Feds mum on timeline for Bennett’s tobacco manufacturer crackdown

Tobacco opponents and the NDP are urging Ottawa not to delay its promised crackdown on tobacco manufacturers, which one MP described as “low-hanging fruit” that should come forth in a budget bill.

Mental Health and Addictions Minister Carolyn Bennett’s mandate letter orders her to ensure tobacco companies “pay for the cost of federal public health investments in tobacco control,” though little details have been offered since the document was published in December 2021.

It’s a promise that’s been years in the making and could bring Canada in line with the U.S. as the Grits look to bring tobacco use down to five per cent by 2035. That goal is etched out in the national tobacco strategy, which sets aside $330 million over five years in 2018.

Les Hagen, executive director of Alberta-based Action on Smoking & Health (ASH), said any measure to make good on Bennett’s promise should “at the very least” cover that amount. The strategy noted 48,000 Canadians die from tobacco-related diseases each year, and Hagen said mass media campaigns around the harms of tobacco use are among the things that should be captured. Spillover effects of tobacco use putting a strain on the overall health-care system could also be “factored in,” as they represent costs that are likely “enormous,” he added.

“The first step is to pay for mitigation and that’s what this levy would do,” he said, noting other levels of government have taken tobacco companies to court over damages.

Alberta, for example, sued companies for $10 billion in 2012, while in the U.S. 46 states penned a settlement agreement in 1998 with several tobacco companies requiring them to make annual payments as reimbursement for past costs.

“It takes a while before Canadian governments and legal systems catch up, but I think we’re catching up,” he said. “What it all comes down to is, what can the industry afford to pay and are governments prepared to wind this industry down? That’s what we think needs to happen.”

Hagen’s calls were echoed by Rob Cunningham, a senior policy analyst with the Canadian Cancer Society, who said there is “broad support” for the measure across the political spectrum.

With similar recommendations coming forth from the House finance committee in February 2021, he said it’s clear taxpayers should not foot the bill for an industry that is “causing the tobacco epidemic,” noting Ottawa already has a cost recovery fee for cannabis in place.

“The tobacco industry is quite unique in terms of the magnitude of harm” compared to other products, he said, adding provinces can also play a role in scrutinizing manufacturers.

Cunningham noted that in a statement on January 16, the kickoff of national non-smoking week, Bennett and Health Minister Jean-Yves Duclos touted the strategy. The pair said the feds are putting aside $66 million per year under the blueprint.

Cunningham predicted costs linked to enforcement of legislation, public awareness campaigns and regulatory development will be covered under an eventual measure.

For NDP MP Gord Johns, the party’s Mental Health and Harm Reductions critic, a cost recovery fee is something one of the “world’s most sophisticated industries, when it comes to marketing and influence over government,” can afford. Framing it as a measure that will save money and lives, he said it’s crucial that the federal government makes progress on the file to show Canadians it is not letting “tobacco giants off the hook.”

Johns said cigarette filters have environmental impacts that also need to be considered, pointing to his 2018 motion urging the feds to work with premiers, cities and Indigenous communities to curb plastic pollution in “aquatic environments” that passed unanimously in the House. (The motion noted filters are among the single-use plastics frequently found in bodies of water.)

The same month Bennett’s mandate letter was issued, NDP Health critic Don Davies tabled his own motion pressing for an annual fee on tobacco companies, with its allocation “to each company being based on market share.”

“They shouldn’t be getting a free ride,” said Johns. “It’s about being responsible.”

The B.C. MP predicted that if the measure comes forth in the budget bill, it would likely face little opposition as the Grits, NDP and Tories backed tobacco control measures during the 2019 election. (CPC MP Todd Doherty, his party’s Mental Health and Suivide Prevention critic, declined to comment for this story.) “The political will is there, the action isn’t following that,” said Johns.

Most constituents likely already think the industry is covering control measure costs brought in by Ottawa, said Johns, but are “appalled” to learn it is actually happening on the voters’ dime. “In the meantime, [companies are] making millions of dollars in profit,” he charged.

“Where is the action?”

So far, Ottawa is mum on timelines.

Health Canada spokesperson Tammy Jarbeau offered little detail on when the feds will make good on the promise, only saying Ottawa will look at its “options and determine next steps to develop and implement this mandate letter commitment.”

Calling tobacco the “leading preventable cause of disease and premature death in Canada,” the department vowed to consult with industry before touting the federal tobacco strategy as an effort to help Canadians quit tobacco, protect youth from nicotine addiction and boost “science, surveillance and partnerships” in the space.

While Ottawa mulls its options, some industry players are making their qualms clear.

Imperial Tobacco Canada (ITCan), which boasts being the country’s “leading tobacco company,” said in a statement it has not heard much from Ottawa on Bennett’s marching orders.

Its vice-president of legal and external affairs Eric Gagnon said Ottawa already collects $1.6 billion per year in excise revenue from cigarettes, a figure that is “more than” enough to cover the cost of its strategy. He said Ottawa should tackle the “illegal tobacco problem that is growing across Canada” if it wants to show it’s serious about increasing revenues from tobacco, predicting the feds are missing out on $1 billion annually to illegal activity.

(Jarbeau did not directly confirm whether Health Canada expects its eventual measure will strictly cover costs, or also rake in revenue.)

Gagnon also noted companies are looking to resolve “all tobacco litigation in Canada under an efficient and court-supervised process,” through the Companies’ Creditors Arrangement Act — which lets insolvent groups that owe creditors more than $5 million restructure. He warned any extra costs or surtax clapped on the sector will “simply mean less money for a potential settlement.”

He also argued that smoking rates in Canada “are at an all-time low” and pressed Ottawa to educate Canadians on “less harmful alternatives to smoking,” pointing to vapes that have “already proven their public health benefits in many other contries.”

The executive’s comments were echoed by Rothmans, Benson & Hedges (RBH) spokesperson James DeCosimo.

RBH, whose parent company is Philip Morris International, is a Canadian tobacco manufacturer and distributor that has sold cigarettes for decades, but says it wants to stop retailing them by 2035. Its goal is to offer alternatives, though it cautions such products are not “risk-free” and also contain nicotine, making them similarly addictive. (Both Imperial Tobacco and Philip Morris have launched their own vaping device brands.)

While RBH “shares” the feds’ goal in moving Canadians “away from cigarettes” and toward the 2035 target, and backs measures to curb the uptake of “combustible products,” DeCosimo said the most “impactful actions” from Ottawa would include regulating “smoke-free products” like oral nicotine, heated tobacco and vaping.

The group also wants to see Ottawa “legalize access to scientific information to allow current smokers to make an informed choice,” though it did not elaborate further.

Hagen said the industry has long been known to push “schemes and gimmicks” to encourage tobacco use, referencing the promotion of light and mild cigarettes and efforts to target younger people.

“It’s really the polluter pay principle,” he said, noting that is also a mantra applied to other industries, like the oil and transportation sectors, if things go awry.

Like Cunningham, Hagen predicted the feds will hear companies “complain” about the feds’ proposed levy, but argued millions of dollars are “peanuts” for large companies operating in a lucrative space — so they may not put up “a big fight.”

“If governments are very competent at doing anything, it’s collecting taxes and levies,” he said. “They will find a way.”

The advocate noted Bennett’s mandate letter had come amid growing scrutiny on the tobacco sector in the pandemic’s aftermath.

Last month, vaccine manufacturer Medicago cut its ties with tobacco giant Philip Morris, after the World Health Organization initially rejected the former’s Covid vaccine, Covifenz, over the company’s links to the industry.

Medicago is now fully owned by Mitsubishi Tanabe Pharma, meaning Philip Morris’ 21 per cent of the company’s shares were divested.

In 2020, the feds gave Medicago $173 million to develop its vaccine, stand up a production site and make 76 million doses for government procurement, with regulators soon approving Covifenz for adults 16 to 64 — though WHO rejected its request for emergency use. The Quebec government said last summer it wants to help Medicago replace Philip Morris as a shareholder.