Thanks, Satinder.
Without adequate resources to deal with contraband tobacco, and without adequate time to prepare for the consequences of plain packaging, already stretched small businesses will take a hit once again. A poll of our retailers, which has been shared with Health Canada, found that over 88% of staff use brand logos to differentiate between tobacco products; 97% of retailers believe that they would need to increase staff training to ensure proper inventory control, stock management, and customer service if plain-packaging restrictions are imposed in Canada. Our stores and distributors are not asking for any compensation to assist with this transition, but we are asking for time to deal with what we know the fallout will be.
While it's not in the mandate of this committee to recommend, we believe the government should address the issue of contraband tobacco before moving ahead with Bill S-5. The Senate social affairs committee noted in its report that more should be done to fight the black market. Health Canada is contemplating studying the illegal market in its renewed tobacco control strategy, and we support that effort.
We need action. Illegal tobacco is unregulated, untested, and untaxed. Many have zero per cent health warnings. The existence of this significant market undercuts every single one of the government's tobacco control measures and goes against the government's stated rationale for plain packaging. Providing law enforcement with greater resources specifically allocated to eliminating contraband tobacco is one option. Funding a regular study to evaluate the state of contraband tobacco and regulatory impacts on illegal tobacco usage rates is another. It is worth noting that this is not something the Government of Canada currently tracks.
To support this committee in its ability to recommend amendments to the proposed legislation, we offer the following recommendations.
First, to help mitigate the impacts of plain packaging on our small businesses, allow for some type of visual differentiation on packages, perhaps on the cellophane overwrap, which has the added benefit of being removed as soon as the package is opened. This would help to distinguish legal from illegal products, particularly for law enforcement. The RCMP have raised concerns about contraband tobacco, particularly the links to organized crime. In a recent massive seizure of drugs, weapons, and contraband, their press release stated that the investigation demonstrated “the strong ties between contraband tobacco and the organized crime community.”
From a distributor perspective, this is crucial when it comes to shipments of cartons of cigarettes. Very rarely are cartons purchased in stores, as you can well appreciate because of the cost, but our distributors use the visual differentiation to pick and fill customer orders. We understand that the U.K. plain-packaging legislation focused specifically on products destined for retail, rather than on shipments. We believe Bill S-5 should include that same provision.
The committee may also want to consider extending the same logic to individual cigarettes. Some differentiation would likely assist law enforcement in telling legal and illegal products apart.
Our second recommendation would recognize that many of our retailers and distributors are small businesses that are already burdened by excessive red tape and regulation. Not allowing for a reasonable transition period for our stores and their distributors will hurt our already struggling channel. Should this legislation proceed, we implore you to consider amending Bill S-5 to include a separate adjustment and sell-through period for retailers and distributors, of between 12 and 18 months.
Our third and final recommendation deals with vaping. We support the government one hundred per cent in finally regulating this product. We find it extraordinarily unfair that our stores and distributors have followed Health Canada's directive to refrain from selling vape products with nicotine, while illegal vape shops have been allowed to pop up on street corners in virtually every community.
With growing acknowledgement of the benefits of vape products as an alternative to traditional cigarettes, we ask this committee to create a level playing field by allowing for limited, substantiated communication by convenience retailers about alternative nicotine-containing products, including electronic cigarettes and heated tobacco products.
We thank you very much for the opportunity to present today, and we would be happy to answer any questions you might have.