The True Cost of Prohibition: Lost Tax Revenue, Unsafe Products, and a Booming Illicit Vape Trade

The Canadian Vaping Association points to record seizures, lost tax revenue, and unsafe products as evidence that enforcement should come before new bans

Ottawa, ON, Sept. 24, 2026 (GLOBE NEWSWIRE) -- The prohibitionists would have you believe that an imperfectly enforced flavour ban is better than no ban at all, which is difficult to comprehend once you get a glimpse of what is happening on the ground in Quebec. 

The province is the clearest example of why flavour bans do not eliminate demand; they feed it. In 2023, as Quebec moved to ban flavoured vaping products, Concordia University economist Dr. Ian Irvine warned that such restrictions could push consumers toward the illicit market. Three years later, the Sûreté du Québec seized more than 300,000 illegal vaping products and froze $1.8 million in bank accounts in a major smuggling investigation, showcasing how restrictive policies push consumer demand into organized criminal networks. The pattern points to an illicit nicotine trade operating at a scale far beyond what border enforcement alone can contain, and the CVA says the cause is no mystery.    

This isn't a new problem. It's a problem economists warned us would come, as the illicit market has grown beyond the Quebec borders. Since January 1, 2026, Canada Border Services Agency has seized over $52 million in illegal tobacco and nicotine products in Southern Ontario alone, including $13.8 million in the month of August. 

Canada is not alone in seeing illicit vaping markets grow under restrictive policies. In the Netherlands, government research found 87% of vapers use illegal products or sales channels after a nationwide flavour ban, while Australia has linked the rapid growth of illicit tobacco and vaping markets to organized crime. 

Demand for vaping products does not disappear when legal access is overly restricted. Using new Statistics Canada sales and vaping-use data, Dr. Irvine estimates that Canada’s legal vaping market was 26.7% smaller in 2025 than it would have been without recent tax increases and stringent regulatory policies. In the face of a relatively constant number of vapers, Irvine attributes the decline to a diversion of demand to the black market. 

The illicit market is a real, everyday threat that needs to be taken seriously as a public safety concern. Illegal nicotine products move without age verification, without quality or safety standards, and without contributing tax revenue to Canada. 

The CBSA has stated that profits from illicit vaping products help finance other criminal activity in Canada. Those dollars should be staying in the Canadian economy, supporting legitimate small businesses and public services, not organized crime. 

A 2025 analysis co-authored by health economist Dr. Michael Pesko, a member of Health Canada's Scientific Advisory Board on Vaping Products, found that cigarette sales rose by roughly 10% in Canadian provinces and territories that restricted vape flavours. The findings point to a simple substitution effect: when legal vaping options are restricted, some consumers switch back to cigarettes rather than quit nicotine. Policies that reduce vaping while increasing cigarette sales risk pushing consumers toward the more harmful product. 

The outcome is particularly concerning given the great progress already made. Youth vaping has fallen by nearly 60% since 2019, while Health Canada reports 1.9 million adult vapers, most of whom are using vaping products as a less harmful alternative to smoking. With Canada targeting a smoking rate below 5% by 2035, further restriction of the legal market risks undermining one of the tools helping adult smokers move away from cigarettes, which is a public health benefit. 

The CVA is calling for a shift in focus towards:  

• Enacting balanced, evidence-based policies that protect public health without further driving adult consumers into an illicit market that is already thriving across Canada. Overly restrictive regulations risk the elimination of the legal industry. 

• Sustained funding for CRA, CBSA, Health Canada, and RCMP enforcement and compliance.  
• Coordinated federal-provincial action against illegal online retailers.    

"We're not opposed to regulations. We're opposed to regulation that hands the market directly into the hands of criminals," said CVA President, Sam Tam. "If the goal is fewer Canadians using unsafe, unregulated products, the fix isn't fewer legal options, it's better enforcement against the illegal ones." 

About the Canadian Vaping Association 
The Canadian Vaping Association is a national, not-for-profit organization representing the legal, compliant vaping industry in Canada. The CVA advocates for reasonable and effective regulation of the vaping sector, recognizing vaping's role in harm reduction for adult smokers, with youth protection through education and prevention as a key pillar of its mandate. For up-to-date information on the Canadian vaping industry and the latest on tobacco harm reduction, follow the CVA on X at @thecvaofficial  

 

Sam Tam
The Canadian Vaping Association 
stam@thecva.org

Ashley Bouman
The Canadian Vaping Association 
abouman@thecva.org