Ex-cops and business leaders oppose Hochul’s 75% tax on nicotine pouches

Former police officers, business leaders, convenience store owners and faith leaders are pushing back on Gov. Kathy Hochul’s proposed 75% tax on smoke-free nicotine products as lawmakers consider their top budget asks. 

Hochul’s executive budget includes a provision to hit nicotine pouch products with the same 75% excise tax that has applied to all other tobacco products for over a decade.

That tax, critics argue, will fuel the illicit market and punish law-abiding retailers. 

“When you raise taxes on adult, legal products beyond what the market will bear, demand does not disappear, it shifts,” New York Association of Convenience Stores President Alison Ritchie said.

If included in the budget due April 1, the new tax would generate about $54 million each year. State budget officials have said the revenue would support Medicaid and health care costs.

Some retired law enforcement officers said the tax would create compliance burdens on law-abiding retailers and police. Former New York City Sheriff Edgar Domenech said New York is the capital of the illicit tobacco market because of the state’s high taxes on products.

“Over 50% of the cigarettes consumed in this state are smuggled or sold illegally, AKA a black market that New York City and New York state has,” he said. “This illicit activity finances organized crime groups and criminal enterprises that creates violence, which is destroying the quality of life in our communities.”

Elliot Boyce, a retired member of the New York State Police, said state fines for illicit sales do not match the crime.

“If I’m part of the illicit market and I’m making $10,000 a month, if you shut down one of my stores and the fine is $500, I’m just going to open another store,” he said. “Once I get shut down, the fine doesn’t match the money that I’m making.”

Independent convenience store owners and the Business Council of New York State said the proposed tax would harm small businesses and do more harm than good. 

The U.S. Food & Drug Administration approved flavored nicotine pouches like Zyn just over a year ago as safe to use, but it has not declared the products to be medically approved smoking deterrents.

Hochul’s tax could increase the price of smoke-free nicotine pouches, which many people use to stop smoking cigarettes, by a few dollars per can. Zyn, one of the most popular brands of the products, currently costs between $5 and $8 in different parts of New York. 

Brian Erkkila, U.S. head of scientific engagement for Phillip Morris International, which owns Zyn, said smoke-free nicotine pouches are supposed to be much cheaper than buying cigarettes in order to help people quit smoking. A tax that matches tobacco products would counter the incentive to quit, he said.

“When we think about who still smokes in New York, it’s people who have lower incomes,” Erkkila told City & State. “It’s older Americans, it’s veterans. So those people are really price-sensitive, so if they were maybe thinking about making that move now (to quit smoking), now that it’s almost as expensive as their cigarettes, they’re not going to.”

About 1.5 million New Yorkers smoke cigarettes, with 28,000 smokers in the state dying from health-related consequences each year, according to the state Health Department. Smoking rates are notably higher among low-income adults, including those enrolled in Medicaid or those with an annual income of $25,000 or less.

Erkkila testified to lawmakers Thursday at a budget hearing about taxes, urging lawmakers to reject Hochul’s proposed nicotine pouch tax.

But the governor is sticking by her proposal – arguing that the state imposes taxes on tobacco products to fund health services for users and higher-priced nicotine products will deter young people.

“Gov. Hochul, New York’s first mom governor, is standing up to big tobacco to help protect our kids and safeguard public health,” a spokesperson with Hochul’s office said in a statement. “The governor's proposal is a common-sense measure to improve public health at large, push back against manipulative tactics by big tobacco companies and increase necessary protections against life-threatening products.”

The American Academy of Pediatricians, American Cancer Society and American Lung Association support Hochul’s proposal to create a new tax on flavored nicotine pouches.