Texas Supreme Court Rules VELO Nicotine Pouches Taxable as Tobacco Products

The Texas Supreme Court reversed the court of appeals’ judgment and held that VELO nicotine pouches are taxable tobacco products. The taxpayer sells oral nicotine pouches made of plant matter infused with nicotine isolate extracted from tobacco leaves, which users place between their cheek and gum. The court determined that, while the pouches are not made of tobacco, they constitute “tobacco substitutes” because they blend plant matter with nicotine and function like traditional snus products, providing both a filling and a chemical response similar to tobacco-containing items. Accordingly, the court held that pouches are taxable under subsection 155.001(15)(E) of the ...