Everything about nicotine pouches has been a shock to convenience store operators in Canada. After their unexpected introduction to the market in 2023 and Health Canada’s surprisingly quick acceptance of a select few of the new products as an instrument for giving up cigarette smoking, pouches became the fastest-growing product in stores almost immediately.
Unfortunately, what came next was an abrupt sales ban of the products in c-stores just a year later.
Indeed, in Canada, the fastest-growing nicotine format went from novelty to superstar to legislative flashpoint almost overnight. Today pouches stand as perhaps the most hotly contested legal battle for retailers in the country.
“There’s no way any country in the world could duplicate what happened here in Canada, because it’s astonishing,” said Jeff Brownlee, vice president of communications and stakeholder relations for the Convenience Industry Council of Canada (CICC). “It’s ridiculous when you think about it.”
From Approval to Backlash
For Canadian c-store operators, nicotine pouches arrived in 2023 as a licensed smoking-cessation product that seemed to fit naturally into a channel already built around age verification, controlled access and adult tobacco customers. By late summer 2024, however, the same products had been kicked out of convenience stores and moved behind pharmacy counters nationwide. Or as Brownlee puts it: “All crap broke loose!”
The regulation has set off a fight between Health Canada (essentially, Canada’s FDA) and some of Canada’s largest convenience retailers, including Alimentation Couche-Tard and Parkland Corporation (now owned by Sunoco LP). Their challenges argue that restricting legal nicotine pouches to pharmacies is unfair and counterproductive—the move has sparked an aggressive illicit market.
The issue is not simply the loss of a promising new category. It is the logic behind the policy. Convenience stores can sell cigarettes, lottery and, in some provinces, alcohol. They routinely check identification for legal age and manage products that governments classify as adult-only. Yet they have been told they cannot sell the one and only Health Canada-authorized nicotine pouch, or any others, even when it is positioned as a nicotine replacement therapy for adult smokers trying to quit.
“We keep asking the question: Why?” said Brownlee. “We’re not part of the problem that you’re trying to solve; we’re part of the solution.”
Nicotine pouches first came to Canada in 2023, nearly a decade after they hit shelves in the United States. The came to prominence when Health Canada authorized the Zonnic brand, distributed by Imperial Tobacco Canada, as a nicotine replacement therapy under the Food and Drugs Act and Natural Health Products Regulations that July.
The product contains no tobacco and came to market as a pouch placed in the mouth to temporarily relieve cravings and withdrawal symptoms.
“In order to sell a nicotine pouch, you have to be licensed by Health Canada as a cessation product, as a type of nicotine therapy, like nicotine gum or nicotine lozenges,” said Eric Gagnon, vice president of corporate and regulatory affairs at Imperial Tobacco Canada. “Zonnic is the first nicotine pouch that has been approved by Health Canada.” It remains the only approved brand.
It caught the convenience channel by surprise. “It went from zero to 1 million overnight,” Brownlee said. “We didn’t really even understand what they were.”
But the opportunity was clear almost immediately. “They were a big seller for us,” Brownlee said. “We were selling tobacco products, so it made sense that we would continue to sell these nicotine products that are smokeless, nicotine replacement therapy.”
Noting glaring gaps in the regulation of the products, convenience retailers themselves developed their own voluntary guardrails to sales. “We banded together and we created five pillars that said we would treat these like tobacco,” Brownlee said. That meant age-restricted sales, keeping pouches behind the counter, limiting visibility and avoiding advertising.
It wasn’t enough for anti-tobacco groups, he added.
The problem, according to critics of the original approval, was that a tobacco-affiliated company had entered the cessation category with a flavored oral nicotine product at a moment when youth nicotine use remained politically sensitive. And with only cursory consideration of the market, according to detractors, Health Canada established overly restrictive regulations on the products in August 2024.
The order cited concerns about recreational use by people who do not smoke, particularly youth under 18, and imposed new rules on emerging nicotine replacement therapies:
- Sales were limited to pharmacies.
- Behind-the-counter placement was required.
- Limits were placed on flavors, allowing only mint and menthol.
- Front-of-package nicotine addiction warnings were enforced.
- Nicotine quantities were limited to 2 or 4 mgs.
- Youth-appealing promotions were banned.
To the convenience channel, the decision felt less like targeted youth protection and more like a vote of no confidence.
The Retailer Argument
Canada’s convenience retailers say the pharmacy-only model ignores how adult smokers shop. Many adult tobacco consumers already visit convenience stores for cigarettes.
Retailers argue that placing a cessation product in the same controlled environment would increase lawful access while keeping purchases age-verified.
“In convenience stores, we sell cigarettes, which is an age-restricted product,” Brownlee said. “We sell alcohol in some provinces. We sell lottery.” They also continue to sell nicotine patches and gum. “But we can’t sell nicotine pouches.”
Gagnon framed the frustration in similar terms. “Convenience stores can be trusted to sell adult-only products—they sell alcohol, they sell cigarettes,” he said. “And now the government is saying we can’t trust you to sell smoking cessation therapy, which makes no sense.”
The business impact is difficult to separate from the broader tobacco environment. Brownlee said legal convenience retailers are already contending with contraband tobacco, online sellers and uneven enforcement. In a pattern familiar to retailers in the United States, lawful retailers lose out on income while unregulated sellers fill demand.
“The people who are left holding the bag are the convenience retailers that are law abiding and adhere to the government regulations,” Brownlee said.
The Illicit Market
The sharpest industry criticism is that the order did not end demand for pouches; it redirected it.
“Since the ban, illegal and untaxed nicotine pouches have flooded communities across the country, many with outrageous nicotine concentrations far exceeding what was ever legally sold in our stores, sold with no age checks and no oversight whatsoever,” said Kenny Shim, president of the Ontario Convenience Store Association. “The government didn’t eliminate youth access; it just handed the market to unregulated sellers who don’t care who they sell to. And it cost legitimate retailers meaningful revenue in the process.”
Health Canada’s policy leaves approved products available through pharmacies, but retailers and manufacturers say consumers can more easily find unauthorized pouches online, in some specialty shops or through contraband channels.
“The fallout is the biggest seller of nicotine pouches in Canada is not an approved product,” Brownlee said. “It’s one that you can access online or through reserves. Prohibition doesn’t work. By restricting this, interest in pouches went through the roof.”
Gagnon said Imperial has identified “approximately 200 websites” selling illegal nicotine pouches in Canada. “It’s fairly easy to access these illegal products,” he said. “And then you have a number of specialty shops across Canada that are also selling these illegal products in their stores.”
Added Brownlee, “It’s organized crime that is taking control of the nicotine-products market, and they’re smart. They’re always three steps ahead of the Canada government and the police. [These websites] are filling a void. They’re filling a demand where the legal channels can’t, which is really unfortunate.”
That argument is central to the legal challenge by convenience retailers. In court filings, Mac’s Convenience Stores and parent company Couche-Tard allege the pharmacy-only rule is unfair and unconstitutional, while Parkland, owner of the On the Run chain, argues it will increase demand for illegal products already accessible to youth. The filings contend that limiting legal retail options aggravate, rather than reduce risks to health by pushing consumers toward unregulated products.
Where the Challenge Stands
That court challenge has stood unadjudicated for more than two years. The practical status today is that the federal restrictions remain in place: New and emerging nicotine replacement therapies such as pouches must be sold from behind pharmacy counters, and convenience stores cannot sell them. Retailer advocacy continues, and industry voices say provincial concern is growing as governments confront illegal supply.
Gagnon said Imperial is engaging with the health minister and Health Canada while consumers and retailers push for change. “[Consumers] may have had to go back to cigarettes or are forced to buy illegal products, which they don’t want to do,” he said.
The company’s policy ask is straightforward: Keep the product controlled, but return it to the adult retail environment. “If the goal is really to achieve that objective, Canada needs to look at its regulation and make these products as accessible as possible,” Gagnon said. “We need to be allowed to sell pouches in a controlled environment: behind the counter and age-verified. That’s what we’ve been advocating all along.”
For CICC, the fight is part of a larger debate about Canada’s nicotine strategy. Brownlee said the government needs to decide whether it wants a regulated adult marketplace that includes retailers with experience in age-restricted sales or a tighter legal channel that leaves room for illicit operators. “What we need is the government to really map out a nicotine strategy going forward,” he said.
The convenience channel’s case is therefore both commercial and philosophical. Retailers lost a category that was selling quickly, but they also argue they lost standing as trusted compliance partners. Whether the courts agree remains to be seen.
In the meantime, the Canadian pouch market remains split between a narrow legal path through pharmacies and a fast-moving illicit market that retailers say is undermining the very youth-protection goals the order was meant to serve.
