Good afternoon, everyone. I'm Mike Hammoud, president of the Atlantic Convenience Stores Association, ACSA. On behalf of the ACSA, I'd like to thank the Standing Committee on Health for inviting us here today to speak on the labelling and packaging of retail cannabis as it pertains to Bill C-45.
Within the context of my presentation today, it is our understanding that the objectives of the act are to prevent minors from accessing cannabis, to protect public health and public safety by establishing strict product safety and product quality requirements, and to deter criminal activity by imposing serious criminal penalties for those operating outside the legal framework. It is also our understanding that the act is intended to reduce the burden on the criminal justice system in relation to cannabis.
More specifically, the focus today is on the labelling and packaging of regulated cannabis products at retail. To that end, I believe our experience with tobacco retailing has significant relevance to the issues you are dealing with.
First, I will begin with some information about the ACSA, our members and our collaborators. Secondly, I would like to delve into the specific issues of the labelling and packaging of regulated cannabis sales, and our experiences with tobacco packaging and labelling.
The ACSA was established in 2009 as a not-for-profit trade organization to promote responsible convenience retailing and to represent the economic interests of our convenience store members. Today, our membership includes more than two-thirds of the convenience store locations operating in Atlantic Canada.
In collaboration with the Canadian Convenience Stores Association, the Western Convenience Store Association, the Ontario Convenience Stores Association, the Quebec Convenient Stores Association, and the National Convenience Stores Distributors Association, we have considerable experience with and insight into convenience retailing.
Convenience retailers are heavily regulated, be it lottery, food services, beverages, alcohol where available, and in particular tobacco. In tobacco retailing, we have experienced monumental change over the years and we have worked with regulators in our industry to achieve what we believe to be two primary goals. The first is to minimize tobacco consumption among minors; the second is to minimize the rampant distribution of illegal tobacco.
Ladies and gentlemen of the committee, I am of the firm belief that we can bring relative and pertinent insights to your deliberations, so let's move on to the labelling and packaging of federally or provincially regulated cannabis at retail.
At present, legislation—Bill S-5—has been put forward that would introduce plain packaging for tobacco products in Canada. As mentioned earlier, this legislation would eliminate the branding of products. By this we mean the trademarks, individual logos, graphics and colours that differentiate one product from another. With a standardized generic package, the only brand identification would be the product name in a small and simple standardized font. Everything inside would look the same.
The catalyst for this is Australian plain-packaging legislation that came into effect in late 2012. However, that example and others demonstrates that plain packaging doesn't work. In the case of Australia, the reality is that an examination of all publicly available, relevant and reliable data, after five years points to the same conclusion, that there's been no statistically significant decline in Australian smoking prevalence. In the Australian plain-packaging environment, there has also been a dynamic shift in market share between legal and illegal tobacco products, with consumption of illegal products increasing.
Is there a correlation between plain packaging and illegal consumption? Our Australian colleagues are of the opinion, and we concur, that plain packaging is the catalyst for a race to the bottom in terms of the lowest price point being the primary purchase motivator. When the price becomes the primary purchase motivator, that opens the door to illegal purchases that can be made at a fraction of the price of legally sold product.
In Canada, we estimate that illegal products account for some 20% of the overall consumption of cigarettes, with the illegal market share being upwards of 33%, and higher in Ontario. In the end, labelling and packaging are immaterial to many tobacco purchases relative to access to cheap smokes. How would this be any different for retail sales of cannabis?
We know that many illegal cigarettes are sold unbranded and loose in poly bags, also known as baggies, but it should be noted that plain packaging opens the door to increased distribution and sales of counterfeit or look-alike packaged cigarettes, simply because it is so much easier for illegal producers to replicate the packaging. Will your average smoker know the difference? It's unlikely.
More recently, plain tobacco packaging became mandatory in France as of January 1 this year, in what was described by proponents as a decisive weapon against smoking. To the surprise and shock of many, first-quarter sales of cigarettes in France increased 7% compared with the same period in 2016. The French health ministry dismissed the sales increase, saying that plain packaging would not influence current smokers, that plain packaging was principally targeting younger people, and that the impact would only become apparent in the medium- to long-term future. What we have, then, is a plain-packaging advocate saying that plain packaging will have no impact on established smokers, and that the target population for plain packaging is youth.
Well, look at the situation in the Canadian context. As far back as 2003, there have been strict rules in place in Canada related to tobacco marketing that prevent the advertising or promotion of tobacco, testimonials, accessories, and anything else tobacco-related that could be appealing to young people. Today there is also mandatory use of locked cabinets or screens at point of sale to hide tobacco products from display.
At the same time, a large majority of retailers are vigilant in screening out underage buyers through the widespread practice of asking for proof of age identification. Our industry takes great pride in its ability to be a responsible and diligent partner to government in the controlled sale of age-restricted products like tobacco. Such training programs as “We Expect ID” are a commitment to assist retailers and their staff in upholding the highest standards of professionalism and ethical conduct and to support public health and safety. Underage youth in Canada today have negligible exposure to cigarette packaging and labelling. In our opinion, the unintended impacts of plain packaging, such as the lowest-price mentality among consumers or the risk of increased contraband sales, far outweigh any perceived benefits.
It is notable that youth cannabis smoking rates in Canada are twice as high as youth smoking rates. According to Health Canada, the national youth tobacco smoking rate in 2015 was 10%, while the national youth cannabis smoking rate was 21%. Generic packaging would not be an effective tool in achieving what is a common goal for all of us, which is negligible rates of both tobacco and cannabis consumption among youth. We believe that if governments are serious about reducing smoking, be it tobacco or cannabis, then there is much more work that can be done in the areas of education and smoking cessation.
Convenience retailers believe that the types of initiatives in place for tobacco retail sales in Canada can be replicated effectively for the retail sale of cannabis without resorting to the questionable value and impact of plain labelling and packaging. As is the case with tobacco, industry, anti-cannabis groups, health care organizations, and governments should work together to minimize the number of youth and adults consuming cannabis.
In conclusion, we recommend to the committee that branding on cannabis retail packaging be allowed for two important reasons: one, to reduce the ability of criminals to produce and distribute contraband product; and two, to minimize the impact of lowest price point by educating and allowing legal consumers to make informed decisions on their product choices.