Committee hears divided testimony on proposal to raise cigarette tax and extend tax to vaping products

Senate Bill 22‑81 would raise the cigarette excise tax by 25¢ per pack, add a comparable tax on cigars, and apply an ad‑valorem wholesale tax to electronic nicotine products and oral nicotine pouches. Sponsor Kathy Hogan told the committee the proposal aims to reduce youth vaping and provide funding to local public‑health units and 988 crisis‑intervention services.

"Taxation is an effective method to improve health outcomes by reducing use," Senator Kathy Hogan said, citing the Youth Risk Behavior Survey showing elevated vaping rates among North Dakota students. She described the proposed approach as conservative compared with CDC best practices but said a modest increase would still make a difference for youth affordability.

Heather Austin of Tobacco Free North Dakota said the bill brings parity to products the tobacco industry has used to avoid existing excise taxes and recommended broader tax increases for public‑health purposes, but expressed support for the bill as a step forward. The American Cancer Society’s government relations director praised the bill’s approach to bringing new products into the tax code but cautioned that incremental tax increases often prompt industry price‑discounting and coupons that blunt public‑health effects.

Opponents included the North Dakota Petroleum Marketers Association, the Greater North Dakota Chamber, retailers and several vaping‑industry witnesses. Mike Rood of the Petroleum Marketers Association called the proposal “egregious” and argued the tax would be regressive; he also noted robust existing funding for tobacco‑control programs drawn from settlement proceeds and other state funds. Retail and vape‑shop witnesses warned an increased tax on vapor products would drive consumers to untaxed online sellers and create a black market, reducing state revenue and raising safety concerns.

Philip Morris International’s regional director, James Curry, and other industry witnesses highlighted the FDA’s January authorization of certain ZYN oral nicotine pouches and urged that tax policy reflect a continuum of risk: higher taxes on combustible cigarettes and lower taxes, if any, on noncombustible alternatives. Curry said imposing a 28% wholesale tax on nicotine pouches would make them proportionally more expensive than cigarettes and could discourage adult smokers from switching to less harmful alternatives.

Committee members asked about enforcement, definitions (including whether nicotine‑free devices would be covered), youth access, and whether the change would reduce use. Testimony included conflicting views on public‑health effectiveness and the risk of shifting sales to online or illicit markets. No committee vote was recorded in the transcript; the hearing closed after extended public testimony and online witnesses.

The bill would also update statutory definitions to capture nicotine pouches, gels and dissolvables as commercial tobacco products while protecting FDA‑approved nicotine‑replacement therapies from excise taxation.