume in litres of the vaping substance that was sold in each province, throughout Canada and for export.

Brand information — kits

(3) The report must contain the following information with respect to kits that a manufacturer sells during the period covered by the report:

  • (a) for each brand of kit sold,
    • (i) the unique product identifier,
    • (ii) the brand name or the brand family name, and
    • (iii) any additional brand element or any descriptive term that distinguishes the kit from other kits in the report; and
  • (b) for each brand of vaping product in the kit,
    • (i) the unique product identifier,
    • (ii) the type of vaping product,
    • (iii) the number of units of that brand of vaping product in the kit, and
    • (iv) in the case of a kit that contains a type of vaping product referred to in any of paragraphs 2(1)(c) to (e),
      • (A) the name of the vaping substance flavour,
      • (B) the concentration of nicotine, if any, in milligrams per millilitre, and
      • (C) the volume in millilitres of the vaping substance per unit of the vaping product.

Sales information — kits

(4) The report must also contain the following information with respect to sales made by the manufacturer during the period covered by the report:

  • (a) the number of kits of each brand sold in each province, throughout Canada and for export, or, if no kits of a brand have been sold during the year after the submission of the last report that included a sale for that brand, an indication to that effect;
  • (b) in the case of kits sold in Canada, the Canadian dollar value, excluding any taxes, of the total sales of the kit in each province and throughout Canada;
  • (c) in the case of kits sold for export, the name of the country of destination and the Canadian dollar value of the total sales of the kit to that country; and
  • (d) in the case of a kit that contains a type of vaping product referred to in any of paragraphs 2(1)(c) to (e), the total volume in litres of the vaping substance that was sold for each brand of vaping product in the kit in each province, throughout Canada and for export.

Time limit — initial report

(5) The initial report must be submitted for the reporting period referred to in subsection (6) that is the first complete period after the coming into force of these Regulations.

Time limit — reports

(6) The reports must be submitted

  • (a) for the period beginning on January 1 and ending on March 31 of a year, on or before April 30 of that year;
  • (b) for the period beginning on April 1 and ending on June 30 of a year, on or before July 31 of that year;
  • (c) for the period beginning on July 1 and ending on September 30 of a year, on or before October 31 of that year; and
  • (d) for the period beginning on October 1 and ending on December 31 of a year, on or before January 31 of the following year.

Report on Ingredients

Brand information

5 (1) The report on ingredients must contain the following information for each brand of vaping product, including a brand of vaping product contained in a kit, referred to in any of paragraphs 2(1)(c) to (e) that a manufacturer sells in Canada:

  • (a) the unique product identifier;
  • (b) the brand name or the brand family name;
  • (c) any additional brand element or any descriptive term that distinguishes the vaping product from other vaping products in the report;
  • (d) the name of the vaping substance flavour; and
  • (e) the concentration of nicotine, if any, in milligrams per millilitre.

Ingredient information

(2) The report must also contain the following information for each ingredient that is used in the manufacture of the vaping substance:

  • (a) its common name;
  • (b) its chemical name, determined using the nomenclature established by the International Union of Pure and Applied Chemistry, if applicable;
  • (c) its registry number assigned by the Chemical Abstracts Service of the American Chemical Society, if applicable;
  • (d) the name and civic address of its supplier; and
  • (e) its concentration in the vaping substance, in milligrams per millilitre or millilitres per millilitre.

More than one substance in ingredient

(3) For greater certainty, if more than one substance was used in the manufacture of any ingredient mentioned in the report, the report must contain the information referred to in subsection (2), set out by ingredient, for each substance used in the manufacture of that ingredient.

Exception — export

(4) The report is not required for a brand of vaping product, including a brand of vaping product contained in a kit, if the vaping product or kit is manufactured solely for export.

Identical vaping substances

(5) A manufacturer is not required to submit a report with respect to a brand of vaping product, including a brand of vaping product contained in a kit, if the following conditions are met:

  • (a) the vaping product is, or contains, a vaping substance with the same ingredients in the same concentrations as another brand of vaping product, including a brand of vaping product contained in a kit;
  • (b) the manufacturer submits a report under this section with respect to the other brand; and
  • (c) the report includes the information referred to in subsection (1) with respect to the brand of vaping product for which a report is not required.

Time limit — initial report

(6) The initial report must be submitted for the period referred to in subsection 4(5), by the applicable time limit referred to in subsection 4(6), and must contain the required information with respect to each brand of vaping product, including a brand of vaping product contained in a kit, that a manufacturer sells during that period.

Time limit — new products

(7) A manufacturer must, on or before the day on which the manufacturer first sells a new brand of vaping product or a new brand of kit that contains a new brand of vaping product, submit a report that contains the following information:

  • (a) the information referred to in subsections (1) to (3); or
  • (b) if the manufacturer has previously submitted a report for another brand of vaping product with the same ingredients in the same concentrations, including for a brand of vaping product contained in a kit, the information referred to in subsection (1) for both brands.

Submission Requirements

Electronic submission — report

6 (1) The manufacturer must submit the report electronically using one of the following forms established by the Minister:

  • (a) for the report on sales, the form entitled Sales Report for Vaping Products, as amended from time to time;
  • (b) for the report on ingredients, the form entitled Ingredients Report for Vaping Products, as amended from time to time.

Electronic submission — attestation

(2) The individual who prepared the report must also submit electronically with the report an attestation that states that the information in the report is true and complete to the best of their knowledge and belief and is provided in good faith.

Language

(3) The report must be in English or French.

Coming into Force

7 These Regulations come into force on the day on which they are registered.