Bill raising NM's tax rate on vaping products, nicotine pouches advances Roundhouse

Yahoo

19-02-2025

Feb. 18—SANTA FE — A proposed tobacco tax increase in New Mexico is advancing at the Roundhouse after being slimmed down to target vape devices and nicotine pouches.
The Senate Tax, Business and Transportation Committee voted 4-3 on Tuesday to advance a bill broadening the definition of nicotine and raising the tax rate for e-cigarettes and other products.
Sen. Martin Hickey, D-Albuquerque, a retired physician who is the sponsor of the measure, Senate Bill 20, said it would likely generate between $5 million and $10 million annually.
But he said the bill's primary goal is not to raise money amid an ongoing state revenue bonanza, but rather to deter young people in New Mexico from using vaping devices and nicotine pouches.
"The reason for this bill is it is a youth health bill," he told reporters after Tuesday's committee vote.
"It's the kids I'm trying to save from learning addictive behaviors that, if they do (learn them), will plague them with other substances potentially for the rest of their lives," he later added.
In its initial form, the bill would have also increased the state's cigarette tax rate from $2 to $3 per pack, among other changes.
But that provision was removed from the legislation amid pressure from lobbyists representing large tobacco companies, Hickey said.
Several lobbyists and business owners still testified against the legislation on Tuesday, with one claiming youth e-cigarette usage in New Mexico has declined in recent years.
Dan Coffman, the vice president of Gem State Distributors, a wholesaler of candy and tobacco products with an office in Albuquerque, said the bill would have "devastating consequences" on local convenience stores.
He also predicted the legislation, if approved, could lead to increased sales of tobacco products in border towns just outside New Mexico.
However, advocates say New Mexico's tobacco tax laws have not kept pace in recent years with the proliferation of recent synthetic nicotine products, including flavored pouches, toothpicks, lozenges and gum.
Mahesh Sita, government relations director for the American Heart Association in New Mexico, cited data indicating about 25% of New Mexico high school students used vaping products at least once in the last 30 days.
Specifically, the bill approved Tuesday would impose a 40% excise tax on the wholesale price of tobacco products, excluding cigarettes and cigars.
It would also create a new fund, administered by the state Department of Health, that would help pay for nicotine prevention efforts.
New Mexico currently levies a 12.5% tax on vaping products, along with a 50-cent tax per cartridge, according to Tax Foundation data.
After Tuesday's committee hearing, Hickey expressed optimism the bill could win legislative approval during this year's 60-day session.
"I've got a bill that's going to treat the disease, and I'm thrilled," he said.
He also said the higher tax rate for e-cigarettes, nicotine pouches and other tobacco products would be only slightly higher than the state's cigarette tax rate.
The state's current cigarette tax rate of $2 per pack ranks near the middle of the pack when it comes to the national average. New York currently has the nation's highest rate at $5.35 per pack, while Missouri has the lowest rate at just 17 cents per pack, according to American Lung Association data.