In her New York State budget proposal for fiscal year 2027, Governor Kathy Hochul announced several elements intended to restrict access to vaping products and nicotine pouches and make them more expensive. The 2027 fiscal year begins April 1, 2026.
Among the governor’s proposals are:
Making “alternative nicotine products” (including nicotine pouches) subject to the state’s 75 percent wholesale tax on non-cigarette tobacco products like cigars and loose tobacco. The tax would take effect Sept. 1.
Adding a second tax on vaping products—55 cents per item made in or imported into New York, whether it contains nicotine or not. The proposed tax would be charged to distributors. The state would continue to also charge retail customers the existing 20 percent retail tax.
Create a state registry of vaping products that can legally be sold in the state. Manufacturers would pay $1,500 per product each year to apply for inclusion, and must certify the submitted products have been authorized by the FDA or have timely filed premarket tobacco applications (PMTAs) still under review.
Creating and extensive system of penalties for sale or possession for sale of “contraband vapor products,” including substantial prison sentences for high-volume and repeat offenders. The proposed budget includes $4.7 million to pay for storage and disposal of seized contraband vapes.
New York banned flavored vapes and online sales in 2020. Despite the flavor ban, Hochul admits that 99 percent of vapor products sold in New York are flavored and violate state law. Yet, despite years of unsuccessfully trying to micromanage the large vape market, the governor continues to believe that imposing additional restrictions and greater penalties will make a difference.
Registry laws, like the one Hochul is proposing, typically originate with tobacco industry lobbyists. Since they reward companies with enough income to spend millions on PMTAs and wait for authorization, tobacco companies like Altria Group and R.J. Reynolds have used registry laws as a tactic to eliminate competition by the small, independent industry.
Hochul has not proposed an increase on cigarette tax rates, which are already the highest in the country at $5.35 a pack.
If Hochul’s proposals for a registry and increased enforcement are successful, the market for flavored vapes could move entirely underground, eliminating any tax benefit to the state. History shows that when flavored vape products are restricted, some consumers turn to the black market and others revert to smoking deadly cigarettes.
The governor’s budget proposal will now go through a 30-day period of being amended and supplemented. It will then be debated in the State Legislature, and both the State Senate and State Assembly will produce their own budget proposals. The final budget must be approved by both houses of the legislature and the governor by March 31.
Because of declining cigarette sales, state governments in the U.S. and countries around the world are looking to vapor products as a new source of tax revenue.
A list of vaping product flavor bans and online sales bans in the United States, and sales and possession bans in other countries.
A closer look at PouchPoint, an online nicotine pouch store offering competitive pricing, wide selection, and a smooth shopping experience.
A practical, data-driven breakdown of where the vape market is heading—and how to position your business ahead of regulatory and category shifts.
