The Texas Supreme Court decided in late May to review whether nicotine isolate products, such as RJR Vapor Co.'s "Velo" branded nicotine pouches and lozenges are "tobacco products" or "tobacco substitutes" which are subject to Texas's Cigars and Tobacco Products Tax.
The appeals court found that tobacco and nicotine aren't synonymous, and that nicotine pouches do not meet the state's definition of taxable tobacco products. The matter is likely on its way to the Texas Supreme Court for a definitive resolution of the taxability of oral nicotine pouches.
A ruling in favor of the [Texas]could reinforce taxation and regulatory measures on emerging nicotine products, while a decision upholding the lower court's ruling might prompt legislative action to address potential gaps in the current tax code.
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