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Selling vaping: E-cigarette industry grapples with cloudy rules

A man uses an e-cigarette at a store in Chicago.

Nam Y. Huh/The Canadian Press

It's not the kind of ad you'd expect to see at a junior hockey game.

But there it was at Toronto Patriots matches and featured prominently on the team's website last season: a promotion for Vapz.com – a company that sells cigarette-alternative vaping products.

While marketing of tobacco cigarettes is illegal in those spaces, the rules for the nascent vaping industry are less clear. Vapz's presence underscores widespread confusion in the sector as it awaits new regulation: Sellers of e-cigarettes, many of them small businesses, are operating in a grey area by advertising and selling unapproved products that deliver nicotine to users' systems without approval and, in many cases, that, in many cases, without being reined in by Health Canada. While Vapz was at the games mostly promoting its line of health and wellness products – which includes juices, teas and lotions – the company was also selling its namesake vaping products online.

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"People think of Vapz, and they think of e-cigarettes," said Vapz president Sandra DeMaria in an interview in March. "It's gotten our name out there. We don't technically market much of the e-cigarettes, but people will go online and peruse the website and see what we have to offer, and then they order online. So we've gotten a really good response with it."

E-cigarettes are not cigarettes. They don't contain tobacco or tar and users do not inhale smoke. Instead, they electronically heat liquid that gives off a vapour that is inhaled. But some of those "juices" do contain nicotine. Sellers say they are offering a smoking-cessation product that can help save lives.

In November, Health Canada proposed an amendment to the Tobacco Act to regulate the sale, labelling and advertisement of vaping products – whether or not they contain nicotine – and any health claims about the products' effectiveness as aids to quit smoking. It would classify e-cigarettes as a separate category of product from tobacco, but would impose some similar limits, such as banning promotion of candy-like flavours that could draw underage users.

In the meantime, all vaping products that have nicotine or are meant to be used with nicotine, are regulated under the Food and Drugs Act and require Health Canada's approval to be imported, advertised or sold here. So far, none have received that approval.

All signs point to vaping becoming a big business. The global e-cigarette market is expected to grow to $27.6-billion (U.S.) by 2022, according to a report from Dublin-based firm Research and Markets. In Canada, vapour products were a $282.6-million (Canadian) industry in 2016, nearly 10 times the size of the market just five years earlier, according to research firm Euromonitor International.

Large tobacco companies are also wading into the space, but many have resisted doing so in Canada until the law is clear.

"Hopefully we'll also be competing in e-cigarettes in Canada once there's some clarity in terms of the regulations and the laws," said Peter Luongo, managing director of Rothmans, Benson & Hedges Inc. in Canada. The company does sell a vapour-emitting product called IQOS in Ontario, Alberta and British Columbia, but the vapour comes from a "heat-not-burn" device that heats a tobacco stick rather than vaping liquid, so it is categorized as a tobacco product. That's also true for a similar product called i-glo, which competitor Imperial Tobacco Canada sells only in Vancouver for now. Imperial's parent company, British American Tobacco, sells an e-cigarette product in 10 countries but has also been waiting for legal clarity in Canada before launching here.

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"There needs to be a regulatory framework in place as soon as possible. There's a lot of people doing stuff because there's no regulation," said Eric Gagnon, head of corporate and regulatory affairs at Imperial Tobacco Canada. "There is no grey zone. It's just that Health Canada is not enforcing its own regulations."

Health Canada can take action when companies are selling non-approved vaping products, including by issuing recalls, communicating the violation to the public or seizing product. The department explained its approach to enforcement in an e-mailed statement to The Globe and Mail as "risk-based and complaint-driven."

Health Canada did not know about Vapz.com's sale of nicotine products until contacted by The Globe, it said in an e-mail in March.

After Health Canada subsequently contacted Vapz, the company removed all products containing nicotine for sale on Vapz.com, including cartridges for its e-cigarette devices containing up to 24 milligrams of nicotine, and "Nix Stix," a compact version of its e-cigarettes with up to 12 mg of nicotine each.

In March, Ms. DeMaria said that selling nicotine products was "a risk … because they tell you not to," and added that this was one reason the company did so online only, and did not promote the nicotine products in ads.

Vapz is just one example of confusion in the vaping sector. Both online and bricks-and-mortar vaping stores commonly offer nicotine and non-nicotine e-cigarette products for sale in Canada. Some believe they are covered under the Prescription Drug List since it includes exemptions for nicotine products "in a form to be administered orally by means of an inhalation device delivering four milligrams or less of nicotine per dosage unit." Health Canada confirmed in an e-mail, however, that nicotine intended for use in vaping is considered a "new drug" and has not been approved at any dosage level.

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Some businesses have received "cease and desist" letters, according to Shai Sinnis, a founding member of the Canadian Vaping Association, but it is not widespread and has not deterred sellers for the most part.

"I don't think you're going to see the industry back off selling nicotine products up until [the law is clarified,]" Ms. Sinnis said.

Industry representatives say they want clearer regulations.

"We've been asking for regulation since 2009," Ms. Sinnis said. "Everybody agrees that this should not be marketed to minors, whether in your labels or in your public advertising. It should be done in a professional manner that promotes the product as a tobacco harm-reduction method … We are saving Canadians' lives. 40,000 Canadians die each year due to tobacco death and disease. We have a product that is magnitudes safer and less harmful than tobacco."

It can be particularly complicated for a company such as Vapz that also sells products such as juices, water and tea, which make up about half of its revenues, according to Ms. DeMaria. This is what Vapz promoted at Patriots games, she said; never e-cigarettes.

"I would never allow any vapour or smoking products in our organization," said Manny Mounouchos – owner of the Patriots, a Junior A team that competes in the Ontario Junior Hockey League – in an e-mail. The Vapz logo was removed from a list of sponsors on its website at the end of this season.

In Ms. DeMaria's brightly lit offices, shelves display candles, tea and coffee and body products – many of which share flavours and scents with its e-cigarette products, such as Blueberry and Tutti Frutti. She has pushed for this growing focus on other products, and is considering opening a café and expanding the brand into a line of athletic apparel. Both she and her husband used vaping to quit smoking, and she said that when people quit, they also move toward a healthier lifestyle overall, which presents a broader marketing opportunity.

"Our products are all about health and wellness. That's what we're actually advocating," she said. "The e-cigarettes were just the first step."

But even when the company still did "minimal" business in vaping products containing nicotine, she said there was not always clarity on what the line was.

"It's a grey area until we have proper legislation," she said at the time. "We obviously want to adhere to that as much as we can."

Video: Public health experts on advantages of marijuana legalization (The Canadian Press)
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About the Author
Media and Marketing Reporter

Susan covers marketing and media for Report on Business. Before joining The Globe and Mail in 2009, Susan worked as a freelance reporter contributing to the Ottawa Citizen, the Montreal Gazette and other publications, as well as CBC Radio's Dispatches and Search Engine. She has a Masters degree in journalism from Carleton University. More

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