Senate advances 40% wholesale tax on vaping and nicotine pouches, creates prevention fund

The New Mexico Senate approved a plan to tax noncombustible nicotine products, including e-cigarettes and nicotine pouches, and to direct the proceeds to a state nicotine-prevention fund aimed at youth education and cessation programs.

Senator Gregg Hickey, the bill’s Senate sponsor, opened debate by framing the proposal as a public-health measure: "This bill is really a youth health safety and family safety bill. This bill places a tax on the wholesale price of ecigarettes, vaping products, and, what we are now seeing youth move to, pouches, nicotine pouches of various chemicals," he told the chamber.

The substitute places a 40% tax on the wholesale price of covered products (not on combustible cigarettes or cigars), and directs an estimated $5–6 million a year to a new "Nicotine Prevention Fund" to be used by the Department of Health and partner agencies for prevention, education and cessation, particularly for ages roughly 5–25.

Opponents raised concerns about the tax’s regressivity and the possibility that higher prices would push some consumers back to combustible cigarettes or onto black-market sources. Senator Joseph (T) Ramos argued it was an ill-timed burden on households already struggling with other costs; Senator Block questioned whether the tax would disproportionately affect low-income residents.

Supporters pointed to evidence linking higher product prices to reduced youth uptake, citing published studies showing meaningful declines in use after price increases. Proponents said the bill will fund prevention efforts the department says are currently underfunded.

After floor debate, the Senate adopted the tax as a committee substitute; the vote in the chamber was 25 in favor, 14 opposed. The revenue will be directed into the state nicotine-prevention fund; the Department of Health will administer grants and education programs using the new money.