Health Minister Stephen Mandel said Thursday the legislation — to be phased in — will still protect young people from the dangers of other flavoured tobacco.
After a year of study since the law was passed, the government decided that banning the popular minty weed wouldn't be cool with adults who enjoy menthol, Mandel said.
"You need to deal with the realities of the world and we made an effort to deal with flavoured tobaccos and I think that we are quite restrictive in that area.
"The decision was made that menthol would be one we leave out at this point in time."
Health, medical and anti-smoking groups say exempting menthol is a mistake, because the flavour is the most popular with young people.
There are studies that say menthol soothes the throat, opens the airways and increases nicotine absorption into the bloodstream.
Angeline Webb of the Canadian Cancer Society said Alberta's decision was very disappointing and thousands of young people will pay the price.
"Menthol is the most insidious flavour of tobacco products. It leads to addiction. It leads to initiation and youth who smoke menthol are much more likely to become long-term smokers than their non-menthol smoking peers," she said.
"From a public health perspective, menthol is the most important flavour to focus on with reference to protecting kids."
On Sept. 30, the Canadian Cancer Society, the Heart and Stroke Foundation and the Lung Association urged all health ministers across Canada to join Alberta in banning flavoured tobacco products, including menthol.
The federal, Ontario and Manitoba governments have balked at including menthol in flavoured tobacco ban legislation.
The Ontario Medical Association recently urged Premier Kathleen Wynne's government to ban menthol cigarettes.
Mandel said other parts of Alberta's tobacco reduction strategy will help protect young people, including an immediate ban on smoking in vehicles with children present and a ban on selling tobacco to children.
The flavoured tobacco ban kicks in June 1, 2015, along with new restrictions to eliminate smaller packs of tobacco.
"Reducing the exposure of children to tobacco and reducing the overall use of tobacco products will have positive outcomes across all areas of health care," Mandel said.
Specific details on some these measures were not immediately available.
Les Hagen of Campaign for a Smoke-Free Alberta said the menthol exemption is a mistake.
"We are pleased that there are new restrictions on sales to minors, we are pleased at the ban on smoking in vehicles with kids, but we are disappointed with the exemption for menthol cigarettes," he said.
Alberta NDP member David Eggen said the government should reconsider its decision not to ban menthol flavoured tobacco.
He accused the Progressive Conservatives of caving into pressure from the tobacco industry.
“This legislation is meant to protect our children, and yet the most dangerous of the flavoured tobaccos will now be allowed to remain accessible to kids,” he said.
Eggen said Mandel has close ties to tobacco lobbyist Hal Danchilla.
Mandel said he hasn't met with any tobacco industry lobbyists.