The regulatory landscape for tobacco and nicotine is rapidly shifting the back bar. With federal agencies signaling tougher oversight and states implementing new tax policies, convenience retailers are watching closely what rules may emerge next—and how these decisions could reshape the category.
Crackdown on illegal vapes
There is broad agreement among convenience-store retailers, regulators and industry groups that enforcement must intensify against sellers and distributors of illegal e-cigarettes.
Federal officials note that illicit products have flooded the legal market, prompting stepped-up enforcements.
In September, the Department of Health and Human Services (HHS) and Customs and Border Protection (CBP), seized 4.7 million units of unauthorized e-cigarette products valued at an estimated retail value of $86.5 million.
FDA Commissioner Marty Makary has urged retailers to stop selling illegal vapes, noting that as much as 54% of vaping products sold nationally are illegal and may contain hazardous chemicals such as formaldehyde, lead and acrolein.
“Too often, retailers in communities are selling illegal vaping products,” Makary said in a statement in September.
To date the FDA has authorized 39 e-cigarette products. These are the only e-cigarette products that currently may be legally marketed and sold in the United States.
To stem the flow of illegal vapor products, the Ensuring the Necessary Destruction of Illicit Chinese Tobacco Act passed the Senate and signed into law Nov. 17.
This new legislation gives the FDA authority to destroy adulterated, misbranded or counterfeit tobacco products, including unauthorized e-cigarettes imported from China.
“For too long, illicit e-cigarettes produced in the People’s Republic of China have been pouring into our country and threatening public health,” Sen. Martin Heinrich (D-New Mexico), who cosponsored the legislation in the Senate with Sen. John Cornyn (R-Texas), said Nov. 17.
Convenience store retailers are welcoming these latest enforcement efforts. Alison Ritchie, president of the New York Association of Convenience Stores (NYACS), said that NYACS members are encouraged by recent enforcement actions targeting illicit flavored disposable vapor products.
“NYACS members are optimistic about the tobacco and nicotine category,” she said, but admits more must be done.
On the state level, Ritchie said that New York State’s continued inaction on enforcing its ban on flavored vapor products has put compliant retailers at a disadvantage.
“The result has been a growing illicit market that undermines responsible businesses,” Ritchie said.
In the state of New York, it is illegal to sell flavored vapor products at retail, sell vapor products to anyone under 21 years old and to ship, or cause to be shipped, vapor products to consumers and unlicensed businesses.
Ritchie said that NYACS will continue supporting fair enforcement and review any future proposals to expand tobacco or nicotine flavor restrictions.
Tax pressure builds
Facing revenue shortfalls, state officials across the country in 2025 turned to increasing their state’s cigarette tax, as well as other tobacco hikes.
In July, Indiana implemented a $2-per-pack cigarette tax increase, raising its rate from $0.995 to $2.99 per pack—an increase of just over 200%.
Illinois’ fiscal year 2026 budget, passed June 1, and included a significant change: nicotine pouches are now taxed at 45% of wholesale, whereas previously they were not taxed.
Rick Mistretta, president of Prairie State Energy, South Barrington, Illinois, said that the increases has pushed many shoppers to cross state borders to save money, hurting retailers in high-tax jurisdictions.
“Consumers vote with their feet,” Mistretta said. “Many can’t afford the Illinois tax burden and will drive to neighboring states to save money, hurting Illinois retailers.”
Mistretta said disparate tax rates between states are fueling a growing gray market, allowing products sourced in low-tax states to be sold illegally in high-tax states. “The gray market can compound these effects on retailers and creates potential risks for consumers,” he said.
On the East Coast, Maine joined the list of states increasing taxes, raising its cigarette tax from $2 to $3.50 per pack, effective beginning this year on Jan. 5—the first increase in two decades.
David Spross, executive director of the National Association of Tobacco Outlets (NATO), said that after several years of relatively little activity, more states are again eyeing tobacco tax hikes.
For 2026, Spross said that “economic uncertainty could put pressure on state budgets, which could result in increased tobacco and nicotine excise taxes to fill budget shortfalls.”
Ritchie said NYACS is prepared to push back against any proposed excise tax increases.
“New York’s historically high cigarette taxes have contributed to a thriving illicit market, inviting organized crime into our communities,” she said. “The Mackinac Center for Public Policy studies cigarette smuggling and has found that New York has the highest cigarette smuggling rate in the U.S., signaling a great amount of the cigarettes consumed in New York State are purchased in other states or countries to avoid high taxes.”
Ritchie said it is important for retailers to have a fair and lawful marketplace—and NYACS will continue to advocate for it.
Streamlining PMTA reviews
As the year unfolds, it will be shaped by what the FDA determines when it comes to premarket tobacco applications (PMTAs), Spross said.
“I expect these to include more product authorizations with vapor and nicotine pouches, including ‘adult-like’ flavors,” he said.
Looking to streamline nicotine pouch applications, the FDA in September launched a pilot program that provides frequent feedback and shorter review timeframes.
Bret Koplow, acting director of the FDA’s Center for Tobacco Products (CTP), said that “for adults who smoke, switching completely from cigarettes to nicotine pouch products authorized by FDA may reduce exposure to many harmful chemicals found in cigarettes.”
Tobacco control experts, including Cliff Douglas, adjunct professor at University of Michigan School of Public Health, believe the FDA may be adopting a more favorable stance toward reduced-risk products.
“We are in a potentially new era for tobacco and nicotine product regulation by the FDA under the Trump administration,” said Douglas, an internationally recognized expert in tobacco control policy and law.
Douglas said that Koplow has signaled a more positive attitude toward authorizing reduced-harm products such as nicotine pouches and e-cigarettes.
“Many experts, including myself, anticipate stepped-up activity by the FDA in acting on premarket tobacco applications, which will likely include authorizing more products than we have seen previously,” Douglas said. “Exactly how far they go in reforming the regulatory approach in a way that will favor greater access and availability to adult consumers remains to be seen, however.”
Douglas said he remains hopeful that Department of Health and Human Services (HHS) Secretary Robert F. Kennedy Jr. and the FDA leadership will prioritize the public-health benefits of expanding access to authorized reduced-risk products.
“I am optimistic that Secretary Kennedy and the FDA leadership will grasp this and run with it,” he said.
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