Oregon House revenue panel hears split testimony on HB 2528A to regulate and tax nicotine pouches

The House Committee on Revenue held a public hearing May 13 on House Bill 2528A, which would add nicotine derived from any source to Oregon’s legal definition of tobacco products for regulation and taxation, exempt FDA‑approved cessation products, require sales be made on licensed premises (prohibiting delivery), and apply regulatory changes beginning Oct. 1, 2025 and taxation beginning Jan. 1, 2027. The hearing brought sharply divided testimony from public health officials and local health leaders on one side and retailers, trade groups and some industry representatives on the other.

“The loophole that we see here in Oregon is, I think one of the continued examples that we see of tobacco industry innovation to evade existing regulations,” said Sarah Wiley, manager of the Tobacco Retail License Program at the Oregon Health Authority. Wiley told the committee that some oral nicotine pouches and other products containing nicotine but not tobacco leaf fall outside current state tobacco laws and are untaxed, making them cheaper and more attractive to price‑sensitive youth. “These are not the seven approved medications to help people quit smoking,” Wiley said. “Nicotine pouches … are not safe to quit tobacco. They are not free.”

Wiley and other public‑health witnesses, including Sarah Lochner of the Oregon Coalition of Local Health Officials, urged the committee to close the statutory gap so regulators could hold retailers accountable statewide, apply minimum legal‑sales‑age protections uniformly and collect excise revenue earmarked for health programs. Wiley described the taxation approach in the bill as an incorporation of these products into the existing smokeless product excise structure — a 65% excise on the average wholesale price — and said the fiscal estimates refer to the 2027–29 biennium. Wiley provided the committee the revenue figures that the bill’s proponents are using: roughly $15.2 million to the Oregon Health Plan and about $1.7 million to the Tobacco Use Reduction Account for 2027–29, with additional limited general fund receipts.

Opponents — including many small business owners and trade groups representing convenience stores — urged the committee to reject the taxation proposal or amend it. Retailers said they already enforce age restrictions, expressed concern that a steep tax would push purchases to illicit sellers who do not check IDs, and argued that the proposal would harm small businesses and customers on tight budgets. “Inflation has made food, housing and other essentials more expensive,” said Sam Masani, who identified himself as the owner of three Portland‑area stores. “Adding an extremely high tax on nicotine pouches would only make things worse for my customers.”

Some industry and retail witnesses urged a different regulatory approach based on harm reduction. Dr. Brian Urkola, senior advisor for scientific engagement at Swedish Match North America, said FDA marketing authorizations for certain nicotine pouches recognize lower toxin levels compared with combustible cigarettes and argued that taxing reduced‑risk products at the same rate as cigarettes would undercut smokers’ incentive to switch. “This measure paints all tobacco products as equal risk when scientific consensus and the FDA acknowledge lower levels of risk for smoke‑free products,” Urkola said.

Committee members pressed agency staff on details. Representative Reschke asked whether the bill’s language — which covers products "derived from any source" — could capture vegetables that contain trace nicotine. Wiley replied that “this bill would not apply to vegetables, or other nutritious products,” and an attorney for the bill reaffirmed that the statute would not regulate ordinary foods. Committee members also asked about enforcement and penalties: witnesses and staff said the bill removes references to ORS 167.755 (the criminal penalty schedule) and places enforcement under the public‑health statute, enabling civil penalties administered by the Oregon Health Authority up to $5,000 under the tobacco retail license authority and applied through a graduated schedule in rule.

The committee heard competing factual claims in the public record about youth use and public‑health trends. Doug Ball of Jackson’s Food Stores cited the FDA’s 2024 national youth tobacco survey and testimony suggesting youth vaping and cigarette use have fallen in recent years and that nicotine pouch use remained low; public‑health witnesses emphasized that gaps in regulation leave products available and attractive to youth. The committee asked the Legislative Revenue Office to provide short summaries of the conflicting public‑health and harm‑reduction evidence and analysis to help reconcile the testimony.

More than 20 witnesses testified in person or remotely; the hearing record contained testimony from local public‑health officials, convenience store owners, trade associations, industry representatives and small‑business advocates. Chair Nathanson closed the public hearing without a vote. The bill will remain pending for further committee action and amendment.