Gregory Conley, an attorney and founder of Conley Policy Group, said that Gov. Kathy Hochul’s (D-NY) plan to tax nicotine pouches at 75% of wholesale price would fuel illicit trade and strengthen conditions for a black market.
The proposed tax is part of New York’s fiscal year 2027 executive budget, which aims to apply the same 75% wholesale rate to nicotine pouches as is currently applied to other tobacco products.
“75% wholesale tax on nicotine pouches proposed in New York,” said Conley posted on X. “Want to expand and strengthen the illicit market for nicotine pouches? Do this.”
Research has shown that high excise taxes have historically driven New York’s illicit cigarette market. A 2025 smuggling analysis found that significant tax differentials create incentives for evasion, making New York one of the highest smuggling states. The report said such leakage undermines revenue and shifts sales to illegal suppliers—an outcome likely if similar rates are applied to nicotine pouches.
A study by Rutgers Health researchers found that steep cigarette taxes in New York City sustain illicit trade. In a 2023 survey collecting littered cigarette packs across all five boroughs, only 16.6% had the required city tax stamp—a decline from previous years—indicating persistent trafficking from lower-tax states. The study warned that this leakage drains revenue, strains enforcement resources, and disadvantages compliant retailers. According to Rutgers Health, these trends highlight ongoing challenges with high tobacco taxes.
Many others have also spoken out against the proposed pouch tax. Assemblywoman Michaelle Solages said “creating a new tax is not the correct way” to curb youth use and warned it would burden low-income communities. Business Council of New York State Executive Vice President Paul Zuber said that “If you increase it to the point of tobacco products… you’re also going to create a black market.”
As reported by Spectrum Local News, these concerns echo those raised by Conley regarding potential unintended consequences of the policy.
Conley is an attorney and tobacco-harm-reduction advocate who leads Conley Policy Group, a consultancy focused on nicotine, vaping, and excise-tax policy. He previously founded and led the American Vaping Association and has served in legislative affairs roles advising industry stakeholders. Conley has testified before multiple state legislatures and frequently comments on FDA/CTP actions and tax proposals.
