The black market could be the big winner if the B.C. government follows through with plans to levy a 20% tax on all vape-related products, restrict access to those products and add deterrents such as mandated plain packaging.
A resurgent underground economy would keep the government from cashing in on the consumer trend toward vaping tobacco and cannabis instead of smoking those substances. It could also, say critics, put public heath at risk as people seek cheaper, unregulated products.
Established retailers and manufacturers could also see their businesses teeter if Health Minister Adrian Dix follows through on his vow to restrict sales of flavoured nicotine vape products to age-restricted stores, lower the maximum threshold of nicotine to 20 milligrams per millilitre and put in place new rules for plain packaging by April.
In addition to thousands of convenience stores and grocery stores, 150 specialized stores sell nicotine-based vape products in B.C., according to government figures. The province is also home to e-juice manufacturers, such as Premium Labs, Indulgence Innovations Inc. and VanGo Vapes.
“The vape economy in B.C. will potentially take a hit because you can go online and order from Alberta,” said VanGo Vapes CEO Saadiq Daya.
“If you order from Alberta, you’re paying 5% GST. Here, you are going to pay 25%” in provincial and federal taxes.
E-juices on sale in Alberta often have nicotine concentrations two to three times higher than what will be allowed in B.C.
An emailed statement to Business in Vancouver from B.C.’s Ministry of Finance said the province’s “strong and thorough auditing process” is aimed at getting retailers to collect and remit provincial sales tax, and that failing to collect provincial sales tax could come with a penalty equal to the amount of tax not collected.
Aside from lost sales, Daya’s 13-employee business stands to absorb tens of thousands of dollars in costs to recall products, and to create, print and affix new plain-packaging labels.
What makes matters worse for him is that last year he had to incur similar costs when Health Canada devised new regulations for vape products.
Fortunately for Daya, his fast-growing business has sales in the millions of dollars and a distribution network in Canada, the U.S. and the U.K. B.C.’s new regulations essentially make the province like a new export country, he said.
Glen Korstrom – Business in Vancouver – November 26, 2019.