When a consumer walks into a convenience store to grab a few things and looks over at the shelves where nicotine pouches used to be, they find them completely empty. In place of those familiar products, there’s a small sign directing you to the nearest pharmacy. This change is thanks to Health Canada’s new regulations, which have moved nicotine pouches out of convenience stores and into pharmacies only.

But what does this mean for Canadian businesses? And how are companies dealing with these sudden shifts?

These new regulations have disrupted the nicotine industry, sparking resistance from major players in the convenience store sector. Distributors and retailers are now scrambling to adapt their business models to avoid being pushed out entirely.

Health Canada’s New Nicotine Pouch Regulations

Health Canada’s latest regulations are aimed at reducing youth nicotine use and stopping non-smokers from picking up nicotine pouches just for fun. Now, you can only find nicotine pouches at pharmacies—they’re gone from convenience stores and gas stations. In addition, the range of flavors has been further limited, with options like ‘berry frost’ and ‘tropical breeze’ removed, leaving only mint and menthol.

The only approved nicotine pouch is Zonnic, made by Imperial Tobacco, which Health Canada sees as a tool for quitting smoking rather than an enticing product for new users—especially teens who are looking for something novel to try.

Impact on Retailers: From Convenience Stores to Pharmacies

For convenience store chains like Mac’s and Couche-Tard, these changes are a major blow. They’ve already filed lawsuits against Health Canada, arguing that the new rules are unconstitutional and will drive consumers straight into the black market. They believe that taking nicotine pouches off the shelves won’t actually prevent youth from accessing them but will instead push them towards unregulated and potentially dangerous sources.

Parkland Corp., the company behind On the Run convenience stores, is on the same page. They point out that their stores have a history of responsibly selling age-restricted items, like tobacco and alcohol. They argue that pharmacies, while well-versed in health products, are less convenient for smokers trying to quit, who might now find it harder to get these alternatives.

It’s not just the big players feeling the pinch. Small retailers, especially those in rural areas, are struggling. Many of these stores rely on nicotine products as a core part of their income. Without the resources to fight the rules in court or quickly shift to other revenue sources, these small businesses are at risk of seeing a significant drop in sales.

Many convenience stores have historically depended on tobacco and nicotine products to provide consistent income. With these new restrictions, small retailers are left scrambling to fill the gap. But there’s no guarantee that the new options they’re turning to will be as popular—or as profitable.

Rising Black Market Concerns

Figure 1 Image borrowed from CBC News

One of the biggest worries for retailers like Couche-Tard and Parkland is that these regulations will end up growing the black market. When legitimate products disappear, demand doesn’t just go away—it finds another outlet. Retailers worry that young people will start buying nicotine pouches online or through unregulated channels. These unregulated products can be extremely risky, with unknown ingredients, inconsistent nicotine levels, and zero quality control. Counterfeit nicotine pouches could also contain toxic substances that make them even more dangerous than regulated ones.

The black market for nicotine products isn’t just a possibility; it’s something we’ve seen happen before. In Australia, similar bans led to a spike in illicit nicotine sales, with products being sold through online stores or underground networks. Canadian retailers are concerned that the same thing will happen here, undermining public health goals and making the market less safe overall.

Critics of Health Canada’s approach argue that instead of restricting access, the government could focus on education and harm reduction—methods that have worked well in other places like Sweden. In Sweden, harm reduction initiatives have made safer alternatives widely accessible while providing clear information about the risks. This strategy has significantly reduced smoking rates without driving users towards dangerous, unregulated options.

To stop the black market from growing, there’s also a need for targeted enforcement to crack down on illegal sales. At the same time, partial policy adjustments could help. For instance, allowing limited sales in convenience stores under strict regulations might help create a more balanced market, offering adults convenient access while keeping protections for young people in place.

Strategies for Adapting to Regulatory Changes

With these regulations now in effect, businesses need to think creatively to stay afloat. Here are several strategies manufacturers and distributors can consider:

1. Strengthen Partnerships with Pharmacy Chains

Pharmacies like Shoppers Drug Mart could become key partners for nicotine pouch brands, as they’re now one of the few places where these products can be legally sold.

• Challenges: Pharmacies operate differently from convenience stores, with stricter inventory management and a focus on healthcare products. Manufacturers will need to invest in training pharmacy staff and provide educational materials to ensure that these products are correctly positioned as tools for smoking cessation.

2. Explore E-Commerce Options

E-commerce, where Canadian regulations permit, could be a viable way to reach customers who can’t easily access pharmacies.

• Challenges: Navigating complex regulatory hurdles and implementing robust age-verification systems are significant obstacles. However, if executed well, e-commerce could provide a convenient solution for adult customers while ensuring compliance.

3. Education-Focused Marketing

Collaborate with healthcare providers to present nicotine pouches as legitimate tools for quitting smoking.

• Benefits: By focusing on educational campaigns and proper messaging, brands can comply with Health Canada’s goals while still gaining consumer trust and interest.

4. Launch Consumer Outreach Campaigns

Partner with healthcare professionals and use digital platforms to educate the public on the benefits of using regulated nicotine products to quit smoking.

• Benefits: These campaigns support public health goals and help reframe nicotine pouches as a positive choice for those looking to quit smoking.

5. Lobby for Policy Adjustments

Consider working through industry associations to open dialogue with Health Canada.

• Goal: Seek regulatory amendments to allow limited retail sales under strict oversight. This collaborative approach could create room for adjustments while still honoring Health Canada’s public health priorities.

These strategies represent different paths for adapting to the changing landscape, each with its own set of challenges and opportunities.

Public Health vs. Business Needs: A Delicate Balance

Health Canada’s aim is clear: protect young people from nicotine addiction and prevent recreational use of nicotine pouches. To enforce these rules, Health Canada plans to carry out regular pharmacy inspections, keep an eye on online sales, and collaborate with law enforcement to tackle illegal channels. But for businesses, this new reality is a bitter pill to swallow. The tension between public health goals and business interests is real. Convenience stores and gas stations have relied on nicotine pouches as a part of their product mix, and losing this line disrupts both their revenue and their relationship with customers who trust them for regulated products.

The lawsuits filed by major retailers are an effort to push back, but it remains unclear whether they’ll have any effect. In the meantime, there’s a need for collaborative discussions between the government and the industry. Finding a middle ground could mean alternative solutions, such as allowing limited retail sales in convenience stores with stringent oversight or trial programs to see if these measures can work without compromising public health.

Until these changes come, companies will have to tread carefully, watching how consumer behavior shifts and figuring out the best ways to comply without losing their edge. For instance, tracking consumer data to understand purchasing trends could help companies adjust their distribution strategies effectively.

Conclusion: Looking to the Future

The changes brought by Health Canada’s nicotine pouch regulations are a wake-up call for the industry. Whether you are a distributor, a retailer, or a manufacturer, adaptation is essential. New strategies, stronger partnerships, and a willingness to change are all key to staying in the game. It’s about finding the right balance between public health and providing access for those genuinely using these products to quit smoking.

The future is uncertain. Will these regulations actually stop youth access and recreational use, or will they push nicotine users underground? Only time will tell. For now, the best strategy for businesses is to adapt, stay compliant, and keep pushing for reasonable, balanced policies that serve both public health and consumer needs.

Those who adapt—whether by partnering with pharmacies, shifting to online platforms, focusing on consumer education, or lobbying for smart policy changes—will likely come out ahead. This is a challenging time, but also an opportunity for those who can innovate and adapt to evolving regulations.