Key Takeaways
- The Texas Supreme Court issued a case summary for Hancock v. RJR Vapor Co. LLC on May 8, 2026.
- The case concerned whether RJR Vapor’s VELO nicotine pouches are taxable as “tobacco products” under the Texas Tax Code.
- The Texas Supreme Court reversed lower court rulings and held that VELO pouches are taxable tobacco products.
- The Court concluded that VELO pouches are made of “a tobacco substitute.”
- RJR Vapor’s constitutional challenges were remanded to the court of appeals.
2Firsts, May 9, 2026
According to a case summary issued by the Texas Supreme Court, the Court held in Hancock v. RJR Vapor Co. LLC that RJR Vapor’s VELO oral nicotine pouches are taxable tobacco products under the Texas Tax Code.
The case concerned whether VELO pouches are subject to tobacco tax
The case summary said the dispute was a tax-refund case over whether RJR Vapor’s VELO pouches are taxable as “tobacco products” under the Tax Code.
RJR Vapor sells oral nicotine pouches that users place between the cheek and gum.
When RJR Vapor introduced the pouches to the Texas market, it asked the Comptroller for a general information letter explaining whether the pouches were taxable under the Cigars and Tobacco Products Tax.
The Comptroller concluded that the pouches were taxable.
RJR paid the tax under protest and filed suit, seeking a refund and a declaration that the pouches are not taxable tobacco products.
Lower courts had sided with RJR Vapor
The case summary said RJR Vapor also challenged the constitutionality of the tax statute and its application. The trial court granted summary judgment for RJR, holding that the pouches were not taxable tobacco products. After a bench trial, the trial court ruled that the language of the Tax Code was unconstitutional both facially and as applied.
The court of appeals affirmed and held that the pouches are not taxable tobacco products, but did not reach the constitutional challenges.
Texas Supreme Court found VELO pouches taxable
The Texas Supreme Court reversed. In an opinion by Justice Busby, the Court concluded that VELO pouches are taxable tobacco products because they are made of “a tobacco substitute.”
The Court said the pouches’ blend of plant matter and nicotine takes the place and function of taxable pulverized tobacco in pouched tobacco products.
Constitutional challenges were remanded
The Texas Supreme Court remanded RJR Vapor’s constitutional challenges to the court of appeals.
The case summary also said Justice Sullivan concurred dubitante, expressing doubt as to whether the inclusion of plant matter in VELO pouches should inform the Court’s analysis.
Image Source: Texas Supreme Court
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