Imagine living in a world where the cost of your tobacco-free nicotine pouches almost doubles due to higher excise taxes. This dystopia could soon become a reality for many New Yorkers if Governor Kathy Hochul’s proposal to levy a 75 percent excise tax on these products makes its way into the fiscal year 2027 budget[2][3]. This would dramatically raise the typical $5-dollar pouch price to roughly $8.75, resulting in an estimated $54 million in state revenue while the state already imposes the nation's highest cigarette tax of $5.35 per pack[1][2][3]. But, what does the landscape look like for consumers, businesses, and health advocates, and why is the proposed tax creating such an uproar? Let's dissect how this controversial tax proposal impacts different factions.

The Tax Proposal — Where It All Began

The storm brewed when Hochul proposed to extend a 75% wholesale excise tax already applied to non-cigarette tobacco to encompass “alternative nicotine products” including tobacco-free nicotine pouches like ZYN[1][3]. This proposal is anticipated to generate $54 million in annual state revenue, augmenting the existing revenue from the nation’s highest cigarette tax of $5.35 per pack[1]. So, how does this affect the cost of nicotine pouches and consumers?

Cost Implication for Consumers — A Bitter Pill to Swallow?

The proposed tax hike would cause a price surge in nicotine products, shooting up the standard pouch's price from $5 to around $8.75[1]. While this increase might seem reasonable to non-users, this 75% surge could have far-reaching consequences on both the consumers and businesses involved.

Rekindling The Flame of Combustible Cigarettes?

One tangible risk associated with this tax proposal is the potential to push price-sensitive consumers back to combustible cigarettes[1][4]. This would indeed be a step backward in terms of public health goals relying on reduced-risk products[1]. Interestingly, data cites that nicotine-pouch use among high-school students has doubled from 1.5 percent in 2022 to 3 percent in 2025[1]. Moreover, around 1.4 million New Yorkers continue to smoke, leading to nearly $12 billion a year in state health-care expenses[1][4]. These data points suggest that easing nicotine pouch use, a safer alternative to conventional smoking, could reduce public health care costs associated with smoking.

Business Opposition — Taxing Times Ahead?

The Business Council of New York State, the New York Chamber, and several lawmakers have expressed their opposition to this proposition[1]. They warn the tax may engineer a black market, disadvantaging legitimate businesses[1]. Moreover, this tax influences consumer behavior, steering them back towards harmful combustible cigarettes, a trend contradicting public-health objectives reliant on reduced-risk products[1].

Tobacco Lobbying — Rising Against The Tide?

Industry lobbying on tobacco-related issues observed a surge in 2025, with a 24 percent increase in lobbyist and lobbying-firm registrations to 1,275 compared to 1,027 in 2024 and 927 in 2023[1]. Tobacco firms such as Altria and Philip Morris International are rallying business groups to contest the tax and argue for a risk-proportionate rate[1]. The FDA's authorization of ZYN in January 2025 emphasized that the product contains about 99 percent fewer harmful chemicals than cigarettes[1]. Advocates contend that the tax would deter smokers from switching to a less-harmful alternative[1].

Frequently Asked Questions

How much will the price of nicotine pouches increase?

If the proposed tax is approved, it could lead to an approximate 75% hike in the price; for instance, a $5 nicotine pouch would cost nearly $8.75[1].

Is the surge in tobacco lobbying linked to the proposed tax?

In 2025, there was a 24 percent increase in lobbyist registrations, largely driven by tobacco firms such as Altria and Philip Morris International challenging the proposed tax and advocating for a risk-proportionate rate[1].

How might the proposed tax impact tobacco users in New York?

The tax could push price-sensitive consumers back to harmful combustible cigarettes, undermining public-health objectives that depend upon reduced-risk products[1].

Moving Forward – A Taxing Dilemma?

While the proposed tax aims to discourage nicotine product use and generate significant revenue, the move has garnered considerable backlash from business groups, tobacco firms, and lawmakers. As we navigate the tides of transformation, the question remains – will this tax proposal light the way to a healthier future or ignite a statistical wildfire, pushing a return to harmful combustibles? The clock is ticking, and only time will unveil the implications of Hochul's proposition. 1]: [(Source) 2]: [(Source) 3]: [(Source) 4]: [(Source)

Impact on New York's Economy and Health Sector

With the proposed increase in excise tax, New York could potentially boost its annual revenue by an estimated $54 million[2][3]. However, the potential adverse effects of this proposal are equally significant. Critics and business groups, including the Business Council of New York State and the New York Chamber, have voiced concerns about the introduction of an underground market for nicotine pouches[2][3][5]. The tax hike could push price-sensitive consumers back to harmful combustible cigarettes[5]. With approximately 1.4 million New Yorkers continuing to smoke, the state incurs roughly $12 billion a year in health expenses[5]. The return to smoking conventional cigarettes could mean an escalation in these already astronomical costs, putting an undue strain on the state's healthcare system. In contrast, proponents of the tax argue that the increased price might deter new users, particularly young adults, from starting nicotine use. Between 2022 and 2025, nicotine-pouch use among high-school students doubled from 1.5 percent to 3 percent[5].

Exploring the Market’s Response – Case Study

The response to the proposed tax was swift and came from both business and advocacy fronts. For example, tobacco giant Philip Morris International, owner of the alternative nicotine product Zyn, joins the lobby against the tax hike[2][3]. Zyn, a tobacco-free oral nicotine product, already generates considerable income for the company[8]. In January 2025, right before the Biden administration left office, the Food and Drug Administration authorized Zyn for adult use[3]. Should the tax be implemented, it could mean a significant increase in the price of the products, from the average $5 to roughly $8.75[2][3][8].

An Escalation in Lobbying and Advocacy Activities

Industry lobbying on issues related to tobacco taxes surged in 2025. The Action on Smoking and Health report indicated a 24% increase in lobbyist and lobbying-firm registrations totaling 1,275, up from 1,027 in 2024, and 927 in 2023[2][3][10]. Both Altria and Philip Morris International have channeled efforts into enlisting business groups to refute the tax, arguing for a risk-proportionate rate[3][5]. They underscore that the FDA's 2025 stamp of approval on Zyn stated clear that the product contains about 99 percent fewer harmful chemicals than cigarettes[5]. Advocates argue that the tax could deter smokers from transitioning to a less harmful alternative[3][5].

Lawson’s Take: A Balanced Approach Needed?

In the wake of Governor Hochul’s proposal, the stakes are high for both the public health and business sectors. The initiative, intended to discourage the use of nicotine products, could ironically push consumers towards cheaper, yet more harmful alternatives[5]. As public health officials, business leaders, and lawmakers grapple with what some see as an oversimplified solution to a complex public health issue, the case for a risk-proportionate rate grows louder[5]. A balanced approach that considers the diverse perspectives could lead to a solution that effectively addresses public health, economic, and consumer concerns.

Opposition Against the Tax Proposal

The controversial tax proposal received instant backlash and dissenting voices came from different quarters. One of the significant voter groups opposing the policy is the Business Council of New York State. They warn that this tax could lead to an increase in illicit trade, a black market that would ultimately undermine public health objectives[4]. Moreover, the New York Chamber and several lawmakers have sided with this argument. Their contention is based on the potential for nicotine pouch users, especially price-sensitive individuals, to revert to smoking conventional cigarettes[5].

The Compelling Data

Public health is one of the most significant aspects under consideration in this scenario. The available data suggests an alarming trend of nicotine pouch use among high-school students, where this number increased from 1.5% in 2022 to 3.0% in 2025[3]. To understand the depth of this issue, the state has around 1.4 million active smokers, costing New York almost $12 billion every year in health care expenses[4].

Industry Responses

In response to the significant tax percentage proposed, industry lobbying on nicotine-related issues has accelerated. The Action on Smoking and Health reported a 24% increase in lobbyist and lobbying firm registrations in 2025, increasing it to 1,275 registrants compared to 1,027 in 2024 and 927 in 2023[5]. To present their case, companies like Altria and Philip Morris International have brought multiple business groups together to contest the tax proposal[6]. They argue that the tax rate should be risk-proportionate given the FDA's endorsement of ZYn pouches.

The FDA's Role in This Debate

The United States Food and Drug Administration authorized ZYN pouches for adult use in January 2025[1]. They established that the product contained approximately 99% fewer harmful chemicals than regular cigarettes[1]. This fact can potentially validate the argument of those who claim that smokers might be discouraged from transitioning to a less harmful choice if the tax proposal takes effect. Heavy taxes on alternate nicotine products could inadvertently lead to a higher consumption of more harmful products.

Nicotine Tax: The Larger Picture

The impact of this tax regulation extends beyond the immediate stakeholders. While it could generate an estimated $54 million in annual state revenue, it might also lead to some unintended consequences[1]. The trade-off here is between public health objectives, industry interests, consumer affordability, and the state's revenue generation.

Consumers' Perspectives

One could argue that this tax proposal would detrimentally affect consumers, especially those who are price-sensitive. Suppose the cost of a pouch almost doubles due to the additional tax from $5 to roughly $8.75[1]. In that case, consumers might resort to cheaper nicotine products, including harmful combustible cigarettes[2].

Industry's Concerns

High taxes can create a barrier to entry for new and existing nicotine pouch businesses, particularly smaller firms. They might face higher operational costs and loss of market share due to reduced consumer demand. It may also instigate a shift in the industry dynamics, possibly leading to the rise of dominant, well-established nicotine pouch manufacturers.