The U.S. nicotine and tobacco market underwent significant changes in 2025. New authorizations from the FDA, a sales tax increase, the continued presence of illicit e-cigarette sales, and increased federal enforcement all contributed to this transformation. These dynamics reshaped how convenience store retailers, manufacturers, and consumers operate and choose within this category. Below is a review of key changes from the front lines of retail in 2025.
I. FDA Authorization
In January 2025, the FDA granted Marketing Granted Orders to 20 Zyn nicotine pouch products , marking the first nicotine pouch product approved by the agency.
These products contain two concentrations of nicotine (3 mg and 6 mg), including Zyn Chill, Zyn Cinnamon, Zyn Citrus, Zyn Coffee, Zyn Cool Mint, Zyn Menthol, Zyn Peppermint, Zyn Smooth, Zyn Spearmint, and Zyn Wintergreen.
Zyn is manufactured by Swedish Match North America, which was acquired by Philip Morris International in 2022.
As the nicotine pouch market continues to expand, the FDA launched a pilot program in September aimed at streamlining the review process for premarket tobacco product applications (PMTA) for nicotine pouch products.
The FDA called this a "significant" advancement, and details of the program include a real-time communication mechanism between the FDA and applicants, as well as shorter review times.
II. Consumption tax significantly increased
In 2025, several states, including Indiana, raised taxes on tobacco and nicotine products to address budget shortfalls.
Convenience store retailers in that state face a $2 tax increase per pack of cigarettes, bringing the total cigarette tax rate close to $3 per pack. In Indiana, the cigarette tax rose from $0.995 to $2.99 per pack, an increase of slightly over 200%.
David Spross, executive director of the National Tobacco Retailers Association in Washington, D.C., said, “In 2026, states will continue to consider tobacco and nicotine excise taxes as in previous years. However, shorter legislative sessions in some states, coupled with a greater focus on non-fiscal matters, will alleviate some of the pressure from tax increases. In addition, next year is a state election year, which will also affect the legislative sessions in each state.”
III. The illegal e-cigarette market continues to proliferate.
Despite federal government crackdowns, the illicit e-cigarette market remains a major thorny issue in 2025 due to tax pressures. Bonnie Herzog , Managing Director and Senior Consumer Analyst at Goldman Sachs , stated that illicit e-cigarettes have been a focus for convenience store retailers, and their continued proliferation has severely impacted the sales of legitimate e-cigarette products.
At the CSP Tobacco Plus forum in September, Bonnie Herzog noted, " The market penetration rate of illicit e-cigarettes is currently around 70% , but we expect this percentage to gradually decline by 2035." Federal agencies have increased enforcement efforts to combat the illicit market.
The U.S. Department of Health and Human Services (HHS), together with the FDA and Customs and Border Protection (CBP), seized 4.7 million unauthorized e-cigarette products with an estimated retail value of $86.5 million.
In September, authorities announced that raids were conducted in Arizona, Florida, Georgia, Illinois, New Jersey, and North Carolina, marking the largest seizure operation of its kind to date.
In a statement, HHS said the seizure was part of a joint federal government operation aimed at inspecting inbound shipments and preventing illicit e-cigarettes from entering the U.S. market.
IV. Legislative actions continue to intensify
In 2025, U.S. lawmakers intensified their efforts to combat the importation of illicit e-cigarettes. In November, Democratic Senator Martin Heinrich (New Mexico) announced that the " Ensuring the Necessary Destruction of Illicit Chinese Tobacco Act" ( END Act) had passed the Senate and would be signed into law as part of the 2026 fiscal year agricultural appropriations bill.
The bill grants the FDA the power to destroy adulterated, counterfeit, or trademark-infringing tobacco products, including unauthorized e-cigarette products imported from China.
Martin Heinrich stated: "Currently, a large number of illicit e-cigarettes originating from China are flooding into the United States, posing a threat to public health. For this reason, as a member of the Senate Appropriations Committee, I am advocating for clear powers for the federal government to destroy these unauthorized e-cigarette products at the border before they enter communities."
Spross stated, " At the federal level, the Trump administration's crackdown on the illicit market is a welcome shift. Many illicit e-cigarettes are imported through illegal channels and are deliberately targeted at minors, featuring gummy flavors, gaming screens, and other designs designed to appeal to teenagers."
To date, the FDA has authorized 39 e-cigarette products and devices, which are the only e-cigarette products that can be legally sold and promoted in the United States.
Source: cspdailynews
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