ALBANY — Nicotine pouches in New York will now be taxed like other tobacco products such as cigars after Gov. Kathy Hochul signed the state’s $268 billion budget into law Thursday.

The enacted budget brings alternative nicotine products under the state’s existing 75% wholesale tobacco tax. Starting in fiscal year 2028, an additional $50 million in annual tobacco tax revenues are expected to flow into the Health Care Reform Act fund. The levy is different than the one placed on cigarettes, which are taxed at $5.35 per pack in New York.

The move treats pouches like Zyn or On! the same as conventional tobacco products, even though they contain no tobacco leaf. State budget director Blake Washington has called nicotine pouches a “public health concern,” describing cigarettes and pouches as “a distinction without a difference.”

The tobacco industry hit back quickly. Officials with PMI U.S., the American arm of Philip Morris International, issued a statement saying the company is “disappointed by Gov. Hochul’s decision not only to impose an excessive 75% wholesale tax on nicotine pouches, but to disregard a more fiscally responsible alternative that would have raised more revenue for the state with fewer unintended consequences for small businesses.”

The statement, which was not attributed to a person, warned the tax would backfire on public health grounds.

“A steep wholesale tax moves in the wrong direction for affordability and public health: it will raise costs and discourage adult smokers from switching to better alternatives, keeping more people on cigarettes, which carry the greatest health risks,” the statement added.

Tobacco control advocates have long argued that taxing all nicotine products discourages addiction broadly and protects youth. Hochul has made youth nicotine access a prominent part of her public health agenda.

The PMI statement said the tax “will also fuel illicit trade, shifting demand to unregulated markets where safeguards and age verification don’t exist, undermining the governor’s stated goal of preventing youth access.”