Michigan Gov. Gretchen Whitmer proposes new tax on vapes, nicotine pouches

• Gov. Gretchen Whitmer proposes taxing non-tobacco nicotine products the same as cigars or chewing tobacco
•  The proposed tax plan would apply to e-cigarettes, vaping pod systems, vape pens, and nicotine pouches
• Whitmer laid out the proposal as part of her executive budget recommendation, which lawmakers will consider in coming months

LANSING — Nicotine products like vapes and oral pouches would face the same 32% wholesale tax as most tobacco products under a new proposal from Gov. Gretchen Whitmer that aims to “curb usage and protect public health.”

Extending the tax to non-tobacco nicotine products would “close a loophole” in state law,  Kyle Guerrant, the deputy state budget director, told lawmakers Wednesday during a presentation on the governor’s new budget proposal. 

While Michigan taxes cigarettes at a flat $2 per pack, non-cigarette tobacco products are taxed 32% at the wholesale level. Nicotine products without tobacco, however, have avoided the tax to date.

The Whitmer administration estimates the new “vape tax” would generate $57 million a year in revenue, which would go toward “smoking and cancer prevention, youth mental health and physical health and access to healthcare,” Guerrant said.

Anti-tobacco and nicotine product groups have long advocated for steeper taxes on nicotine products, citing studies that have shown they lower rates of use, and in turn, damages to public health by reducing cancer rates.

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Whitmer also requested an additional $2.5 million in the upcoming year’s state budget to hire new employees to administer and enforce the tax.

“The proliferation of vaping products raises profound public health concerns, particularly for young adults and adolescent youth for whom the rise in the use of these types of products is most notable,” state budget officials wrote in documents provided to the Legislature.

A 2024 survey from the Centers for Disease Control and Prevention found about 6% of youths use e-cigarettes while close to 2% use nicotine pouches. One in 29 middle school students nationwide reported using vapes in the past month, while the same is true of 14% of Michigan high schoolers.

Thirty-two states now tax vaping products in one form or another, including all of Michigan’s Great Lakes neighbors Indiana, Illinois, Ohio, Wisconsin and Minnesota. In Minnesota, the products are charged a 95% tax.

In 2019 Whitmer attempted to ban flavored vapes, citing their appeal to children and calling it a public health emergency that warranted emergency rules. A state court struck down those rules, however, and flavored vapes remain legal in the state.

The administration of former President Joe Biden also sought to ban menthol cigarettes for similar reasons but held off on finalizing the rule amid backlash.

Non-tobacco nicotine pouches, which are held in the mouth, have grown rapidly in popularity. 

Sales of the leading pouch brand, Zyn, grew 62% between 2022 and 2023, according to the product’s manufacturer, tobacco giant Philip Morris International. The pouches carry similar health risks to that of other oral tobacco products. 

Legislation to institute a new tax is likely to face hurdles in the state House, where Republicans hold 58 of 110 seats. Many have pledged not to institute new taxes.

Tobacco groups actively lobby the state Legislature and contribute to lawmakers’ campaigns and political action committees. In the first half of 2024, tobacco giant Altria Group voluntarily disclosed giving nearly $50,000 to both Republicans and Democrats.