Critics say tax on nicotine pouches would give smokers less reason to quit

ALBANY — A proposal from Gov. Kathy Hochul to tax nicotine pouches at the same rate as cigarettes and other traditional tobacco products is drawing opposition from groups that think it would disincentivize people from quitting smoking.

Dubbed the Zyn tax after one of the more popular brands, Hochul’s administration estimates it will raise roughly $54 million, a fraction of the state’s $260 billion proposed budget.

Opponents see the tax potentially discouraging tobacco users from transitioning to a non-smoking alternative and have questions about how the state would enforce the new taxes.

Nicotine pouches have been on the market for over a decade. Users place a pouch with nicotine in their upper lip, and the nicotine is absorbed into the bloodstream.

A tin of nicotine pouches typically retails between $5 and $10, while the average cost of a pack of cigarettes in New York is close to $15.

Nicotine pouch manufacturers say the pouches remove 99% of harmful chemicals a cigarette smoker is exposed to.

Hochul's position

Blake Washington, Hochul’s budget director, told reporters last month the administration sees nicotine pouches and cigarettes as a distinction without a difference.

"One has carcinogens from smoking, but I would say there's an addictive property to both," he said.

The American Cancer Society is supporting the proposed tax, calling it long overdue and calling on the state to go further in its tobacco control strategy. The nonprofit wants $7.5 million from the projected $54 million in new revenue from the Zyn tax fund more resources aimed at helping smokers quit.

"If the legislature is serious about protecting public health and preventing the next generation from tobacco addiction, the one-house and final budgets must include a comprehensive tobacco control strategy — not piecemeal measures," said Michael Davoli, the senior government relations director for the American Cancer Society during a joint legislative budget hearing last week.

FDA approved

Nicotine pouch makers see them as a way to help people get off cigarettes.

Dr. Brian Erkkila, the director of regulatory science at Swedish Match, a subsidiary of Philip Morris International that makes the Zyn pouches, said increasing the cost takes away one of the incentives for cigarette users to switch to nicotine alternatives.

"You're going to have fewer people even trying the product, and definitely fewer people who are going to stop using combusted cigarettes," he said in an interview. "Ultimately, our position is the FDA has shown that these products present less risk than a combusted cigarette, that people who switch to them from cigarettes, reduce their risk of disease."

Philip Morris International already won U.S. Food and Drug Administration approval last January to keep Zyn on the market after years of review. At the time, FDA said the product appeared less harmful than cigarettes and other traditional tobacco products.

And Philip Morris is asking the agency’s permission to include marketing language that says switching from Zyn lowers the risk of serious diseases, such as lung and mouth cancer, stroke and heart disease.

About 1.4 million New Yorkers still smoke cigarettes and it is considering the leading preventable cause of death.

Potential problems

Beyond the increased financial cost for users, there are also concerns about enforcement, the emergence of counterfeit products and whether the law enforcement response will fall disproportionately on minority communities.

Assemb. Michaelle Solages (D-Elmont), who chairs the Black, Puerto Rican, Hispanic and Asian Legislative Caucus, said there was apprehension among the caucus members about the tax.

"I just hope the state isn’t looking at this from a revenue lens, we should be looking at it from a public health lens," she said.

Edgar Domenech, a former New York City sheriff and a former special agent in charge with the Bureau of Alcohol, Tobacco, Firearms and Explosives, said he believes that adding a tax on nicotine pouches would push users toward alternative products, opening the door for criminal enterprises.

"That’s how they operate," he said. "The criminal cartels will insert themselves because they know there’s a market."

Domenech said that in his experience, the state often doesn’t consider how it will ensure it provides sufficient enforcement of the new tax. He said the answer is to bring law enforcement agencies and consumer affairs agencies together to determine what additional resources they need.

"If we’re going to do this, let’s do it right," he said.