New York Governor Kathy Hochul has proposed a sweeping 75% wholesale tax on nicotine pouches, aiming to bring products like ZYN under the same fiscal umbrella as traditional tobacco. The proposal, embedded in the executive budget, comes as the state grapples with declining tobacco revenue and a surge in illicit cigarette trade. While public health advocates argue the tax is necessary to curb rising youth usage, industry experts warn it could eliminate the financial incentive for smokers to switch to less harmful alternatives.
Key Takeaways
- The Proposal: Gov. Hochul seeks to apply New York’s existing 75% tobacco tax to nicotine pouches like ZYN.
- Revenue Crisis: State tobacco collections dropped 21% last year, fueling a need for new revenue streams.
- Harm Reduction Debate: Experts argue high taxes reduce the incentive for smokers to switch to safer, smoke-free products.
- Youth Usage: Nicotine pouch use among NY high schoolers doubled to 3% in 2025, sparking fears of a “new Juul” crisis.
The Revenue Gap and the “Sin Tax” Solution
New York’s tobacco tax revenue has plummeted from $1 billion in 2021 to roughly $793 million last year. Compounding this is a massive black market; the Tax Foundation reports that over half of the cigarettes smoked in New York are bought illegally, costing the state an estimated $812 million annually. In this context, the exploding popularity of ZYN—now a fixture in offices and gyms—presents an irresistible target for regulators seeking to plug budget holes.
The Harm Reduction Dilemma
The industry data highlights a critical conflict between revenue generation and public health. Philip Morris International reports that “smoke-free” products like ZYN now account for 41% of its total revenue. Dr. Brian Erkkila of Swedish Match argues that taxing these products at the same rate as deadly cigarettes removes the economic incentive for smokers to switch. According to company data, roughly half of smokers who try ZYN quit cigarettes entirely.
Dr. Raymond Niaura of NYU suggests a “proportional risk” tax model: cigarettes, being the deadliest, should bear the highest tax, while lower-risk products like FDA-authorized pouches should be taxed less to encourage cessation.
Comparison Matrix: Public Health Perspectives
The debate splits sharply between harm reduction proponents and youth prevention advocates.
| Perspective | Argument | Key Data Point |
|---|---|---|
| Industry (Philip Morris) | High taxes hurt public health by discouraging switching. | ZYN has 99% fewer harmful chemicals than cigarettes. |
| American Lung Assoc. | “Quit, don’t switch.” Pouches are the “new Juul.” | Youth usage doubled to 3% in 2025. |
| Academic (NYU) | Tax should be proportional to risk. | Smoking costs NY $12 billion in healthcare annually. |
The “New Juul” Fear
The American Lung Association frames the issue strictly through the lens of youth prevention. Mike Seilback warns that ZYN is becoming the “new Juul,” citing state data showing a doubling of high school usage rates. He points out that while Philip Morris claims ZYN helps smokers quit, the company never sought FDA approval as a cessation treatment—a rigorous medical pathway. Instead, they pursued a consumer product authorization, which critics argue allows for broader marketing that appeals to minors.
Will ZYN become more expensive in NY?
If the budget passes as proposed, the price of ZYN and similar pouches will likely nearly double due to the 75% wholesale tax. This would make them price-competitive with cigarettes, potentially stalling the migration of smokers to smoke-free alternatives.
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