Posted by Derek Champoux
2 years ago / April 6, 2020
The Cloudy Future of Alberta’s Vape Tax
Since the federal legalization of cannabis in 2018, Canada has led the industry in regulations, policies, and thought leadership. While the nation, as a whole, is moving the industry forward, Alberta’s surprising announcement to impose a 20% tax on vape products is a major step in the wrong direction.
The policy is a misguided attempt to curb teen vaping. As important as it is to protect youth, this approach is ineffectual and implementing this high vape tax will do more harm than good, negatively impacting the cannabis industry, as well as Canadian families.
Why The Vape Tax Is Bad For The Industry & Canadians
1. It Will Push Albertans Toward The Black Market
One of the main justifications Canada used for the federal legalization of cannabis was to disrupt, and ultimately displace, the black market. Alberta’s new vape tax, however, is only going to make the black market stronger.
Increasing the price of products by 20% is prohibitively expensive. Of course, the tax only affects legal products, making black market pricing even more competitive. As a result, consumers will prefer to purchase from Alberta’s (already thriving) black market.
Illegal vape sales keep money out of the hands of the government, legitimate cannabis companies, and provide less safe products to Canadians.
Black market vape hardware and extracts are dangerous. They do not undergo testing and do not have to adhere to Health Canada’s regulations. As such, they are much more likely to include dangerous additives and diluents, such as Vitamin E Acetate.
Vitamin E Acetate is the chemical linked to EVALI (E-cigarette & Vaping product use Associated Lung Injury), the lung disease caused by illegal vape products. Legal, regulated products do not carry these same risks.
The 2019 EVALI scare happened because black market extractors and retailers were adding dangerous additives to their unregulated products. These incidents were largely limited to the US. There’s no reason to believe Canadians will experience similar vape related illnesses now that there is widespread access to legal, heavily regulated cannabis vape products.
2. It Perpetuates Fears and Reinforces Unfair Stigmas
Health Canada has implemented some of the strictest cannabis regulations in the world to ensure that all cannabis vape products sold in legitimate shops undergo and pass rigorous testing. But Alberta’s vape tax gives the impression that tested cannabis vape products, specifically, are inherently more dangerous than other cannabis products and delivery systems. This is not only patently false but also contributes to the negative stigma that the cannabis vape industry has been battling since EVALI.
To be fair, EVALI was a big concern in the U.S., where few regulations—and even fewer oversight bodies—existed for cannabis vape products and retailers. In Canada, however, there were no EVALI-linked deaths and only 18 total cases of vape-related illnesses, each traced directly to black market purchases. All 18 of those cases wouldn’t have happened if regulated cannabis vape products were available for purchase at the time. Shedding itself of the doubt and stigma that EVALI cast over the legal cannabis vape industry has already proven to be difficult enough without Alberta’s government making things worse.
3. It Conflates Two Separate Issues
The rise of both EVALI and teen vaping happened at around the same time last year, so it’s easy to conflate the two issues—especially since both revolve around vapes. But please understand that these separate are completely distinct from one another!
The rise of teen vaping, for the most part, had nothing to do with cannabis. It pertained to the flavored e-juice devices and other vapable nicotine products that middle and high schoolers are now huffing at unprecedented rates. This is certainly an issue that needs addressing, but attempting to rectify it by overtaxing a product that is completely unrelated to the problem is completely misguided and raises questions about how much homework Alberta’s politicians did on the issue before implementing this law.
4. It Wouldn’t Actually Curb Teen Vaping
Even if teen cannabis vaping was a real problem in Alberta—and it’s not … how could it be . . . the sector just came online a few months ago and there are no metrics to support that conclusion—the provincial government could have taken several other more effective measures to limit teen access to these products. This is not one of them! In fact, there’s no reason to believe that increased taxes for regulated vape products will in any way hinder the province’s youth from obtaining them.
Albertans under the age of 18 already cannot legally purchase or possess cannabis. They’re not even allowed to enter cannabis retail stores, so why Alberta’s government thinks raising the taxes on products that teens can’t access in the first place would make any difference at all is beyond us.
Instead of penalizing the Canadians that are buying cannabis vape products legally, the government should be increasing penalties considerably for vendors and retailers that sell to underage users in addition to clamping down on any adults who allow their vapes to get into the wrong hands.
5. It Would Cost The Province And The Industry Millions
Alberta’s vape tax is expected to generate $4 million in revenue this year. In the grand scheme, that isn’t very much—the Ontario Cannabis Store did $4.3 million in sales in January alone.
Will that little bit of extra tax revenue outweigh both the vape product revenue it would have seen had this tax not been imposed and the potential fallout that is sure to ensue when users turn to the black market?
Every time that an Albertan buys a vape product from the black market or a retailer in another province to avoid paying this tax, the legal industry misses out on a sale and Alberta’s government misses out on tax revenue. That’s not even taking into account the finds the government may need to allocate to health care, investigations, and studies if this reckless tax decision backfires and consumers start getting sick from vaping unregulated black market products.
In the long term, the only people who win from increased cannabis vape taxes are illegal vendors and non-licensed extractors.
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