Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Nicotine Tax topic
No spam. Unsubscribe anytime.
Health, enforcement and industry witnesses clash over proposed wholesale tax on nicotine pouches
Summary
Witnesses at the joint budget hearing reached sharply different conclusions about a proposed wholesale tax on alternative nicotine products: enforcement experts warned higher taxes would fuel illicit markets, industry scientists said FDA authorization shows pouches are lower risk and cautioned that steep taxes could undermine harm‑reduction.
Albany — Lawmakers and witnesses sparred over a Governor’s executive proposal to treat alternative nicotine products — including nicotine pouches — as "other tobacco products" subject to a wholesale tax structure. The dispute paired public‑health arguments, enforcement warnings and industry testimony on risk and access.
Assemblymember Bailey asked why products that do not contain tobacco would be lumped into legacy tobacco tax categories. "Treating alternative nicotine products the way we treat the other tobacco products… creates a clean structure for how to tax those products," Acting Commissioner Amanda Hiller responded, adding that a price‑based tax structure is designed to keep products out of reach of children and be administered consistently across product variations.
Witnesses were sharply divided. Eric B. Hawk, an expert in global security and anti‑illicit trade, told the committee that high taxes create price gaps criminal networks exploit and estimated an illicit cigarette market that accounts for over 50% of consumption and roughly $1 billion in lost revenue. "If New York creates a significant price gap for pouches, these same criminal actors will flood the market with unregulated, counterfeit and potentially dangerous black market pouches," he warned.
Industry and scientific witnesses advanced a different concern. Dr. Brian Erkkila, head of scientific engagement for Philip Morris U.S., said nicotine pouches authorized by the FDA present "more than 99% less harmful chemicals than cigarette smoke" and cited FDA findings that adults who switch can expect reduced risks of cancer, respiratory and cardiovascular harms. He and other industry witnesses argued the proposed steep wholesale tax would reduce the price advantage of lower‑risk products and could discourage adult smokers from switching.
The Tax Department stressed that smoking‑cessation products would remain excluded from the tax and that the enforcement proposal would expand the department’s role in vapor enforcement, but acknowledged enforcement challenges given cross‑border and illicit‑market pressures.
The hearing produced no legislative reading or vote on the tax; lawmakers requested additional information on youth use rates, enforcement capacity and potential revenue tradeoffs before any policy decision.
