22 July 2026
Reference: JDM/26 0826
To:
Ministry of Justice and Digital Affairs of the Republic of Estonia
[email protected]
FEEDBACK ON THE DRAFT ACT AMENDING
THE TOBACCO ACT AND THE STATE FEES ACT
Submission of the Latvian Traders Association on nicotine pouch and heated herbal product regulation
The Latvian Traders Association (Latvijas Tirgotāju asociācija) welcomes the opportunity to share its position with the Estonian trade community and public authorities on the draft amendments to the Tobacco Act and the State Fees Act, published jointly by the Estonian Minister of Justice and the Minister of Social Affairs. We write in a spirit of regional cooperation, drawing on Latvia's direct and recent regulatory experience, which we believe is highly relevant to the deliberations currently underway in Estonia.
The draft Act proposes new regulatory requirements for nicotine pouches and heated herbal products, including a maximum nicotine concentration of 4 mg/g in nicotine pouches and restrictions on permitted flavours. Latvia introduced closely comparable restrictions in January 2025. Based on the consequences we have since observed — and which our Parliament is now actively working to reverse — we urge Estonian authorities to carefully reconsider the proposed measures before adoption.
LATVIA'S EXPERIENCE SINCE JANUARY 2025 — KEY FIGURES
→ 0
Legal nicotine pouch turnover, practically eliminated
> 50%
Decline in electronic smoking product sales
€ 30M+
Estimated annual loss to the state budget
Cross-border purchasing and illicit trade are estimated, according to relevant studies, to now exceed 50% of total consumption in the affected categories.
1. BACKGROUND TO THIS SUBMISSION
Since January 2025, Latvia has applied nicotine concentration limits and flavour restrictions to nicotine pouches that closely resemble those now proposed in Estonia. The Latvian Traders Association has monitored the market impact of these measures continuously through its member network, which includes small and regional traders who are disproportionately exposed to shifts in legal and illicit trade flows.
2. MARKET IMPACT IN LATVIA
• Legal turnover collapsed: sales of compliant, legally supplied nicotine pouches fell to practically zero following the introduction of the restrictions.
• Electronic smoking products were also affected, with recorded sales decreasing by more than 50%.
• Illicit and cross-border trade expanded rapidly to fill the gap, and relevant studies indicate it now accounts for over 50% of consumption in the restricted categories.
• Regional and small traders were hit hardest, losing a stable, previously legal revenue stream to unregulated and untaxed channels.
• State budget revenues fell by an estimated €30 million or more annually as a direct consequence of the shift from legal to illicit supply.
3. LATVIAN PARLIAMENTARY REVIEW AND COURSE CORRECTION
The scale of these consequences prompted the Finance and Budgetary (Tax) Committee of the Saeima to formally review the impact of the restrictions in dedicated sessions on 24 February 2026 and 25 March 2026. Committee members examined the evidence of lost legal turnover, the growth of illicit trade, and the resulting budgetary shortfall.
As a direct result of this review, proposals for targeted deregulation — aimed at restoring legal market channels, reducing illicit trade, and recovering state budget revenue — are now under active discussion in the Latvian Parliament. We consider it important that Estonian policymakers are aware that Latvia is actively working to correct the very policy approach that Estonia is now considering adopting.
4. POSITION OF THE LATVIAN TRADERS ASSOCIATION
Based on this first-hand experience, the Latvian Traders Association calls on the Estonian Ministry of Justice and the Ministry of Social Affairs to:
• Review the proposed 4 mg/g nicotine concentration cap and flavour restrictions in light of Latvia's demonstrated market outcomes before finalising the draft Act.
• Commission or consult an independent impact assessment of illicit trade risk, drawing on comparable Baltic market data, prior to adoption.
• Engage directly with Estonian traders — particularly small and regional operators — who will bear the first and most direct impact of any restrictions.
• Consider regulatory alternatives that maintain consumer access to legal, quality-controlled products while pursuing public health objectives, in order to avoid displacing demand into unregulated channels.
We believe that a policy outcome which shrinks the legal market, expands illicit trade, and reduces state revenue serves neither public health nor fiscal objectives. Latvia's experience offers Estonia a rare opportunity to learn from a neighbouring market before, rather than after, similar measures take effect.
5. CLOSING REMARKS
The Latvian Traders Association remains available to share further data, Parliamentary materials, and market analysis from the Latvian experience, and would welcome the opportunity for direct dialogue with Estonian counterparts on this matter.
Respectfully submitted,
Latvian Traders Association
(Latvijas Tirgotāju asociācija)
President
Henriks Danusēvičs
[email protected]
Bruņinieku 12-9, Rīga, LV1001
Latvija
www.lta.lv