Vol. 145, No. 8 — February 19, 2011

ARCHIVED — Promotion of Tobacco Products and Accessories Regulations (Prohibited Terms)

Statutory authority

Tobacco Act

Sponsoring department

Department of Health

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issue

Tobacco use is the leading preventable cause of illness and premature death in Canada. It is responsible for at least one-fifth of all adult deaths, more than 37 000 people each year. Tobacco use is a known or probable cause of more than 30 debilitating and often fatal diseases of the lungs, heart, and other organs. It is estimated that the attributable health care costs in Canada are more than $4 billion a year. In a 2006 study, the Canadian Centre on Substance Abuse estimated that the annual societal costs reached $17 billion in 2002.

For many years, tobacco products, including cigarettes and little cigars, described as “light” and “mild” have been popular in the Canadian market. In 2005, 133 of the 307 brands of cigarettes on the market displayed the terms “light” or “mild” on the products and/or the packaging. Currently, there are an estimated 20 brands of cigarettes and a small number of brands of little cigars on the market that use the terms “light” and “mild” or variations thereof. These products, especially cigarettes, developed as early as the 1960s, altered product design to allow for more air to mix with the smoke, thereby allegedly making them less harmful to health. In 2005, 58% of Canadian smokers reported smoking light and mild cigarettes. Studies carried out by the Department of Health found that a significant portion of users of light and mild products believed they were less harmful to their health. A 2003 survey found that 37% of smokers of light or mild brands had switched from a regular brand for health reasons; 30% of those surveyed said that the light descriptor meant that the product contained less tar and nicotine, while 15% said the same for the mild descriptor. In a 2005 study, 25% of users indicated that they believed these products were less harmful to their health, while 22% smoked light and mild brands because they believed that there was a reduced risk to their health.

Research, including a 2001 report from the U.S. National Cancer Institute (NCI), found that the public’s perceptions of the light and mild tobacco products are not consistent with scientific findings on the relative harm of light and mild products versus regular tobacco products. The NCI examined the impact of changes in cigarette design and manufacturing, including the design features of light and mild brands such as vent holes and more porous paper, which are intended to allow more air to mix with the tobacco smoke. The report found that the epidemiological and other scientific evidence, including patterns of mortality from smoking-related diseases, did not indicate a benefit of changes in cigarette design and manufacturing to public health.

The report concluded that the overall harm to smokers’ health is influenced by two main factors: repeated exposure to tobacco smoke, and the interaction of the smoker with the cigarette. The first factor refers to the composition of tobacco smoke, which is a complex mixture of over 4 000 chemicals that a smoker is exposed to regardless of the design of the cigarette. The second factor refers to how an individual smokes. Each individual smoker smokes a cigarette differently in order to satisfy their need for nicotine. The report concluded that when a smoker smokes a light or mild product, the smoker changes his or her technique to get the needed amount of nicotine. This may include drawing on the cigarette more often or drawing more deeply to increase the amount of nicotine, or simply smoking more cigarettes. Smokers may also unconsciously cover the vent holes and porous paper with their fingers to reduce the amount of air that mixes with the smoke, which negates any potential benefit of those features. The harm to an individual smoker, therefore, is less an issue of cigarette design than a result of smoking behaviour and the overall exposure to tobacco smoke. Based on these factors, the NCI concluded that light and mild tobacco products are not less harmful than regular products.

In light of the misleading nature of products bearing the light and mild descriptors or variations thereof, the Government of Canada proposed to prohibit the terms “light” and “mild,” and any variations thereof, through regulations which were pre-published in the Canada Gazette, Part I, in August of 2007. Before the regulations were finalized, the Competition Bureau, investigating a complaint, reached an agreement with nine tobacco companies, representing approximately 98% of the Canadian cigarette market, to voluntarily remove the misleading terms from their products and packaging.

While the light and mild tobacco market has been radically altered by these agreements, tobacco reports show that approximately 20 brands of cigarettes on the market still display light and mild descriptors. While these brands account for only 2% of cigarette sales in 2009, their sales totalled more than 624 million units. The proposed Regulations would require that the prohibited terms be removed from these products, thereby ensuring that all smokers are protected from misleading and confusing information on tobacco products.

The Government has also chosen to expand the scope of the proposed Regulations and include the approximately 15 brands of light and mild little cigars on the market. These products continue to mislead some tobacco users into believing that they are less harmful to health, and require addressing. Second, the agreements between the tobacco industry and the Competition Bureau stipulate that the agreements will remain in place until they are replaced by regulations. The Government, therefore, has a responsibility to enact regulations to formalize these agreements. Finally, guidelines of the World Health Organization Framework Convention on Tobacco Control (FCTC) recommend that parties adopt and implement effective packaging and labelling measures to prohibit the promotion of tobacco products by any means that are false or misleading, including any term or descriptor such as “light” or “mild” and variations thereof.

Bans on the use of the terms “light” and “mild” in connection with tobacco products already exist in more than 40 countries, including Australia, Brazil, Chile, India, Israel, Peru, Thailand, Venezuela, the 27 countries of the European Union, and the countries that form the European Free Trade Association such as Norway and Switzerland. The United States, through a law signed in 2009, also prohibits the use of the terms “light,” “low,” “mild,” and other similar descriptors in tobacco product labels or advertising. As of July 22, 2010, the law prohibits manufacturers from producing or distributing any tobacco products labelled or advertised as “light,” “low,” “mild,” or any other similar descriptor.

Objectives

The proposal to remove the terms “light” and “mild” supports one of the overarching objectives of the Tobacco Act, to reduce inducements to smoke.

The proposed Regulations have four main objectives:

• To protect Canadians from misleading and confusing information on tobacco products, and ensure that they base their decision to smoke on more accurate information about the harmful effects of the product. Research suggests that some smokers may be disinclined to make serious smoking cessation efforts under the false belief that smoking light and mild cigarettes would result in less negative impacts on their health;
• To remove the competitive advantage that brands still using the terms “light” and “mild” have enjoyed since the agreements with the Competition Bureau were signed. As the only light and mild products on the market, these brands may have benefited from increased sales. The proposed Regulations will ensure a level playing field by requiring that the prohibited terms are removed from all relevant products;
• To formalize the Competition Bureau agreements, which stipulate that the voluntary removal of the prohibited terms will remain in effect until regulations are enacted; and
• To bring Canada into greater compliance with the FCTC guidelines.

Description

The proposed Regulations would prohibit the use of the terms “light” and “mild,” and variations thereof, on cigarettes, little cigars, bidis, kreteks, cigarette tobacco, tobacco sticks, cigarette papers, filters, and tubes. The prohibition would apply to the products, the packaging, advertising, promotions, and retail displays. The proposed Regulations would not require modifications to the design of tobacco products.

The proposed Regulations would also apply to tobacco accessories, defined in the Tobacco Act as a product that may be used in the consumption of a tobacco product, including pipes, cigarette holders, cigar clips, lighters, and matches; branded accessories would be prohibited from displaying the terms “light” and “mild” and variations thereof.

Regulatory and non-regulatory options considered

Status quo

The option of maintaining the status quo was considered, but ultimately rejected as it would not allow the Government to meet its objectives.

Develop regulations to prohibit the terms “light” and “mild” and variations thereof — Proposed option

This option was retained because it would allow the Government to meet all of its objectives, including the commitment to enact regulations to formalize the agreements between the Competition Bureau and the tobacco industry.

Benefits and costs

Prior to publication of the proposed Regulations in 2007, the Department of Health prepared an analysis to determine the costs of complying with the proposed Regulations. While that analysis no longer reflects the current market, it will be used here to estimate the compliance costs for those manufacturers that still have relevant products on the market. As there are only a small number of products that continue to use the light and mild descriptors, the costs of the proposal are now estimated to be so small that carrying out a new analysis was not considered cost-effective.

The cost analysis was prepared by TNS Canadian Facts, Social and Policy Research for the Department of Health in March 2007. Based on 2005 data, the analysis estimated that approximately 33% of tobacco brands sold in Canada, or 172 out of 526, would have been subject to the proposed Regulations at that time.

Industry costs

A survey to stakeholders formed the basis of the estimate of the cost of complying with the proposed Regulations. The survey asked a series of questions that led stakeholders to provide information on a variety of costs, including removing the terms “light” and “mild” from both the products and product packaging, potential inventory loss of product and packaging, and changes to relevant trademarks.

Despite repeated efforts to obtain information from industry sources, the response rates for the questionnaires remained low. In total, ten completed questionnaires were received, including surveys from five manufacturers and five other respondents consisting of associations representing tobacco products retailers, tobacco workers, the packaging industry, and tobacco growers. As a result, the cost estimates were calculated based on a limited data set, but, for the purposes of the analysis, it was assumed that the data collected applied to the non-respondents. Data from responding organizations was extrapolated to the entire market on the basis of market share.

The major compliance costs identified by manufacturers in the cost survey were new packaging costs, including creating and producing new artwork, re-engraving printing cylinders and embossing dies, and inventory costs related to non-compliant packaging, including loss of inventory of both product and packaging. Other quantified costs included changes to advertising, Web sites, and possible costs associated to changes in trademarks. Manufacturers also cited possible costs such as changes to the distribution chain, but did not quantify them.

The cost analysis carried out in 2007 represented approximately 54 brands that were on the market at that time. The analysis calculated that the cost to industry of complying with the proposed Regulations ranged from $1,717,500 with a 12-month transition to $2,125,500 with a 6-month transition.

By extrapolating costs from the original cost analysis, it can be estimated that the compliance costs of the approximately 20 brands of so-called “light” and “mild” cigarettes still on the market would range from $858,750 with a 12-month transition to $1,062,750 with a 6-month transition.

Costs to Government

The regulatory proposal would not result in any additional costs to Government. Compliance monitoring would be done by existing compliance staff.

The full cost analysis is available upon request.

When the original cost analysis was carried out, little cigars were not included in the list of tobacco products which would be subject to the proposed Regulations; therefore, the cost of compliance was not estimated for these products. Based on tobacco reporting, there may be as many as 15 brands of little cigars that display the terms “light” and “mild.” Given that many manufacturers of little cigars made changes to their products following the coming into force of the Cracking Down on Tobacco Marketing Aimed at Youth Act in October 2009, it is difficult to ascertain how many of these brands remain on the market, and therefore difficult to estimate the costs of compliance. The Department of Health continues to monitor the little cigar market to try to ascertain how many brands would be subject to the proposed Regulations and to estimate the costs.

Benefits

The health benefits of the proposal are very difficult to quantify. First, most products on the market removed the light and mild descriptors some time ago, and any health benefits that could be linked to the removal of those terms would have already been accrued. Second, the health benefits arising from the removal of the terms on the remaining products are expected to be small and, while the benefits of the proposal are still expected to outweigh the costs, they may not warrant the cost of carrying out a benefits analysis. It is possible, however, to present a qualitative assessment of the anticipated benefits.

The proposed Regulations are expected to result in health benefits for smokers. Public opinion research has shown that some smokers use light and mild products because they believe that they are less harmful than regular tobacco products. Research has also shown that at least some of these smokers would quit smoking rather than switch to a regular brand. The proposed Regulations could result in improved health for those smokers who choose to quit based on the removal of the misleading information. Quitting smoking could lead to decreased tobacco-related mortality and morbidity for those users. There may also be health benefits to family and friends of those who choose to quit, due to decreased exposure to second-hand smoke. These improvements in health may result in reduced health care costs and reduced demand on the health care system. The proposed Regulations could also result in other benefits such as increased productivity.

Cost-Benefit Statement		Base Year:	Final Year:	Total (PV)	Average Annual
A. Quantified impacts $
Costs	Tobacco industry	$858,750 to $1,062,750	$0
C. Qualitative impacts
Smokers	Improved health for those smokers who choose to quit based on the removal of the misleading information, including decreased tobacco-related mortality and morbidity
Canadians	Health benefits to family and friends of those who choose to quit, due to decreased exposure to second-hand smoke
Canadian society	Possible reduced health care costs and reduced demand on the health care system Possible other benefits such as increased productivity

Rationale

The proposed option is the only option that will meet all of the Government’s objectives, thereby achieving the greatest overall benefit of the options considered. It will remove the terms “light” and “mild,” and their variations, from tobacco products, ensuring that all Canadians are protected from misleading information. It will level the playing field between tobacco companies, ensuring that no one enjoys an advantage in the market. It will bring Canada into greater compliance with the FCTC. Finally, it is the only option that fulfills the Government’s responsibility to enact regulations as set out in the Competition Bureau agreements. The proposed option will achieve all of these objectives while imposing minimal costs on industry and Government.

The proposed option is proportional to the degree and risk posed by light and mild tobacco products. The proposal will ensure that misleading information is removed from all relevant tobacco products, and is expected to lead to health benefits that outweigh the minimal costs to industry.

The proposed Regulations are consistent with international regulations and guidelines. More than 40 countries have already instituted similar regulations, and the FCTC guidelines recommend the removal of false and misleading information, and make specific reference to the terms “light” and “mild” and variations thereof.

Consultation

The Department of Health has consulted with stakeholders at various points during the development of the proposed Regulations.

Notice of Intent

A government Notice of Intent (NOI) was published in the Canada Gazette, Part I, on December 1, 2001. The NOI sought public input in the development of proposed regulations to prohibit the display of the terms “light” and “mild” and variations thereof on tobacco product packaging. Interested parties had 45 days in which to provide comments. A total of 35 submissions were received from various stakeholders. Generally, views expressed by industry stakeholders were against the proposal, whereas those received from the public health community were in support.

Non-governmental organizations

In recent years, several prominent tobacco-control non-governmental organizations (NGOs) have presented submissions calling for the removal of the terms “light” and “mild” from tobacco product packaging.

Industry

The Department of Health held meetings with industry stakeholders on this issue, starting in 2001. A meeting was held with the three largest companies in 2003 to discuss the light and mild issue in more depth. A meeting with the same three companies took place in September 2006, where an overview of the proposed Regulations was provided along with estimated timelines for the coming into force and implementation of the proposed Regulations.

In 2006, cost surveys were sent to industry stakeholders requesting their input into the cost estimates associated with the proposed Regulations. Two tobacco companies responded with letters which provided information beyond cost assessment data. One company stated that the Government should “get on with it” and move forward with adopting reasonable regulations.

Pre-publication in the Canada Gazette, Part I

The Government pre-published the proposed Regulations in the Canada Gazette, Part I, in August 2007. The Government accepted comments from stakeholders for 75 days. A total of 18 comments were received from NGOs, industry, government organizations, and the general public. Eleven of the eighteen respondents supported or conditionally supported the proposal, six respondents opposed it, and one neither supported nor opposed it.

Non-governmental organizations

Comments on the proposed Regulations were received from nine NGOs. While seven organizations expressed support for the proposed Regulations, only two organizations were unconditionally supportive. Five NGOs expressed support, but explicitly stated that they would encourage broader action on the issue, including prohibiting “replacement terms,” terms that the organizations felt the tobacco industry was using to replace “light” and “mild.” These included terms such as “smooth,” “bold,” and “rich,” as well as numerical values and package colours. Two NGOs opposed the proposal, stating that if the Government would not broaden the scope to include replacement terms, the proposal should be withdrawn. They claimed that the proposal would not achieve public health benefits, and recommended that it be replaced with a complete ban on all misleading descriptors and other devices.

Industry

Comments were received from four industry respondents. Of the three respondents who opposed the proposal, one claimed that smokers are not confused or misled by the “light” and “mild” descriptors, and deemed the proposed Regulations unnecessary. They also argued that the expected benefits of the Regulations were not described, and that the alternatives would be more appropriate than the proposed Regulations. The other two industry respondents who opposed the proposal stated that the proposal would place a heavy financial burden on them. They stated that the proposal would create an undue impact on the cost of doing business in Canada and that it could take upwards of a year to implement the proposed changes. The second respondent stated that it would take six months to a year to sell their present inventory and implement the proposed changes, but conceded that they would not have difficulty implementing them given enough time. The final industry respondent neither supported nor opposed to the proposal, but sought to confirm that the proposed Regulations would mirror the agreements between the tobacco industry and the Competition Bureau, and would not introduce any additional requirements.

General public

Comments were received from two individuals. One expressed support for tobacco control initiatives in general, but did not provide specific comments on the proposed Regulations. The second, while stating support for the spirit of the Regulations, did not support the proposal because the individual said that the scope of the proposed Regulations was not broad enough. The individual stated that the Regulations should prohibit all misleading descriptors and practices, including colours and numerical values. The respondent urged the Government to rewrite and reinforce the proposed Regulations to include these issues.

Government response

The Department of Health considered all comments received when reviewing the proposed Regulations. While the comments are valid, the Department is not addressing them at this time. The Government is continuing to monitor the tobacco market and may include other misleading or deceptive descriptors on the list of prohibited terms as required. The Government may also choose to address other allegedly misleading or deceptive practices in future regulations.

Implementation, enforcement and service standards

The proposed Regulations would come into force on the day they are registered. Two provisions, those prohibiting the sale of an accessory displaying the prohibited terms and the display at retail of a product displaying the prohibited terms, would come into force four months after the proposed Regulations are registered. This grace period is intended to minimize inventory loss by allowing manufacturers and retailers to sell existing inventory.

Compliance monitoring and enforcement would be undertaken by the Department of Health under the authority of the Tobacco Act. Compliance with these requirements will be monitored through inspections that will be undertaken to ensure that the prohibited terms are not used, in accordance with the proposed Regulations. Penalties for non-compliance are defined in Part VI of the Tobacco Act.

Contact

Manager
Regulations Division
Office of Regulations and Compliance
Controlled Substances and Tobacco Directorate
Healthy Environments and Consumer Safety Branch
Health Canada
Address Locator 3507C1
123 Slater Street
Ottawa, Ontario
K1A 0K9
Fax: 613-941-1551
Email: pregs@hc-sc.gc.ca

PROPOSED REGULATORY TEXT

Notice is hereby given that the Governor in Council, pursuant to section 33 (see footnote a) of the Tobacco Act (see footnote b), proposes to make the annexed Promotion of Tobacco Products and Accessories Regulations (Prohibited Terms).

Interested persons may make representations with respect to the proposed Regulations 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 the Manager, Office of Regulations and Compliance, Controlled Substances and Tobacco Directorate, Healthy Environments and Consumer Safety Branch, Health Canada, MacDonald Building, Address Locator: 3507C1, 123 Slater Street, Ottawa, Ontario K1A 0K9 (fax: 613-941-1551; email: pregs@hc-sc.gc.ca).

Ottawa, February 3, 2011

JURICA ČAPKUN
Assistant Clerk of the Privy Council

PROMOTION OF TOBACCO PRODUCTS AND
ACCESSORIES REGULATIONS (PROHIBITED TERMS)

INTERPRETATION

Definition of “cigarette”

1. In these Regulations, “cigarette” includes any roll or tubular construction that contains tobacco and is intended for smoking, other than a bidi, cigar, kretek or tobacco stick.

APPLICATION

Scope of prohibitions

2. The prohibitions in these Regulations that apply with respect to the terms “light” and “mild” also apply with respect to

• (a) any variations in the spelling of those terms as well as the spelling of other parts of speech and grammatical forms of those terms; and
• (b) any modifiers of those terms, including “extra” and “ultra”, as well as any abbreviation of those terms or modifiers.

PROMOTION

GENERAL

No promotion if terms on product

3. (1) A person must not promote a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if the tobacco product displays the term “light” or “mild” or promote such a tobacco product by affixing to it the term “light” or “mild”.

No promotion if terms on packaging

(2) A person must not promote a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if the package of the tobacco product displays the term “light” or “mild”.

No promotion if terms on accessories

(3) A person must not promote

• (a) an accessory that displays a brand element of a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if that accessory displays the term “light” or “mild”; or
• (b) a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters by affixing to an accessory a brand element of such a tobacco product if that accessory displays the term “light” or “mild”.

ADVERTISING

No advertising of product with terms

4. A person must not promote a bidi, cigarette, kretek, little cigar or tobacco stick, or cigarette tobacco, cigarette papers, tubes or filters by using the term “light” or “mild” in an advertisement of the tobacco product.

PACKAGING

No packaging of products with terms

5. A person must not package a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters, or have the tobacco product packaged by a third party, in a package that displays the term “light” or “mild”.

SALE

No sale of accessories with terms

6. A person must not sell an accessory that displays a brand element of a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if that accessory displays the term “light” or “mild”.

DISPLAYING AT RETAIL

No retail display of products with terms

7. (1) A person must not display, at retail, a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if the term “light” or “mild” is displayed on the tobacco product.

No retail display of accessories with terms

(2) A person must not display, at retail, an accessory that displays a brand element of a bidi, cigarette, kretek, little cigar or tobacco stick or cigarette tobacco, cigarette papers, tubes or filters if that accessory displays the term “light” or “mild”.

COMING INTO FORCE

Registration

8. (1) Subject to subsection (2), these Regulations come into force on the day on which they are registered.

After registration — four months

(2) Sections 6 and 7 come into force on the day that is four months after the day on which these Regulations are registered.

[8-1-o]

Footnote a
S.C. 1998, c. 38, s. 3

Footnote b
S.C. 1997, c. 13