The top law enforcement official in Gov. Kathy Hochul's home county is urging New York legislators to kill her proposed 75% tax on nicotine pouches, warning that the levy will fuel the same black market the state already struggles to contain.
Erie County Sheriff John Garcia sent a letter to legislative leaders rejecting Hochul's plan to tax nicotine pouches like Zyn and FRE at the same rate as cigarettes. His argument is straightforward: New York has tried taxing its way to public health before, and the results have been a booming underground economy in tobacco products, not fewer smokers.
"New York already faces widespread trafficking of vapes and other regulated goods."
"Experience shows that steep tax increases rarely reduce demand; they push it underground."
Garcia isn't speculating. He's describing the reality already unfolding across the state.
New York's cigarette excise tax stands at $5.35 per pack, the product of years of incremental hikes, including a $1 per pack increase in 2023, according to Just the News. Tack on New York City's additional $1.50 per pack levy, and smokers in the Big Apple face a combined tax rate of $6.85 per pack. For comparison, neighboring Massachusetts charges $3.51, and Vermont charges $3.08.
The predictable result: according to recent reports by the Tax Foundation, about 53.5% of cigarettes consumed in New York are purchased from illegal outlets or smuggled across state lines. More than half. The state's own enforcement actions tell the story. A 2023 New York City raid netted more than 1,800 cartons of cigarettes and $155,000 in cash from a single operation.
This is what a multimillion-dollar illicit market looks like in practice. And Hochul's answer is to replicate the same policy for an entirely new product category.
The proposal, dubbed the "bro tax" by some for the demographic most associated with nicotine pouches, is part of Hochul's $260 billion preliminary two-year budget. Her office projects the new levy would generate $18 million in its first year and $50 million annually once fully implemented.
A Hochul spokesperson framed it as a matter of public health:
"The Governor's proposal is a common-sense measure to improve public health at large, push back against manipulative tactics by big tobacco companies and increase necessary protections against life-threatening products."
The "common-sense" framing does a lot of heavy lifting here. New York already has one of the most aggressive tobacco tax regimes in the country. The result is that more than half of all cigarettes consumed in the state bypass the legal market entirely. The state doesn't collect a dime on those transactions. It doesn't regulate them. It can't even track them. Calling the next round of the same strategy "common sense" requires ignoring the evidence produced by every previous round.
Retailers and business groups, including the New York Association of Convenience Stores and the Business Council of New York, have also pushed back against the proposal. Their concern is practical: a 75% tax doesn't make customers quit. It makes them shop somewhere else, whether that's a neighboring state, an unlicensed dealer, or the internet.
Legal retailers lose revenue. The state loses tax compliance. Law enforcement inherits another black market to police. The only constituency that benefits is the underground economy.
There's a familiar pattern in Albany's approach to vice taxation. Officials propose steep levies under the banner of public health. They project modest but appealing revenue numbers. They dismiss enforcement concerns. Then, years later, they hold press conferences about the illicit market they created, seizing cartons and cash as proof that they're "cracking down" on a problem their own policy incentivized.
The 53.5% smuggling rate for cigarettes is not an anomaly. It is the direct, measurable consequence of making legal purchase so expensive that illegal alternatives become rational. Every economist who has studied excise taxes on inelastic goods could have predicted this. Many did.
Now Hochul wants to extend the experiment to nicotine pouches, a product that doesn't involve combustion, doesn't produce secondhand smoke, and that many public health researchers regard as a less harmful alternative to cigarettes. Taxing it at the same rate as cigarettes removes the price incentive to choose the less harmful option. That's not a public health strategy. It's a revenue play dressed in public health language.
Garcia's opposition carries particular weight because he's not a policy think tank or an industry lobbyist. He's the person whose deputies will be dealing with the consequences when unlicensed nicotine products start flowing through Erie County. He's watched it happen with cigarettes. He's watched it happen with vapes. He's telling Albany, plainly, that a 75% tax will produce the same result.
Whether Albany listens is another question. The $50 million revenue projection is a powerful incentive for legislators who prefer to tax first and enforce later. But $50 million is a projection based on legal sales. If nicotine pouches follow the trajectory of cigarettes in New York, the actual collections will be a fraction of that number, and the enforcement costs will eat the rest.
New York already proved this model doesn't work. The sheriff is just the latest person willing to say it out loud.
