NEW YORK, NY — A proposal by Gov. Kathy Hochul to impose a steep tax on nicotine pouches has drawn opposition from law-enforcement officials and business groups who warn the move could expand the state’s illicit tobacco market.
Hochul included the proposal in her preliminary two-year, $260 billion budget plan.
The tax would treat nicotine pouches like other tobacco products and discourage use of addictive nicotine products, according to her administration.
The New York Association of Convenience Stores and the Business Council of New York State have formed a coalition to fight the measure, arguing the tax would hurt small retailers and encourage black-market sales.
Opponents argue the policy could deepen a problem New York already faces: a large illicit cigarette market fueled by high taxes.
In a letter to legislative leaders, John Garcia urged lawmakers reviewing the governor’s preliminary budget to reject the plan to impose a seventy-five percent tax on nicotine pouch products.
“New York already faces widespread trafficking of vapes and other regulated goods,” Garcia wrote. “Experience shows that steep tax increases rarely reduce demand; they push it underground.”
Garcia, the top law-enforcement official in Hochul’s home county, joins retailers and industry groups opposing the proposal to tax nicotine pouches such as Zyn and FRE at the same rate as cigarettes.
New York charges the highest cigarette excise tax in the nation at $5.35 per pack. Nearby Massachusetts charges $3.51 per pack, while Vermont charges $3.08.
Within the City, an additional $1.50 local tax raises the combined rate to $6.85 per pack.
Authorities have seized growing quantities of banned and untaxed vaping products linked to cross-border smuggling operations.
During a 2023 enforcement raid, investigators confiscated more than 1,800 cartons of cigarettes and about $155,000 in cash.
Lawmakers will weigh the nicotine pouch tax as they negotiate the final state budget with Hochul’s administration.