well....I don't know what kind of canadian you were talking to...
But most here would assume you were talking about cigaretters....since it is common slang for that in britain ..."fags" that is...
So I don't understand his horror...
For the most part ...Canadians hear so many different slang terms from people here from different parts of the world.. ....he shouldn't have batted an eye...and assumed it was just yet another term for something else...
Not necessarily a statement on sexuality.
In fact ...here...we have strict laws on harassment, physical or verbal abuses, etc...whether it be based on ethnicity, race, skin colour, language, or sexuality.
We do have a small minority of rude people who try to flaunt said laws ...and be abusive, but you would find that in a public setting, folks would be real quick to straighten that individual out, ever before the authorities arrived to complete the job.

That is something we have zero tolerance for here...
Zero tolerance for the intolerant.