Bhutan’s 2021 shift from prohibition to regulated sales left gaps for e-cigarettes, heated tobacco and pouches; a new policy brief urges risk-based taxes and better quitting support.

Bhutan’s tobacco policy, once among the world’s strictest, is struggling to keep pace with a wave of new nicotine products after the country lifted its long-standing sales ban in 2021. A 2026 policy brief argues that treating all nicotine products the same undermines efforts to reduce harm, especially as imports of e-cigarettes and related devices have soared.

The brief, titled “A Harm Reduction and Fiscal Strategy for the Post-Liberalization Era: A Policy Framework for Regulating Alternative Tobacco Products in Bhutan,” was co-authored by Karma Choden and Sonam Tshering of the JSW School of Law and Carmelo Ferlito of Malaysia’s Center for Market Education. It examines the shift from outright prohibition under the Tobacco Control Act of 2010 to controlled liberalisation following the 2021 amendment.

From Total Ban to Controlled Sales

For more than a decade, Bhutan stood out globally as a near-prohibitionist outlier. The 2010 law banned commercial sales and distribution, permitting only limited personal imports under heavy duties. Enforcement failures and a booming illicit market, however, forced a rethink. Seizures of smuggled cigarettes climbed from 3.7 million sticks in 2018 to 11.9 million in the first half of 2021 alone. The COVID-19 pandemic added urgency, as cross-border smuggling raised fears of virus transmission.

The 2021 amendment legalised commercial sales through authorised outlets while retaining bans on cultivation and manufacturing. The move reduced reliance on informal channels but exposed a new regulatory vacuum. Current legislation focuses mainly on combustible tobacco and remains ambiguous on heated tobacco products, nicotine pouches, synthetic nicotine items and some vaping devices.

“The fundamental reason for tobacco control is to reduce harm, not to punish,” said Sonam Tshering. Prohibition, he noted, never eliminated demand and simply redirected it into black markets – an experience shared by other countries that tried similar approaches.

Explosive Growth in Vaping Imports

Trade data underscore the urgency. E-cigarette and vaping device imports leapt from fewer than 1,000 units in 2022 to more than 448,000 units in 2025, valued at roughly Nu 48.5 million. Cigarette imports also rose sharply, from about 107 million sticks in 2023 to over 204 million in 2025. The National Health Survey 2023 put overall tobacco use at 31.4 per cent, with nearly one in five users also vaping.

Youth use has drawn particular concern. More than eight in ten tobacco users surveyed in the 2020 Global Youth Tobacco Survey said they wanted to quit, yet formal cessation support remains limited. Nicotine-replacement therapies such as patches and gum have historically faced severe restrictions, leaving smokers with few evidence-based tools.

Bhutan’s broader development ambitions, including its push toward high-income status under the 13th Five-Year Plan while preserving Gross National Happiness principles, make the public-health stakes higher. Non-communicable diseases already strain the health system, and tobacco remains a major contributor.

High Taxes on Lower-Risk Alternatives

Taxation is a central weakness identified in the brief. From January 2026, cigarettes attract a combination of specific excise (Nu 10 per stick), GST and customs duty. E-cigarettes face a 100 per cent excise tax plus GST and customs duty, producing a cumulative fiscal burden of about 115 per cent for e-cigarettes and heated tobacco products. Devices themselves carry an additional 20 per cent excise in some cases.

The authors argue that taxing lower-risk alternatives at levels close to combustible cigarettes shrinks the price incentive for smokers to switch. High prices can also drive consumers toward informal markets. Karma Choden cautioned that very high taxes place a heavier burden on highly dependent and lower-income smokers without necessarily delivering higher quit rates.

The brief recommends a risk-proportionate tax system: keep combustible tobacco heavily taxed while applying lighter, differentiated treatment to non-combustible alternatives. This would maintain a clear price differential that encourages switching without creating new illicit channels.

Closing the Regulatory Grey Zone

Beyond tax, the researchers call for stronger product-specific rules rather than leaving newer nicotine products in a legal grey area. Recommendations include mandatory product registration, ingredient disclosure, toxicity reporting, nicotine concentration limits, and packaging and safety standards tailored to each category. For youth protection, they urge strict age verification, retail licensing, controls on online sales and restrictions on youth-oriented flavours and designs.

Better data collection is also essential. Tobacco-use monitoring should distinguish combustible smoking, smokeless tobacco and non-combustible alternatives so policymakers can track shifts in consumption patterns rather than treating all nicotine use as identical.

Expanding Support for Quitting

Cessation services form another critical gap. Limited access to nicotine-replacement therapy and weak data on quit outcomes leave many users without practical pathways out of dependence. The brief urges expanding availability of evidence-based tools and integrating regulated lower-risk alternatives into a broader cessation strategy. Setting a clear long-term target for reducing smoking prevalence, backed by stronger monitoring, would help measure progress.

Officials have already begun responding. The Bhutan Food and Drug Authority and the National Council have been reviewing the Tobacco Control Act to clarify definitions, introduce quality standards and strengthen protections for minors. Proposed amendments seek to bring e-cigarettes, heat-not-burn products and similar devices explicitly under the law, set nicotine limits and tighten enforcement against underage sales.

Lessons for International Audiences

Bhutan’s experience offers a cautionary tale for other countries experimenting with or contemplating strict tobacco controls. Absolute bans can generate large illicit markets without eliminating demand. Once liberalisation occurs, regulators must move quickly to differentiate products by risk profile, or risk seeing newer nicotine products fill the regulatory void while high taxes blunt potential harm-reduction benefits.

For international readers, the story illustrates how a small Himalayan kingdom known for prioritising well-being over pure economic metrics is grappling with the same technological and commercial forces transforming nicotine markets worldwide. Success will depend on whether policymakers can craft rules that reduce harm, protect youth and remain enforceable – rather than simply extending outdated frameworks designed for cigarettes alone.