The session will explore the economic dimensions of prohibition through a political economy lens. Drawing on data and insights from multiple markets, it considers how regulatory actions may influence consumer behaviour, demand across product categories and public perceptions. It will also examine potential fiscal effects and the dynamics of illicit trade in response to prohibition. Bringing together policy, data, and market insight, this session explores how prohibition shapes real-world outcomes for consumers, governments, and public health.
Chapters:
0:00 - Introduction 3:42 - Presentation of Tim Andrews 17:11 - Presentation of Shane MacGuill 33:30 - DiscussionTranscription:
00:03 - 03:31
[Sarah Cooney]
Good morning, everyone, and welcome to the final day of GFN 2026 and to our third keynote session. My name is Sarah Cooney, and I'm a scientist and science engagement consultant working in highly regulated and contested spaces. I've spent over 15 years working in tobacco harm reduction, and I've been coming regularly to the GFN since 2018. I never leave without having my thinking challenged, which is what I hope this session will do. I'm really honored to be to act as host for this keynote session on the economic impact of prohibition, where we will be exploring the economic dimensions of prohibition through a political economy lens. Drawing on data and insights from multiple markets, we will be looking at how regulatory actions may influence consumer behavior, demand across product categories, and public perceptions. It will also examine potential fiscal effects and the dynamics of illicit trade in response to prohibition. Bringing together policy, data, and market insight, we will be exploring how prohibition shapes real-world outcomes for consumers, governments, and public health. And before I introduce today's speakers, I wanted to briefly reference yesterday's workshop on tobacco harm reduction and illicit trade, because it provided a really powerful, almost visceral, real-world context for what we're discussing today. This session featured speakers from Thailand, the Netherlands, and Mexico, plus industry and Interpol. And if you couldn't make it in person yesterday, it's really worthwhile to go and find it on the GFN YouTube channel after the fact. What's happening in Mexico was particularly alarming because the cartels have moved in to the vape market following prohibition. So these aren't abstract economic models. They are real consequences for real consumers and real governments. So that's exactly why this session matters. And we're joined by two people who are uniquely placed to examine this. First, we're going to hear from Tim Andrews, who is the global spokesperson for Prohibition Does Not Work and director of consumer issues at the Americans for Tax Reform and the Tholos Foundation. He previously served as executive director of the Australian Taxpayers Alliance, where he founded the Legalize Vaping Australia campaign. He holds degrees in law and public policy from the University of Sydney, including a master of public policy, and is a frequent commentator in both the US and his native Australia on issues of harm reduction, regulation, and public policy. Then we will get some hard facts and data from Shane McGill, who is Euromonitor's global lead for tobacco, nicotine, and cannabis. He spent more than a decade overseeing Euromonitor's nicotine and cannabis research. He conducts research and produces future-facing insight across a range of FMCG industries, assessing developments in consumer behavior, regulation, and the intersection between vice and well-being. Collaborating with a broad spectrum of players, including international brand owners, companies in the supply chain and regulators, he leads conversations on consumer and industry trends and strategic developments. He's a frequent contributor to the mainstream media and business media on industry-related topics, including Reuters, BBC, CNBC, The Economist, Bloomberg, The Financial Times, and The Times of London. So, I would like to hand over to Tim.
03:41 - 16:57
[Tim Andrews]
Thank you everyone for joining us today. I hope that you are all well rested and looking forward to this presentation. I'm particularly honoured to be joined here by Shane, who will be speaking after me, whose data is what I know informs a lot of our work and what we rely on. So thank you to Shane and Sarah. This particular GFN, I think, is really stimulating for one particular reason. For many years, we've been focusing our arguments based on public health and consumer choice, where the argument is clearly on our side. The evidence is so overwhelming that these products have the capacity to save hundreds of millions of lives across the world. This should be a policy no-brainer, and yet we see government after government after government banning these products. And it was a very depressing realization for me as part of my job. I speak with a lot of lawmakers, particularly in the United States, realizing they're just not swayed by public health arguments. I speak to them about life saved. I speak to them about science. I speak to them about evidence. And it's like speaking to a brick wall. When I speak to them about lost tax revenue, however, that's when their ears start pricking up, and that's when they start listening. When we start talking to them about the enforcement costs, the costs on business, the economic costs, something that directly affects their bottom line as legislators, that's when we started to get traction. And I think this is a terrible indictment on our political class, the fact that they don't actually care about saving lives. But this is the argument that started to swing them. And because we have so many amazing groups out there doing the public health argument, which I'm not dismissing, by the way. It's a critical argument, obviously, to make. We found that prohibition doesn't work specifically to go into that niche in the market and focus on the direct economic and law enforcement costs of prohibition. where the evidence is, in fact, the more we started looking into it, even stronger than I originally thought, and looking into some of the economic modelling and a new report that we're launching today, it's actually an even more compelling argument that we have. So we launched Prohibition Does Not Work as a collaboration between over a dozen of think tanks around the world from the United States, Europe, Latin America, Asia, my native Australia, looking at the horrific hellscape that prohibition is causing. I don't think I need to tell anyone in this room the effects of prohibition in Australia. Australia, my native country, the world leader in tobacco control and telling us how not to do policy and the hellscape it has become. When I went to Australia last, a couple of months ago, I was speaking to somebody. Oh, yeah, the shop straight away from me was bombed twice. They had to go out of business because they wouldn't sell the products that their criminal syndicate wanted to do. The deaths, the murders, the actual cost. And this is an important point I want to make. We stress the argument, the moral argument, about lives saved through harm reduction. But there is an equally compelling moral argument about the cost of prohibition and the devastation it brings. the hundreds of businesses in Australia that have been firebombed, the seven people who have been murdered in Australia as a result of prohibition, including innocent victims who were just completely killed by mistaken identity. But the cost to social cohesion, what this does to society, We see a couple of days ago, France announced that they're gonna criminalize with up to five years jail, possession of nicotine pouches. What does that do to social fabric when you make millions of your citizens into criminals? This goes against every fundamental principle of the rule of law that allows for a civilized society to function. This is an equally important moral argument to the public health argument. So we see, I don't need to spend time talking about what's happening in Australia here, how somebody in, people in the Middle East are organising murders in Australia. So the promotion, of course I do need to engage in some self-promotion if the prohibition doesn't work, is how we are trying to use the evidence to show that it's not just the public health argument, it's all these other costs as well. and that a proper regulated market will lead to better public health, but also public safety, because a prohibition doesn't eliminate demand. It simply shifts it to the black market. And this is why I'm so grateful to be followed by Shane here, because it's research that Euromonitor and other groups like that provide that we base our work upon. We're also very grateful, I know many of you were here, for the illicit panel to also have Michael Ellis, former assistant director of Interpol, advising us. But as I said, we do try and have a broad spectrum from around the world, and I do hope if you run an organisation, you might be interested in joining us as well. I don't want to spend this time going through, and we can discuss this more in Q&A, the case studies that we've done. We've so far launched, this is a slightly old presentation, we just did one on Sri Lanka a couple of days ago. but how in Australia, in Brazil, in the Netherlands, in Germany, everywhere this has been tried, it has led to failure. And it's not just a failure in achieving its aims. It's very, very clear in all of these countries the aims have not been achieved. In Australia, nicotine consumption has gone up by 40% in the last four years, despite the world's most expensive cigarettes and despite the essential prohibition on vaping. 40% increase. So even on its own merits, prohibition fails. But look at all of the other costs. So we've seen in Australia, as I said, over 90% of products are illegal, but 10 million vapes are sold monthly illegally and no impact on smoking rates. We've seen that in Australia, now there's a Senate inquiry into this because we've tried prohibition, we're trying prohibition harder, we're trying prohibition even harder. Let's try prohibition even more hard and just the complete failures there. But we've also seen this in Brazil. Almost 3 million people still vape there, despite it being illegal. And you actually see 8.7% of Brazilian teens do this. Why? Because illicit markets don't check for ID. You don't have age verification. You don't have all of these checks and balances that you have in a regulated market. Perhaps one of the worst, before I go there, sorry, Germany's next, Germany's de facto ban on nicotine pouches. 17 million smokers and they're trying to make, and a product that is proven to help them quit, that is pharmacologically no different to nicotine gums that doctors provide, are illegal. Yet they still have 1.4 million consumers of these products getting them illicitly. And you don't necessarily know what goes in illicit products because you don't have those regulatory checks and balances. I think one of the most compelling cases for me, though, was Mexico. Those of you who were here for the presentation yesterday would know just how horrific it is that the gangs have gotten into This is one of their most lucrative markets. Why? Well, because you don't actually get the same penalties that you do for vapes than you do for cigarettes. And the profits are just as high. You had a city burned to the ground in Mexico after the cartels took it over a couple of months ago. It made front page news. It was like the lead story on CNN. What people didn't realise is a significant percent of their money comes from illicit vapes and illicit tobacco. This is a human cost. Like, we saw this in prohibition in alcohol in the United States. I mean, sure, we might have got a few good movies out of it, but nothing else good happened as a result. And it's tragic, and I need to stress this again at the risk of repeating myself. There is a human cost to this. The face of lives lost as a result of vape prohibition aren't just the smokers who can't get a product to save their lives. It's also the victims of gangland warfare. It's the businesses who were destroyed, the legitimate small businesses who can't compete against the illicit trade, even if they don't end up being firebombed as a result. It's failing to protect young people. And it's failing to protect anyone, really. So we're also, though, we're today releasing a new report by Professor Sinclair Davidson on the economic costs of prohibition. We've distributed a number of them on the chairs that you have in front of you. But one of the, I won't go through in my presentation now, we can perhaps discuss this in the Q&A, his economic modeling. But one interesting thing, and I, that reading this report just a few days ago, I realised, I've actually been underestimating the lost tax revenue to governments when I've been making the argument of flavour bans. So whenever I would make the argument, if you ban these products, you'll lose excise tax, and that's a number. One of the things that Sinclair, I think, very, very comprehensively demonstrates is that the lost tax revenue isn't just the revenue lost through excise tax. It's the revenue lost to governments by shifting this entire market to the illicit trade where you don't pay payroll tax, you don't pay income tax, you don't have all of these other revenues that governments get. So in Australia, for instance, while the lost tax revenue is estimated from vapes is about $3 billion on excise, itself a really big number for the size of Australia's economy. If you look at the total loss of tax revenue to the government, it's over $10 billion. This is an argument that politicians start listening to. You add to that law enforcement costs, $2 billion at least in Australia, just in policing what should be a legal consumer product. And unfortunately, I think that is one of the ways that we will ultimately win this, because of appealing not to politicians' better nature, because we haven't had that much success with that, unfortunately, but appealing to their base instincts of wanting to have enough revenue to fund whatever program they want. And this is why this sort of data is so important, because it's not like... Because we should be using every single arsenal of ammunition that we have. And the argument that I think is one of the strongest is that of the failures of prohibition and how it's in politicians' rational self-interest to end prohibition. in the same way as it's in the politicians' rational self-interest to appeal to voters. We know from polling that vapers and nicotine pouch users now are really highly motivated to vote according to this one issue, which makes complete sense. If your life was saved by a product, you're not going to vote for a politician who wants to ban it and condemn you to death. So it's another way of appealing to people's self-interest in politics. I have no illusions that I know we're up against multi-billion dollar Bloomberg funded and other special interest campaigns who want to deny the evidence. But ultimately, truth is on our side, as we know. Evidence is on our side. And if we can make this argument that it is in the economic interests of lawmakers to end prohibition and legalize products. I think that there is a huge scope for success, and ultimately, once we win this battle, this will be hopefully one of the many arrows in the bow that we will be using that will lead to our ultimate success. So thank you very much.
17:10 - 33:20
[Shane MacGuill]
Thank you very much. Thank you very much, Tim. I've rarely seen anyone so enthused to see me coming with a slide full of data. It's a pleasure to be here at the GFN. It's a pleasure to be able to contribute to this dialogue. Thank you to Sarah and Tim for your collaboration on the panels to date. For those of you who are not familiar with Euromonitor, we are a strategic research agency. We produce data on about 30 FMCG markets of which the nicotine market is one. And from the perspective of the nicotine market, what we see our role as really is providing data information that can provide insight, context, et cetera, to discussions that go on around this space. Our client base is very broad, includes brand owners, manufacturers in the supply chain, as well as those who work in the public health sphere, academics, governments, etc. So what we want to do is to make sure that we're providing a data set that portrays the tobacco and nicotine market as accurately as possible. We've been researching the tobacco industry for about 25 years on an annual basis. Most of the research we do focuses on the legal categories because in most cases that's where the bulk of consumption is. We had produce date on the illicit cigarette market for most of those 25 years. We started researching the evapour market in 2014, so about 12 years ago. And again, initially, we focused on the legal evapour market in the research we did. And in the intervening period in that decade, it became very apparent that focusing only on the legal market when it came to evapour consumption was not providing a full and accurate context or information around that market. So two years ago, we added research on penetration of illicit evapour consumption into the data set we do. We produce research on 100 markets every year, and we now produce estimates for both legal and illicit evapour consumption in each of those 100 markets. So what I want to do today is just talk a little bit about how we do that, what research methodology we use, because I know that's a question that people always ask, talk through a little of the headline data from the the most recent research period and talk a little bit about what I can say about what the drivers for that consumption are from the research we do, what impact it has, and where this might be moving in future. I'm going to move through quite a lot of material, so I'm happy to share the slides with anyone who wishes to have them afterwards, rather than having you to scribble or take photos. So the first point here to make really is that the annual research that we have done for about 25 years is for a product that we call Passport. That product, which is a syndicated data set, covers about 30 industries, as I said, of which tobacco is one. And that syndicated data set basically takes the same methodology across all of the industries of research. which is we have an analyst in each of the markets that we're researching in. And that analyst is, A, tasked with understanding the context in that market, the landscape, what the regulations are, et cetera. That analyst is then speaking to players involved in that category or industry in that geography. And that may be brand owners. It may be distributors. It may be, in certain cases, academics, public health, when they're willing to speak to us, and government And that analyst is also then capturing anything that's published about that category in that market. And effectively, from an illicit evapor point of view, we take the same approach. The analyst is making sure that they're understanding everything that's available on illicit evapor. We are also adding in a few extra inputs in terms of things like looking at what's available in stores from a product perspective and understanding whether we believe those products are compliant or not, looking at things like what we believe the consumption population should be and the gap between that and the legal market, and looking at things like import-export. This is the scope of research we do just for completeness of information. So we're looking at both closed and open vaping systems, and we research the illicit evapour consumption at each of those sub-category levels. So we're not just producing a total evapour view, we're actually producing a view for each of those disposable, rechargeable, and eliquid-based categories, and then aggregating that up to a higher level. In terms of the markets we researched, they basically group into three categories from a regulatory point of view. There are obviously a number of markets, as we've heard, where the product is banned completely or where individual categories are banned, and we regard consumption in those markets, hopefully fairly obviously, as 100% illicit. There are a few other markets where we'd see no regulation on the eVapour space, either explicitly on the product category or even regulation that brings those products under existing tobacco regulation, we regard that as 100% legal. And then most of the markets we research are a mix of legal, illicit, where there is a regulatory framework in place. And we're looking at things like compliance requirements that may be on the product, nicotine strength, nicotine volume, or things like registration requirements, channel restrictions, et cetera. And that's what determines whether a product is legal or not. And maybe we can go into that in more detail in the panel if we have time. Again, just a very quick overview in terms of where the 100 markets that we research land. So there are just over 20 markets with full prohibition, about 10 markets where we don't see any regulation in place. And there are obviously always edge cases here. If you ask 100 people in the industry, you'll get 100 different views of some of these markets in terms of whether you regard them as legal or not. But most of the markets we research, there's a mix of illicit and legal. Okay, so that's the logistics of how we do the research. We've just finished a set of research across those 100 markets that was published to our clients at the end of May, and at a high level, and this is looking from a total nicotine perspective, so this is looking at total industry excluding China, but our estimate of the total nicotine market globally is about 4.5 trillion stick equivalent, so this is combining all the categories together, and again, You know, there's questions around how you convert between categories, et cetera. I'm more than happy, again, if anyone's interested to go into how we do that. But from an overall perspective, we're looking at an industry that's about 4.5 trillion sticks, and which in 2025, we believe 22% of that market was illicit, rising, we estimate, to 25% by 2030. So in other words, by 2030, one quarter of all nicotine consumption globally, we believe, will be illicit. And again, if you look at that, how it breaks across regions, there are obviously regional differentiations in terms of how the regions split from a lower level of illicit penetration in a market like Western Europe to a higher one in somewhere like Australasia or North America because of the incidence of illicit evapour consumption. So from an evapour view, specifically in 2025, our estimate is that 71%, so just over 70% of all e-vapor consumption globally was illicit. Even higher in the disposable category, so 90%, so only 10% of all consumption in disposables globally is legal. And if you look at the stick equivalent volumes, either at a total e-vapor level or even just for the disposable cigarette category itself, you start to see a level of consumption that's effectively equivalent to the illicit cigarette consumption. volumes globally so again from a kind of awareness or visibility perspective you know most people will be familiar with illicit cigarettes even if you stop someone on the street and that it's an issue in most markets people are probably not as aware of illicit evapour products but actually from a volume perspective it's approaching the same level of significance and if we drill down into the evapour category specifically again from a total perspective you're talking about depending on exactly how you do the conversions something over 700 billion sticks globally so about one in seven of all nicotine units globally from a total perspective but from a legal perspective only three percent of those are from a from a legal perspective only three percent of those are actually legal product and again you can see how that that split so you know really very significant illicit consumption. And people, even people who think they know the industry sometimes can be shocked when I tell them that figure that's coming up, as I said, from the aggregate of all our research. And again, you know, obviously different splits by regions. As you see, there is no region where illicit evapopenetration is under 20%. So, I mean, in the cigarette market, you would really say anything over 20% is a chronic illicit problem. So there's no region where illicit evapoconsumption is under 20%. And in North America, for example, because of the FDA PMTA process, 90% of all evapoconsumption is illicit. I won't go into this in too much detail, but just to illustrate the scale of the problem in some markets. So these are the top 10 markets without prohibition. So these are the markets where supposedly the product is legal. And you can see the scale of the issue in some of these. Israel, where 99% of all product in a supposedly legal market is actually illicit, and you can go right down through. So in the top 10, none of those are below 85%. Again, one in seven of all evapour consumption globally is in a market where there's supposedly a prohibition, where it's banned, so one in seven of all evapour consumption is in a banned market, but 70% of all illicit volumes are in a market with regulation in place. Just to give a quick sense of some of the country-level detail, I've just picked two markets almost at random, if I can put it that way, just to demonstrate what we're talking about here. But the Philippines, where you've got 86% of the evaporation market. So Philippines is, again, in theory, a legal market. 86%, according to our research, is in the illicit space. The illicit volume growing much more quickly, obviously, as you can see from the legal market there. as a result of the complexity of the regulation that's in that market, there's excise, there's licensing required for retailers, there's product compliance, et cetera. And in terms of our research, consumers are just moving into the illicit space. We had a lot of conversation about Mexico in the session yesterday that Sarah referenced in her remarks, but again, it's very much reflected in the research. We do a growing evapour market, about 2.5% of the adult population using evapour products in terms of our research, just over 2 million users, growing at 5% year on year, and all of that revenue going directly into criminal gangs and cartels. So just in terms of, again, based on the research we've done at those market levels, what do we see driving this very significant level of illicit consumption in the e-vapor space? Well, really, I would break it down to three things. The first of those is what we would call product gap, and what that means really is that In those markets where either the category is fully prohibited, obviously, or in markets where we've got regulatory frameworks, those legal frameworks are restricting consumers from accessing products that they want to use. So they could be flavor restrictions in many cases, could be volume restrictions. That means the legal products are more expensive than consumers are looking for. And effectively, the legal frameworks are not allowing consumers access to the products that they want and that they're easily able to get. in the illicit or non-compliance space. It's traditionally been less of an issue of price and price arbitrage than we see in the cigarette market, but that is changing very rapidly. We see more markets that are putting excise in place on the e-vapor category, and that means that we see more and more consumption in the illicit space on the basis of value arbitrage, products that are cheaper, and consumers looking for cheaper products. And again, the The market that we're in right now, Poland, is a very good example of that, big excise increase on the evapour category, and consumers now right across, maybe less so in Warsaw, because of the income levels here, but in other parts of Poland, very, very common for people to buy from local dealers, effectively, because the products are much cheaper than going to your Zabco or anywhere else to buy a vape product. And then enforcement plays a big part in this. Effectively, there's a real lack or absence of enforcement almost in the e-vapor space. That means that once the regulations are put in place that are causing the issues for consumers, there is no effectively barrier to those products either coming into the market in many cases or being tracked and prevented from getting into the hands of consumers. And again, from an enforcement perspective, it's a combination of many different factors. There's, you know, restrictive and often complex legal frameworks. Then there's not enough resource for enforcement in the first place. You've got a market that evolves very quickly from a product perspective as well, which means that once you're trying to kind of get a handle on one aspect of it, it's moving on very quickly. Often consumers, retailers are not aware of what products are legal or not legal. And that means that you're not getting kind of social enforcement or compliance in that sense either. And then again, as we heard yesterday, we've also got the advent of e-commerce and social media, which makes it even more difficult to track these products and make sure they're not getting into the hands of the consumers. I think maybe we can talk a little bit more through the panel in terms of the economic loss here, but I think it's very clear. You can see there the disparity in that solid yellow bar between the illicit market, which we estimate it's somewhere between 60 and 65 billion, and the legal market, which is sort of tipping around the 20 billion mark. And again, if you are able to bring some of that volume back into the legal space, there's a significant gain from an economic perspective, both for the operators in the market, but also for government from an excise revenue perspective as well. And then just finally, how do we see this again from a research point of view evolving? You know, we see more, not fewer, bonds coming in in the short term in the evapour space. So we can expect in many of these markets to see additional consumption moving into that space. We've also now got a broader landscape of product categories, more options for consumers. And if you look at something like the nicotine pouch category, we've already talked about Germany There's a real risk in the TPD3, for example, that we'll have more flavor restrictions in the category, which will really effectively just replicate what we're seeing from our perspective based on the same drivers in the illicit evapour category, perhaps even more so because of the lower barriers to entry in the nicotine space, easier to make, you don't need to make a device, easier to ship in many cases as well. And then in the longer term, we also see the advent of potential alternatives to nicotine, nicotine analogs that consumers can tap into, which may be untaxable or maybe even harder to regulate or restrict. And that raises the specter as well of the potential for what you could call embedded noncompliance in markets. Again, we heard yesterday about Mexico where the thesis is that actually even if you wanted to change the situation tomorrow, you just wouldn't be able to do it. So thank you very much and I look forward to the discussion.
33:44 - 34:09
[Sarah Cooney]
So thank you both very much for really, really interesting, excellent presentations. And I wanted to start the discussion by asking you both sort of an overarching question for both of you. If prohibition doesn't work, what does? What specific regulatory model, licensing, taxation, flavor controls, marketing restrictions, actually balances keeping products accessible to smokers while limiting youth appeal and illicit trade?
34:16 - 37:48
[Tim Andrews]
If governments want to act in accordance to and based upon evidence, what I would suggest they do is they start with the lowest possible level of regulation, see if that works, assess the outcomes. I know this is such a crazy idea, assess the outcomes of a policy. And if that doesn't seem to achieve the policy outcomes they want in terms of youth out, in terms of youth usage, escalate a little bit further. So my personal opinion is generally if governments simply enforce very, very low levels of regulation, basic sort of minimum standards in terms of ingredients and ID checks, that'll solve 95% of the problems that governments claim to care about in terms of youth usage. But if that doesn't work, you could try further escalating techniques. But what is important is at least try low levels of regulation and see if it works. I think that, I mean, my personal political ideology is one of relatively pro-freedom. But this isn't an ideological question. I think irrespective of where you are on the political spectrum, you should support evidence-based policies. And I think everybody will be very happy to say there should be minimum standards when it comes to ingredients. You need to make sure that you don't have absolute toxins in e-cigarettes. But you don't need a process like the PMTAs in the United States, where you need to do this entire insane regulatory process for every single product. Just set some level of basic guidance for product safety, like we do in every other industry. Have age checks. Make sure that there's enforcement. Like, we do need to make sure that your shops aren't selling to underage people. We do need to ensure regulatory compliance. But let's try that first. And if that doesn't work, then maybe look at advertising restrictions in terms of products that may be appealing to kids. I don't think this is actually true, by the way. I think the evidence is pretty clear that adults like different flavored products. And an adult is just as likely to have unicorn bubble gum than a kid. I don't actually think that it's kid-focused. But... I'm open to the argument that there should be potentially restrictions on that. I don't necessarily like it ideologically, but I'm open to that. But let's move there only when low regulation has been tried. And if that doesn't work, you can escalate further. You can look at only selling things in age-restricted shops. I don't think that's a good idea personally, but I'm open to that as an escalatory tier. The point is that policy should be based on results and outcomes. Let's try minimum regulation and do a regulatory impact analysis. This is the 101 politics. Governments should be actually looking at the outcomes of their policies and seeing if something works, and then adapting course. And we're not even doing that at the moment.
37:52 - 38:45
[Shane MacGuill]
I mean, I think the only observation I would make is that, again, I mentioned the word in the presentations, the idea of gaps. As I see it at the moment in terms of the eVapor regulation that's in place, there are a lot of gaps there. There's a gap between the regulatory framework and the reality. There's a gap between the regulatory framework and what the enforcement authorities can do. There's a gap between the framework and what consumers and retailers understand about the framework. So as a starting point, I think a good idea would be to close those gaps and bring those different aspects of what you need to go forward into alignment. I think too often at the moment regulatory authorities are putting in place what they think in theory may be a good framework or model, but it's not grounded in reality, it's not grounded in evidence, and it's effectively shifting the burden of the issue onto others, whether it be their enforcement colleagues or whether it be society as a whole.
38:47 - 39:02
[Sarah Cooney]
So sort of as a follow-on to that, do you think there are lessons to learn from successful jurisdictions? Are there any successful jurisdictions about where policy could be replicated from? Anything working anywhere?
39:03 - 41:22
[Tim Andrews]
I mean, New Zealand is the clear example to compare to Australia. I mean, if you want to look side by side, two countries that are relatively close geographically, relatively culturally similar. Australia has gone down a path of opposing science. New Zealand has embraced science. And you've seen significant declines in smoking rates in New Zealand. You've seen particularly huge gains in reducing smoking in Indigenous, low socioeconomic, and other minority groups. And you've seen governments that are actively taking a proactive role in embracing harm reduction. So I think New Zealand is probably, at least in my opinion, on the basis of outcomes, the best success story. And it's so important, and I think what Shane said about gaps is worth repeating, that if you have regulation that is not enforced because everything is outsourced to the black market, that's worse than no regulation at all. Because if you have in a legal market a level of minimum regulation, you don't get that in the black market because of those gaps, which is why you see countries like New Zealand with a good regulated market. You have all of these successful outcomes. You don't have boons in youth usage, but you do have declines in cigarettes. You also have particular advances in New Zealand about the impact on other minority populations. Like, we know people with mental health issues smoke the most because it's a form of self-medication. We know people from the LGBT and neurodivergent communities smoke more because of pressures that they face. And we've seen New Zealand has also done, and I think this is under acknowledged point of the New Zealand model of going to more vulnerable populations and trying to reach out to them and trying to help them quit smoking. So I think New Zealand's the best success story. Unfortunately, it does look like Canada, which was really good up until a few years ago, and the United Kingdom, backsliding somewhat, but there's still really good evidence and data from New Zealand. I'm not sure, though, that I can think of any other great success stories at the moment.
41:25 - 42:54
[Shane MacGuill]
No, I mean, it's very hard to look at that data set and say there are any really strong examples of countries that are doing it right, and there's very many, obviously, as I showed, where you can very easily identify an issue. I think one of the issues that I find difficult here, and I appreciate the the New Zealand example, I think you mentioned UK at the end, and to me it seems there's a sort of equivalent issue here. Everyone has a plan until they get punched in the head, and I think that's what happened to the UK in terms of the disposable category. They were taking a very evidence-based approach and wanting to differentiate between ORP and combustibles and so on, and then what happened was that the disposable category really, and I can see John there shaking his head or nodding his head, but the disposable category really cut through into the mainstream in terms of public understanding. And there was a real backlash against that. And they were almost forced to act on that category in particular because of everything else that went around it. So it feels to me that there's something more global here that needs to happen as well. I don't think it's just enough to say, well, country A or B can adopt a framework that's going to work for them at all times because this is a global industry. It's a global category. There's innovation happening constantly. And I think there needs to be some coordination as difficult as that is at a global level to try and come to some consensus or alignment around what regulatory principles should be in place here, what product categories societies want to see for nicotine delivery, et cetera.
42:56 - 43:09
[Sarah Cooney]
That makes complete sense. It makes complete sense. So Shane, out of all the markets in your data set, which one do you think illustrates the failure of prohibition most darkly? And is there one that gives you any optimism?
43:10 - 44:05
[Shane MacGuill]
I mean, on the optimism one, I don't think there is any particular, I mean, there are, you know, as I said, there's about 20 markets where the prevalence of illicit consumption is below 20. I think for many of those, it's probably, frankly, more luck than judgment in some ways. So, you know, the kind of positive examples are very few and far between. In terms of the negative stories, I mean, again, it's you take your pick as to which one you want to highlight. I mean, there are a number of markets there where, again, theoretically, as I've said, the product is legal, and yet the You know, most of the market is in the black market. In those markets where we've got full prohibition in place, like, again, 15% of all consumption of evapour products globally is happening in the market, in the few markets where we've got prohibition in place. So, again, you know, it's very hard to make the argument that prohibition is working in that case because we see big, growing consumption in markets like Brazil, Mexico, and elsewhere where the product category is banned.
44:07 - 44:22
[Sarah Cooney]
Okay, thank you. And so Tim, I wanted to ask you, I think everyone in this room accepts that Australia is politely a cautionary tale. So why can't policymakers see this and what's preventing them from learning the lessons?
44:24 - 46:08
[Tim Andrews]
I think Australia is a particularly unique case because Australia prided itself on being the first country in the world to adopt plain packaging, the highest tobacco taxes in the world, this first sort of some of the early advertising bans. And Australia had, in the tobacco control movement, this pride of we're number one, we're global leaders. And yet every single policy they did had failed. Every single plain packaging failed. Highest tobacco taxes in the world failed. Advertising bans failed. And the tobacco control movement can't give up this psychological pathology that everything they had spent their entire lives advocating for has been a colossal failure. And here, a product came that they had nothing to do with that is so successful at saving lives. And they would rather people die than admit that they were wrong and something better has come up. This is potentially an overly cynical view, but it is the only one that I can explain, that I think can explain the Australian experience because of just how obvious the failure of policy is on every single level, and yet you still have people advocating for this. I can find no other reason than you've got people who have invested their entire life's work into policies of failure, and this abstinence-only prohibitionist mindset that they just can't let go of and they can't accept reality.
46:11 - 46:12
[Sarah Cooney]
It's pretty depressing.
46:15 - 47:48
[Tim Andrews]
I am optimistic about the future. We do have Alex Wodak in Australia. Whenever I get depressed, I always listen to Dr Wodak as to how ultimately we do know that, like, truth will prevail. So things may be dark, but I do genuinely think that even... Like, even in Australia at the moment, if you look at every single Australian newspaper today, every single media coverage is on the failure of Australia's tobacco policies. You're seeing this now across the ideological spectrum from the Ceremony Herald on the Age, which leaned left, The Australian and Sky News, which lean right. That is what all of them are talking about today. You see cross-party support in Australia for reform. You see, in my own state of New South Wales, the Labor Party premier, like the governor, etc., advocating for changes in policy. You have the Greens. You have the more conservative parties. There's a Senate inquiry going into this at the moment. So there is a realisation now, belatedly, by the political classes that something needs to change. So there is some optimism for Australia. I don't think, unfortunately, though, it'll be easy to fix, because even if they legalise all of these e-cigarettes, The black market is so entrenched, it'll be so hard to displace it. We've seen this with the legalization of cannabis in a lot of states in the United States, where the majority is still black market, even though it's licit, because it's just so entrenched. So it will be a lengthy battle, but we'll get there.
47:50 - 48:15
[Sarah Cooney]
I mean, I agree with you that I think the evidence will eventually win out. Science and the data always eventually wins out. It's a painful process. I've got one more question for you, Shane, before we open up to the audience. I guess, why do you think the economic costs of prohibition, the lost tax revenues, enforcement escalation, retailer displacement, and so on, why are these so absent from public debate?
48:17 - 50:00
[Shane MacGuill]
Well, I mean, in my opinion, there's two probably interlinked reasons for that. And effectively, it's just around a hierarchy of issue for the public. I think, A, you know, people, again, we saw that yesterday very clearly in some of the sessions, people do not have a clear perception of what nicotine is as a substance. The vast majority of people, if you walked out in the street, would tell you that nicotine is carcinogenic. Many of them would see it as similar to something like cannabis or something like that. So effectively, when you talk about an illicit market for nicotine, there are many people publicly who would say, yeah, but it should be illicit, or we... you know, it's not something that we want, it should be hard to get, etc. And those issues around the costs to the legal industry, etc., are secondary in people's minds to the fact that it's a good thing that nicotine is harder to get, etc. So I think that's part of it, a fundamental. And to me, in a broader sense, that's something I've been talking about for, you know, almost all the time I've been looking at the industry. To me, that's the single biggest issue for the industry and all the stakeholders in the industry is that misperception of nicotine as a substance. It's the root cause of almost everything that's wrong with the industry and wrong with our regulatory approach is that there's a massive misalignment between what nicotine is as a substance and how we as societies perceive it in terms of its attributes. And then related to that is that, again, most people think the major people who are suffering from all of these issues are the tobacco industry and the big tobacco players. And again, there's an element of people not wanting to intervene because they feel that those are the guys who are being hurt or the big tobacco companies. And there's not a lot of sympathy for big tobacco companies around.
50:04 - 50:16
[Sarah Cooney]
Very good answers. Thank you. So I do have a couple of other questions, but I want to open it up to the audience. And I don't want to run out of time for audience questions. So I can see somebody there in the second row and then somebody back there.
50:19 - 51:04
[Joe Kosterich]
Thanks. Joe Kosterich from Australia. Tim, I think you completely encapsulated the public health lobby in Australia. They're hubristic, they refuse to admit error, and they refuse to listen to anybody outside the bubble. But you obviously talk to policymakers who aren't public health people, and I'm wondering, where is the block with them? And in my mind, I wonder, is it also ideology? Is it just complete refusal to look at data? Or is there something darker going on, which always leaves one-to-one to follow the money? And could some of the money from organised crime be finding its way back into the pockets of these people who allow it to continue and flourish?
51:07 - 52:33
[Tim Andrews]
Look, I won't be as cynical as to say that I think that fully explains it. So possibly one thing, I'm less cynical than you are, but I do think that politicians aren't motivated by the public health arguments. I don't think they're motivated by evidence. I do think you're right in that they're motivated by evidence. self-interest and this is why going back to my earlier points I think showing them the impact like why is Australia now looking into the black market for tobacco it's not because the science has changed on the public health it's not that the stuff about the black market and that criminal syndicates has changed it's not that the fire bombings are a new thing they've been going on for years it's the fact the treasury is looking at what's happening to revenue and they're going We have a real problem here. So that's what I think we're going to be successful at in terms of motivating politicians. Because I don't think politicians care about science, unfortunately. I'd like it if they do. But I think that the antis have been very successful in saying, stay away from this issue. But it's the budgetary impacts that will finally convince them.
52:34 - 53:20
[Shane MacGuill]
I wish that wasn't the case, but... We discussed this before, though, so in practice I think there's a real difficulty there because you have to make the argument that we should put excise on ORP categories in order to incentivise enforcement of the regulations that are in place, etc. To me, that seems like a very difficult balance to strike, so you're giving yourself a hard job there to nuance that message. And again, from a wider perspective, If you're turning around and saying, we should have excise in this category, there's a risk, I think, that the nuance of the message gets lost more broadly. And all people hear is, it's right that we tax these products because they're harmful or because they're dangerous or whatever it might be. So that feels to me like a hard argument to make.
53:21 - 54:00
[Tim Andrews]
I think you can, I mean, it's where the continuum of risk argument comes in in terms of taxation. I think you can make an, I mean, I would prefer that they're not taxed at all, obviously. But I do think you can make a credible argument that a proportionate taxation and regulatory system that incentivises harm reduction, I mean, if you go from prohibition to a moderate tax, that's not even something I think the most hardcore anti-tax warriors will necessarily oppose, because currently the tax rate is you go to jail if you have these products. So having a moderate excise tax, I think, is potentially justifiable.
54:02 - 54:12
[Shane MacGuill]
And I think that makes sense from a prohibition to moderate access point of view, but the issue is that in some of these markets, you've got a regulatory framework in place, and the issue is there's no enforcement for the moderate regulatory frameworks.
54:13 - 54:19
[Sarah Cooney]
Is there a sweet spot for a tax, do you think?
54:20 - 54:53
[Tim Andrews]
I think that, I mean, I think, Shane, you're absolutely right in that enforcement is important. I don't think we can enforce our way out of the problems caused by prohibition. I think that they're much more structural when it comes to prohibition. whether it be de facto or de jure, that I do think that law enforcement has a very important role. And I do think in some cases we do need to increase compliance and increase law enforcement so that if you have a legal regime, you make sure that the frameworks that are put in place are adequately enforced.
54:54 - 55:36
[Shane MacGuill]
I think, I mean, again, I'm not an expert in this area, but it seems to me there may be a role for things like licensing or bringing the industry into it, provide that resource and revenue because that provides you some revenue for enforcement that's something they're looking at I know in the UK for example licensing retailers and that allows you to make the argument look these are adult products we want to make sure that they're sold responsibly but it doesn't necessarily send the message with higher excise that they're dangerous in that sense or whatever so that feels to me like maybe there's some more creative models that can be put in place that give some enforcement, target enforcement resource that isn't necessarily sending the wrong messages either around the products and what they are.
55:37 - 56:09
[Tim Andrews]
And I completely agree with that. And I would also note in terms of getting industry participation, you have in a lot of other industries codes of conduct and ethical standards that industry self-enforces. And I think there's potentially a role for that here as well. So things don't necessarily have to be mandated by legislation. But if you actually get industry buy-in and co-opt industry to have these sort of ethical codes, it seems to have worked in quite a number of other sectors. And I'm not sure why it wouldn't necessarily work here.
56:11 - 56:14
[Sarah Cooney]
Thank you both. I know Mark Tyndall had a question.
56:19 - 58:28
[Mark Tyndall]
Hi, thanks. I really enjoyed those presentations and appreciate your passion. When we leave this meeting, though, we're stuck now with two enemies. We have the regulators and people making obscene policies that really limit access to these products, and now we have a new enemy, the illegal market, and we're saying we need to stamp out this illegal market because it's flooding the environment with illegal products. and we're forgetting about the consumers and why we're here in the first place to get people access to these products. So we have the wrong enemies and then in the middle of it we have industry and companies that are trying to do this legally And I really think they need to step up really hard and say we have products that need to get out there. If I had a choice and I'm faced with somebody who's a smoker and they need access to these products, I'm on the side of the illegal market. Go for it. We need these products out there. I'm not on the... I think we have to be careful before we demonize this illicit market, which are serving a very important public health purpose here. Obviously, when we're at this prohibition meeting yesterday and Mexicans are talking about getting people's heads cut off and stuff, it's pretty scary. And that is not the kind of group that we want to be putting these products out there. But at the end of the day, If we want to see progress on people getting access to these products, we need to leave this meeting with more than just, well, we have to fight the illicit people and we have to fight the regulators. And right now, I think we're losing with the regulators. We seem to be going in the absolutely wrong direction. And so there needs to be some more urgent solution here. We can't just leave kind of at a stalemate. Because at the end of the day, if we succeed in pushing back the illicit market, it just means that people don't have access to safer products, which is a disaster.
58:30 - 59:15
[Tim Andrews]
And I think that's exactly why, I mean, I use illicit products in the US as well, because I can't get flavored vapes otherwise. So I wish there was a legal market, but I'm using illegal products. I think that other people should. So I completely get your point. My point is that And this is the point I was trying to make in that you can't enforce your way out of this. This is a structural issue that you use the illicit market and the problems there to convince politicians as to why they need to create a legal market. Like, I don't support the view that, you know, you can just law enforce your way out of this. But the illicit market is a powerful argument to persuade politicians was more the point that I at least was trying to make.
59:17 - 60:20
[Shane MacGuill]
Yeah, I mean, it feels to me that no one, no matter where you're sitting, wants an illicit market for nicotine. Or if you do, I really question what your assumptions are, your basis for that is. So to me, it's not about demonizing the illicit market. It's more around showing that it exists and the scale of that problem. I think some of the color around the specific attributes of the illicit market is useful because, yes, the cartels in Mexico are providing a service to smokers or combustible tobacco users in Mexico, but as we heard yesterday, they're also doing much more than that, and they're actively doing harm as they're doing that, etc. So I think it is important to recognize that effectively all this is doing is setting up unnecessary additional issues in society, and it's not necessarily demonizing any group of people. It's around trying to demonstrate the scale of an issue and the context in which that issue sits.
60:23 - 60:26
[Sarah Cooney]
Thank you. I saw Roberto has a question.
60:31 - 62:36
[Roberto Sussman]
Hi. Yes, just a very quick... There is an important technical issue. It's not taken care of, and it's the fact that most of the... And it is an effect of prohibition or bad regulation. Most of the devices that are in the black market are closed. In fact, disposable. Here's an important technical problem. The liquid is in contact with the metallic parts and the plastic, and there is a chemical phenomenon called corrosion. That means that parts of metal might go into the liquid and then into the aerosol. And this is a potentially very nasty problem. Well, there is a security valve, because after all, the taste... and the flavors are chemicals, right? So corrosion is a chemical phenomenon and it corrupts the taste. So if it is extremely corroded, the users are going to throw it away. This is a security valve. But there is a lot of room of ambiguity where it can be sufficiently corroded for the users, especially a young user who has never tried it, to say, well, that's the way it tastes. And because of social pressure, I mean, what I'm trying to say is that there is room for danger, and this is an argument that has to be put in the, used against the prohibitionists. This is a direct threat. So far, we have, thanks God, we have not seen hospitals and so on, but there is a risk for that, and it's an important argument. It's a technical argument. We have research on this. And that's what I wanted to convey.
62:37 - 63:07
[Tim Andrews]
I remember there was a study, your comments about a study, this was a couple of months ago, that found various heavy metals and toxins in vapes. And the argument in the media was, this is terrible, this is why vaping is bad. And you did the work and put out, well, hang on, these are all illegal products. So this is not a problem of e-cigarettes. This is directly the result of prohibition so I know that you've been making this great argument for a really long time and I mean you're absolutely right.
63:08 - 64:03
[Shane MacGuill]
I think just an adjacent point to that actually is something I've increasingly heard recently around regulators approach this category and it's something that you would have heard previously and maybe what you would call emerging markets or whatever is that these are obviously complex products with complex chemistry and interaction between electronic components and chemicals and so on. And in certain cases, I think there's starting to be a view among some regulators that actually it's easier just to ban something than have to set up the processes and resources to test and monitor and ensure the products that are coming onto the market are safe in various different ways. So not only does prohibition cause kind of mutations in the product set that's available to consumers, it's actually also in some ways something that's driving an argument for prohibition or prohibition rethinking in the minds of regulators is to not have to bother to monitor what is a complex product set.
64:07 - 64:09
[Sarah Cooney]
Question there in the middle.
64:09 - 65:03
[Andrew Manson]
Hi, Andrew Manson from Extima UK. You mentioned earlier, Shane, about the UK disposables ban. And in that situation, we have a public health that broadly accepts harm reduction. We have a legal market. But we also have an issue, a clear issue, an environmental issue and a safety issue with disposables. I would ask the audience here and the panel, do we accept that we failed to offer a credible or articulate a credible alternative leading the politicians to execute a ban which I know has not been effective and we could have predicted it hadn't been effective. Can we accept our failure in failing to articulate an alternative?
65:05 - 66:18
[Shane MacGuill]
I mean, to me, I think the short answer to that is yes, probably, but it's understandable. I think that the disposable vape is such an emotive product, and I've told some people, I mean, I also do work on the cannabis research we do, and I deal on the cannabis side of things with people who are extreme libertarians who are saying we should legalize everything and arguing for more legalization in the cannabis space, and I'd speak to them about disposable vapes, and they'd be saying, oh, these things are terrible, we should ban them straight away. So You know, that particular product, the combination of the youth use, the environmental issue, the fact that people could start seeing them strewn around the streets, et cetera, it was a kind of heady mix, I think, in that sense. So I think there was a window of opportunity to make a harder argument around the value of having a product that appeals to a smoker, et cetera, and is simple to use, and so on. But I just think it was a hard argument to make at that particular time just because of how quickly they came. And again, it maybe goes back to that lack of coordination internationally and across the industry, because there was products that were being released that also weren't helpful, I think, in terms of the case for the category.
66:21 - 68:24
[Tim Andrews]
I mean, I think with the benefit of hindsight, there should have been more research and investment done into seeing if we can work out things like product recycling for disposables. But I would say that I wouldn't let the government off the hook on this either because I don't think they created the incentive structures for companies to look into these sorts of things. I mean, in the United States, for instance, the regulatory barriers were such that people were flat out said, we can't be... It's not worth investing in research into recycling and battery disposal and safe sorts of things because of the way that the entire PMTA regulatory process was designed. It just made it economically... impossible to invest into that sort of research. So people just went to black market disposables. So, yes, I do think that... there is a greater scope for industry to research and look into things such as recycling. And I'm fairly confident that technology will get there. I think people have said, you know, I think we're not there yet, but I'm fairly confident in it that we will get to a position where a lot of those problems would be addressed. But I think it would be a lot better if governments could incentivise this sort of research rather than, again, this is what I was trying to say earlier about tiered regulation. why don't you look at, before banning something, look at, just to use a basic example, and I'm not saying I advocate this policy, but why not look at things like you have in a lot of jurisdictions with bottles, like container deposit schemes, where proper recycling products and things, there's a financial incentive to do that. Things like that, at least governments could look into to help incentivise this, because I do actually think the disposable products ban in the United Kingdom mainly was driven for those sort of environmental reasons, as you say, rather than for public health ones. And appropriate policies there we could have and should have tried before going straight to the ban.
68:25 - 69:01
[Shane MacGuill]
If I could just add quickly on that, I think one other dimension to it was just the fact that these products were available in almost any type of retail outlet. It almost became a meme in the UK. You could go to a hairdresser, mobile phone shop, and pick up a disposable vape, et cetera. So something like a licensing framework which is kind of, you know, still making the products available, but just putting a little bit of a choke point in terms of who they're available to and how, et cetera, again, may have helped. And if that had been in place, then it's possible you wouldn't have had a ban put in place at a category level because the retail infrastructure would have contained the issue perhaps to some extent.
69:05 - 69:06
[Sarah Cooney]
Fiona.
69:13 - 70:31
[Fiona Patten]
Thank you. Fiona Patten from Australia. I think it's... Just on those comments, I just noticed, ironically, the other week, I was in a store which had a disposable vape recycling bin, and I've started to see them actually around my city of Melbourne. Looking in Australia, as you mentioned, Tim, we're holding a Senate committee inquiry into illicit tobacco... and e-cigarettes, although that seems to be a very small part of that inquiry. It's really focused on tobacco. But I'm wondering if the panel has any suggestions on how we can avert the hubris of the tobacco control lobby in Australia. And yes, they don't want to say they've got it wrong. And in doing that, they are putting more and more smokers at risk. But can anyone think of this sort of diplomatic detour that we can make in Australia in that argument? I mean, is it for the products that are already legal that are being sold in very small amounts in chemists? I mean, do we start from that low base or should we be pushing for a full regulatory model like New Zealand?
70:36 - 72:15
[Tim Andrews]
If I had known the solution for Australia, I would have advocated it by now. Look, I do think it's important to try and do an off-ramp. Like, despite my personal views about the tobacco controllers, if you want to use... I'm going to stretch the analogy a little bit, but, like, what do we do with terrorists? We deprogram them by providing them with an off-ramp. It's like de-escalation, de-radicalisation. It's not demonising them. So there may... Not necessarily with, like, the Simon Chapmans of the world, but with more moderate people in tobacco harm control, providing them an off-ramp where they can at least be slightly de-radicalised. So I don't think we're going to see Australia fully embracing a New Zealand model any time soon. But incremental reform... I mean, this is how... a lot of drug law reform was won in Australia and other places. It wasn't through, right, we're legalising everything tomorrow. It's sort of that slow, incremental reform, which won't achieve what everyone in this room will want overnight, but it will ultimately get there step by step. So I think that there's scope at the moment. I mean, just expanding the pharmacy model to actually make it a consumer product to some degree. I do think there is some scope of, again, we're not going to get there immediately, but I think that step by step. But if I did have an answer as to how to do it, I would have been advocating it for many years.
72:19 - 73:02
[Shane MacGuill]
I mean, you know, again, it's just in general terms, and I guess in the Australian context as well, it does strike me that there is more consensus often than, you know, we talk a lot about the differences and different camps and demonising people and so on. There are a lot of commonalities, I think, between TH4 and people who are more extreme on the tobacco control side. So maybe just continuing to emphasise the commonalities around, look, we want to make sure that vulnerable communities are not getting access to these products as well. We want to make sure that companies are not exploiting people. as well, but obviously what we're doing right now as a society is not working and we need to change something. So yeah, I think these feel like starting points to try and bring the sides together.
73:02 - 73:06
[Sarah Cooney]
Thank you. And Alex, I can see your hand up.
73:12 - 73:44
[Alex Wodak]
Simple question for both speakers. You've painted a picture of abject failure of policy adopted by many governments around the world, and if anything, stable or increasing, and yet the policy failure is very clear. The question is, why has the policy failure persisted for so long? And if anything, is maybe even strengthening?
73:44 - 75:53
[Shane MacGuill]
I mean, from my perspective, I would go back to the point I made about the understanding of nicotine and its role in society. That's just a conversation that no society is having right now. As societies, we don't understand what nicotine is, full stop. There's no other way of putting it. And therefore, we also are not having conversations about what we see as its ongoing role in society as a collective. And in that context, those policy failures can be seen by some as successes or honorable failures or something that's being done in the right spirit and will work eventually or whatever it may be. So again, it's not a straightforward answer, perhaps, but I think, you know, the only real way out of this is to to kind of go back to that and say we need to have that conversation as a society we all need to be transparent around our motivations and I think that goes both for the tobacco industry the tobacco industry is always very careful to say we only want smokers to transition to these products we're not interested in having and I mean I I don't think that's the case, quite frankly. I think some of these tobacco companies would be quite happy to see people continuing to use nicotine over a longer period of time, and I think that's a legitimate position to have. But by not being transparent around that, there's a question of credibility, there's a question of motivation on the tobacco control side, where again, tobacco controllers talk about wanting to to end combustible tobacco consumption or whatever it might be, but what they really mean is I don't want any nicotine consumption at all in my society, and they're not transparent about that as an end goal or a motivation. So, you know, until we have those more transparent, honest conversations as societies, I think you'll continue to see regulatory failures, frameworks being set up as successful that are actually making problems worse, et cetera, because we're completely misaligned. on how we see nicotine and what the goal is.
75:55 - 77:55
[Tim Andrews]
I mean, you ask why has prohibition persisted despite its failures for so long, but look at the entire lesson of human history. Why did alcohol prohibition persist for so long in the United States despite the fact that everybody knew it was a failure? But look at all the other prohibitions. I mean, we had criminalisation of same-sex relationships for centuries before that stopped. I mean, that was a prohibition. You had drug prohibition that's been still going on that is ending. Look at where we are now in the country of Poland that lived under an evil regime that tried to prohibit virtually every single sort of individual freedom for close to half a century, but that failed. So ultimately, if you want to look at why prohibition persists, I mean, sure, it prohibits in the short term, but we're looking at a 10-year period of the prohibition of these products, and that's just a drop of an eye. Drop of an eye? That's not... blink of an eye, in the sort of course of human history. So I'm very, very confident that the lesson of history is prohibition does keep going because of the entrenched interests who seem to have this prohibitionist mindset. But as we have learned from every single other area of human history, ultimately, it will come crumbling down. And we're seeing, I think, the sort of panic at the moment may well be the last sort of shrieks of the prohibitionists before their entire edifice comes crumbling down a lot sooner than we would think. Just a couple of years before this country here was free, before the Solidarity Movement and so forth led to the freeing of Poland from their regime, nobody would have expected that to happen. Just go a couple of years in the mid-80s and look at what people were saying. Nobody expected So it could actually happen a lot quicker than we think, is the sort of optimistic way of potentially looking at things.
78:06 - 79:11
[Sundramoorthy Pathmanathan]
In relationship to punishment of users, of individual users of web, The little bit I understand about it, in your part of the world, and yours I'm not certain, in Thailand, for individual users who are repeat offenders, besides fine, it traditionally starts off with a fine. And if you are a repeat offender of a vape, or you're a vaper, you're going to be sent to prison. And I think yesterday I brought this issue about it's the wrong place to go to for many good reasons. How, what is it for Australia exactly if you're a repeat offender of e-vaping or possession of one of those instruments? Just, and your thoughts on, because since it's prohibited, there's going to be punishment. Prohibition always comes with punishment. So I'm just curious to know what are your stance on this matter? Thank you.
79:14 - 80:11
[Tim Andrews]
So, I now live in Washington, DC, so my knowledge of Australia isn't as first-hand as it should be. My understanding is that there's... I mean, it is a state issue, not a federal issue, so fines and penalties do differ state by state. I believe Western Australia is the only state that theoretically punishes penalisation by jail time, ACT. But I don't believe users so far have been... So it is illegal to present, but I don't think people have been jailed for use, only for import, not yet. So technically on the books, you could be jailed for usage, but I don't believe that's been enforced yet. Only import has been really the, I mean, which is one of the issues that I, so yeah, I think enforcement so far has mainly been on sale and import.
80:14 - 80:34
[Sarah Cooney]
So I wanted to come back to both of you. And we've made the case that economics is the argument that should finally move politicians. And Shane, the data you presented, is the evidence package now strong enough for governments? And are there still gaps that prohibition advocates can exploit?
80:39 - 82:12
[Shane MacGuill]
I don't know. Depends on the regulator, I suppose. I mean, again, it's very hard, I think, objectively, and as a researcher, my job is to be objective and try to kind of look outside these things. It seems to me really difficult to look objectively at some of that data and say, this is working. We're headed down the right path. So from that perspective, when you combine that data with some of the sort of anecdotes we've had It seems to me, again, objectively looking at the scientific properties of nicotine, objectively wrong is the polite way of saying to criminalize someone for consuming or possessing a nicotine product. The idea of putting someone in jail for holding in their hand an ORP, that seems to me objectively wrong. So I think there's enough there to say, we need to rethink this. We need to look again. you know, at the risk of sounding like a broken record, I think it will be very difficult to make significant progress on that without also talking about, you know, having an honest conversation about nicotine, its properties, what we see as society's, its role, and therefore how we want to go forward. The fact that people will continue to use nicotine, they've used it for thousands of years, it probably, on that basis, as a researcher, I would say the odds are good it will continue to be used for some time to come, and therefore we need to kind of come to some alignment on that as societies and work out what's the best way of regulating in that context.
82:15 - 82:24
[Sarah Cooney]
OK. Are there any other questions in the audience? But then I have one final. Oh, sorry. Is there John?
82:28 - 86:54
[John Dunne]
John Dunne from the UK. This has been a very interesting conversation. And unfortunately, it's been doing my head in for a number of years. I liked your comment on the disposable ban, but to say that the industry should have offered more insight, we did. The problem is the government didn't want to listen. We had three prime ministers, nine health ministers, I think we're up to now, in a two-year period. But the industry is to blame for some of this themselves. The biggest argument that I get from politicians is, we love vapes, we think they're great, but they're not a lifestyle product. And when we see some of the marketing that's being done by companies, even though I've told them for many, many years to stop doing it, they're feeding into that, listen, it's all about the kids now. We've got to save the kids, right? We've only had that problem since 2019 in the U.K., I remember giving a speech in China in December of 2019 where disposables were 5% of the market. They were down from 10%, exactly where they should have been because they were a great product for people trying vaping for the first time. They were cheap, easy to enter. Six months later, they were 75% of the UK market, mainly because of what was happening in the US where the Chinese companies, well, we can get around PMTA by putting these products in. They're sealed. Happy days. And then they went, Okay, well, if it works there, let's try the second biggest market, the third biggest market, and next thing, Russia and the UK got these devices too. But this is what triggered the change in the mindset in the UK. And then we had the environmentalists jumping on board. And this is where the whole disposable thing went in. But the disposable ban has been, for the most part, an absolute failure. A, because the industry wasn't involved. So the definition of what a rechargeable device is It goes all over the place. But it didn't change the mindset of consumers. So I would have loved to have seen a deposit scheme, maybe even a pound or something like that, because that would incentivize the consumer to spend the time and bring them back into the recycling system. Recycling companies I talked to were going, this is fantastic. We can make a ton of money recycling these things, but we need volume so that we can automate the process, blah, blah, blah. But the government wasn't listening to that. They weren't saying, right, let's get the recycling companies involved, let's get the industry involved. We know consumers like these products. And absolutely, they were bringing adult smokers into vaping in huge numbers. Yes, we had the you thing, but that could have been easily solved with licensing, which we're pushing for now. But this is why it's really frustrating when governments don't understand that The industry is not here to hook children on nicotine products. We've got millions and millions and millions of smokers out there who all we can try and do is encourage them to use safer methods. Not all of them will. Many of them still like smoking for some ungodly reason. But this is why we've got to all work together. It is depressing at the moment, but I absolutely think that things will come around. Prohibition, we know, doesn't work. the illicit market growing, that doesn't work. But the other reason the illicit market exists is for two reasons, availability of product and price differentiation between the legal products and tobacco, and specifically illicit tobacco. Because for many of the people that are using these products, they're at the lower end of the socioeconomic scale. They're not buying, and this is the argument that the UK government has made as well, we're raising the price of cigarettes four times before we tax your product, so the differentiation is still there. Well, not for the bag of rollies that you can get for five quid in the back storeroom. That's who's buying these products. Even with the taxation, they're talking about a modest taxation. Well, that's great when you look at it on a full high-priced device. But you look at it from, say, a one-pound bottle of e-liquid in the UK. That's now going to go up 367% for the people that can least afford it. And this is where they're getting it wrong. And this is why we've really, really got to push for that cooperation.
86:57 - 87:01
[Sarah Cooney]
There's one more question over at the side. Rohan? Is Rohan over there?
87:05 - 88:22
[Rohan Pike]
Hi. Thanks for the panel. Fantastic, even though Tim's just stolen all my lines from this afternoon's session. But no, it was a great insight. But just quickly on the economic issue, just to put things in perspective for Australia, our revenue has gone from $16 billion five years ago to now $4 billion. So it's a quarter of what it was. All those people... have just moved straight over to the illicit market. There's been no reduction in smoking rates whatsoever. In fact, there's been an increase. So if people in the room here could imagine what would happen in their country if a major proportion of the revenue of your government was lost, which it is a significant portion, you might think that your government, and you expect them to do something about it, and that would raise an alarm and there'd be response activated. Not so in Australia. Nothing has happened. In fact, they won't be satisfied until it goes to zero, at which point the entire market will be run by the criminals, and the policy is that they would prefer the criminals to run the market than the legal industry. So that is the mindset in Australia, and that's hard to argue with, that sort of insanity.
88:24 - 88:40
[Sarah Cooney]
Indeed. So, well, with one, with just a couple of minutes left, I wanted to ask both Tim and Shane, if you could put one number or one fact or one finding in front of the people who actually set nicotine policy, what would it be and why aren't they seeing it?
88:43 - 89:13
[Shane MacGuill]
Well, from my perspective, it would be that 71% figure from a global point of view. And your market is either a little bit above or a little bit below that or whatever it might be. But again, I think one of the reasons why it's not being seen is perhaps because of that last comment. In the eyes of some people, this is the way forward. And that's a difficulty that I think needs to be overcome as well and can only be overcome, again, with evidence insight, anecdote, and transparency.
89:15 - 89:23
[Tim Andrews]
I would probably go with that figure as well. And my second figure would be, going back to Australia, 255 bombings, seven murders. Do you want this coming to your country?
89:26 - 89:40
[Sarah Cooney]
Well, on that happy note, I'm going to close this keynote session and thank Tim and Shane very much for fantastic presentations. Thank the audience for fantastic questions. And thank you all for being here.
89:41 - 89:41
[Shane MacGuill]
Thank you.