Public health advocate and industry clash over proposed excise increases for nicotine pouches

A policy split emerged at the Senate Economic Development committee between public-health experts who warned that steep excise hikes on nicotine pouches could harm adult smoking-cessation efforts, and industry and retail groups who opposed fee increases that they say would penalize compliant brick-and-mortar stores.

Jeff Willett, director of the Progressive Policy Institute's project to end smoking, urged the committee to oppose proposals in S.198 that would substantially increase excise taxes on nicotine pouches. Willett told the committee that nicotine pouches are lower-risk alternatives for adults who smoke and that tax policy should be "risk proportionate" to preserve adult access to products that can help people quit cigarettes. He cited national data he said show youth pouch use is low (he referenced the National Youth Tobacco Survey) and warned that large excise increases would undermine adult transitions away from combustible tobacco.

Industry and retailer witnesses pushed back. Maggie Lenz of the Retail Grocers Association and other retail representatives said their members are law‑abiding and that most illicit product access to youth originates online rather than from neighborhood stores. Lenz and others argued that steep licensing fee increases (witnesses discussed proposals like a $1,000 license) and structural tax changes could drive consumers to illegal sellers and disproportionately harm small businesses operating on thin margins.

The wholesale sector (Core Mark) emphasized operational issues tied to stamping and excise collection, arguing that some proposed changes would be technically and financially onerous. Committee members said they would ask the Tax Department and DLL to study taxation options, including a requested analysis of measuring nicotine concentration versus other excise bases. The committee did not adopt an excise rate increase during the hearing and asked for more data and modeling before advancing tax proposals.