Scott Woodward, Senior Vice President of Merchandising at QuickChek, said on Feb. 18 that New York should not extend its 75 percent wholesale tobacco excise tax to alternative nicotine products, arguing the change would raise prices on items like nicotine pouches and increase the risk of unregulated sales.
The proposal is part of the FY 2027 Executive Budget, which would classify “alternative nicotine products” under the broader definition of tobacco products and make them subject to New York’s existing 75% wholesale tax. The plan does not create a lower-rate category for pouches, instead folding them into the same tax structure used for other tobacco products, according to the state budget documents.
Woodward said, “If the proposed tax increase on alternative nicotine products is passed into law, consumers who would consider making the switch to alternative nicotine products will have much less incentive to do so. Moreover, such a tax increase could, in effect, extinguish this category, as the sales of such products would potentially fall precipitously, leading many manufacturers to re-consider the viability of the category. Tax increases often lead consumers to go elsewhere to other markets to procure their desired products at a lower price, leading to lost business revenue, lost tax revenue, and sometimes a rise in unregulated black-market sale. In the nicotine category, unregulated black-market sales often lead to minors obtaining nicotine products, as black-market sellers have no incentive to ensure that they sell only to of-age individuals,” according to his testimony.
A systematic review found that after tobacco tax or price increases, consumers often adopt cost-saving strategies such as switching products or purchasing in lower-tax areas. This supports Woodward’s point that a steep new tax could redirect purchasing rather than simply raising revenue in-state according to research published by Wiley. The Tax Foundation’s latest state analysis found high cigarette excise taxes are linked with larger illicit markets; in 2023 California had an estimated 56.8% inbound smuggling rate and New York was close behind at 51.8%. The report notes that when legal prices rise far above neighboring jurisdictions, black and gray markets gain a competitive edge and divert sales from licensed retailers according to The Tax Foundation.
Rutgers Health researchers found New York City’s high cigarette taxes have fueled illicit trade; a 2023 survey showed only 16.6% of discarded cigarette packs carried the required city tax stamp—down from previous years—reducing revenue and disadvantaging compliant retailers.
QuickChek says it opened its first store in Dunellen, New Jersey in 1967 and today operates more than 150 stores across New York and New Jersey. Woodward noted that QuickChek currently operates 20 stores in New York State and employs hundreds of New Yorkers according to company information.
