Canadian E-cigarette Regulation Presentation by Reza B. .

Canadian E-cigarette RegulationPresentation by Reza B.

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What are E-cigarettes?

• Battery-powered heating devices, often resembling cigarettes, cigars or pipes

• Designed to deliver nicotine to users in the form of vapor (instead of smoke)

• The vapor comes form heating liquid nicotine

• First invented in 1960’s,

• E-cigarette first entered the market in China in 2004

• Currently over 250 brands available

• 3 Main components of the E-cigarette:

• Battery

• Atomizer

• Inhaler

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Legal Guidelines

• Here are the current Countries that have APPROVED e-cigarettes for sale: - as of October, 2010

• Austria, Denmark, Netherlands, New Zealand (with prescription), United Kingdom, U.S.A (individual states are attempting to ban e-cigarettes)

• Here are the Countries that have REJECTED e-cigarettes for sale: - as of October, 2010

• Australia (sales is illegal), Canada (importing, sales and advertising only), Brazil (importing, sales and advertising only). Panama (importing, sales, and advertising only), Singapore (illegal, even for personal consumption), Thailand (importing or sales only)

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Health Canada Regulations• At this time in Canada, electronic cigarettes are legal to use as individuals.

They are not to be imported, sold, or advertised.

• In Canada, there is little regulation of e-cigarettes, although Health Canada does recommend against using them.

• Here are Dr. Phillip’s stated reasons Health Canada has not approved the sale of electronic cigarettes in Canada.

• Quality Control

• Improper use may cause nicotine poisoning

• May cause addiction

• Must receive market authorization

• At this time, Health Canada is simply warning consumers against the purchase and use of electronic cigarettes. Various countries have different opinions on electronic cigarettes and their sales.

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Industry News

• WHO says e-cigarettes are less toxic than conventional cigarettes, but may also contain nicotine and other compounds.

• WHO issued a report calling for stricter regulation of the industry, including banning sales to minors, and banning their use indoors.

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Our Stance• Regulation.

• Medical: E-Cigarettes are not medicines, as they do not treat anything and have no therapeutic value. In Canada, they are clearly exempt from the “Prescription Drug List” of the Food and Drug act, which exempts nicotine delivered by inhalation device in 4mg or less per dosage (usage) unit

• Tobacco: Electronic Cigarettes are not a tobacco product. They do not contain, nor utilize tobacco and those who use the product do so in order to avoid tobacco and its harmful effects.

• Common Consumer Products: Manufacturing of all parts of an electronic cigarette and e-juices are already guided by standards applied to common consumer products. Hardware components are electronic devices. E-juices created from already approved additives widely used in food and every-day consumables.

• Re-Normalization of Smoking / Tobacco Use

• With a complete absence of any data showing re-normalization in over 10 years of market availability, and a parallel drop in tobacco sales worldwide, electronic cigarettes are currently displaying a significant trend towards reducing tobacco use world-wide, not re-normalizing public smoking.

• Harm Reduction

• Electronic cigarettes enable harm reduction on two levels: immediate and long term. Smokers can choose to achieve immediate removal of tobacco products and, the industry is able to engage in long term harm reduction in manufacturing. Unlike tobacco, electronic cigarette “e-juice” is not a fixed organic crop, but a “recipe” of commonly used food additives versus 4,000 chemical in cigarettes and 69 known to cause cancer. If one ingredient is determined to be more harmful, it can be replaced with another. Ongoing scientific research can assist in identifying potential harms – as with other common consumables.

• Electronic Cigarettes have been in the mainstream marketplace now for more than 10 years.  Total Illnesses or Deaths from Electronic Cigarettes:  0. Total Illnesses or Deaths from Tobacco for that same time period (According to the CDC): 5 million deaths per year. Current trends show that tobacco use will cause more than 8 million deaths annually by 2030.

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Our Stance Continued…

• Smoking Cessation

• Consumers do, indeed, often and many, achieve complete (or near complete) abstinence from tobacco using these devices. This is not due to a specific therapeutic effect.

• It’s simply that electronic cigarettes are more pleasant and less dangerous – enabling a consumer to achieve the same behaviour without the same harm.

• Sales to Minors

• After ten years in the market, there remains an unfortunate absence of legislation, in Canada and internationally, restricting electronic cigarette sales from minors.

• To be clear, electronic cigarettes are adult products. They provide no benefit to youth or children. Our society, as a whole, reserves many services and products to adults, not because of inherent danger, rather because use and access requires a level of maturity. Electronic cigarettes are substitutes for tobacco (an adult product), and therefore an "adult" product by their very nature.

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Total Tobacco Volume EstimateTotal tobacco volume decreased ~2% in 2013. Cigarette volume was down ~5% and smokeless tobacco volume increased ~5%.

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0

200

400

600

800

1,000

1,200

FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014E

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lum

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n p

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nd

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Total Tobacco Industry Volume (in mn pounds)

10-Yr CAGR = -1.0%

E-cigarettes Revolutionizing Tobacco IndustryE-cigarettes consumption could surpass combustible cigarettes

in 10 years

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0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Equi

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nt P

ack

Volu

me

(in b

illio

ns)

E-Cigarettes (in equivalent packs) Combustible Cigarettes (in packs)

2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

Ope

ratin

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ool (

in $

bill

ions

)

E-Cigarettes Combustible Cigarettes

Source for graphs: Company data and Wells Fargo Securities, LLC estimates

Few Quick Facts on E-cig in Canada

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In Conclusion…

• On behalf of vape community we demand more focus on regulated manufacturing

• Proper import, and Sales Tax

• We demand accurate product claims, and product disclosures (MSDS, Spec sheet, Allegan Sheet, C of A, GMP, TUV)

• Demand restrictions on sale to minors

• Freedom to advertise the product (without any false claims)

• Freedom of use (with restrictions)

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