Texas Tobacco Tax Applies to Nicotine Pouches, State Tells Court

RJR Vapor Co. LLC’s oral nicotine products are subject to tobacco taxes because they qualify as tobacco substitutes under the Texas Tax Code, the state comptroller told the Texas Supreme Court.

The state is seeking to overturn a 2023 appeals court ruling that RJR’s nicotine pouches and lozenges sold under the brand name VELO aren’t subject to Texas’s Cigars and Tobacco Products Tax. The lower court ruling, which held that tobacco and nicotine aren’t synonymous, affirmed an approximately $16,000 refund to the company.

However, Texas Comptroller of Public Accounts Glenn Hegar argued that RJR’s nicotine isolate products provide consumers the chance to consume ...