Zyn Changed Nicotine Forever - Are Cannabis Pouches The Next Big Thing?

Philip Morris International PM, one of the largest tobacco companies in the world, has undergone a dramatic transformation over the past few years. As cigarette smoking continues its decades-long decline, PMI has aggressively expanded into smokeless alternatives, with Zyn – its flagship nicotine pouch brand – emerging as a major driver of growth.

Zyn's rapid adoption in the U.S. market has played a key role in PMI's resurgence. Earlier this year, the Food and Drug Administration (FDA) authorized 20 Zyn products for sale, determining that these pouches contain "substantially lower amounts of harmful constituents than cigarettes and most smokeless tobacco products." This regulatory green light reinforced Zyn's positioning as a lower-risk alternative to traditional tobacco products.

PMI's $16 billion acquisition of Swedish Match, the original manufacturer of Zyn, in 2022 has proven to be a strategic coup. The company reported shipping 238 million cans of Zyn in the U.S. that year, with projections indicating that this number will more than double in 2024. According to CNBC, PMI has committed over $832 million to expand Zyn's production capacity, including new manufacturing plants in Aurora, Colorado and Owensboro, Kentucky.

This shift aligns with PMI's broader corporate strategy: by 2030, the company aims for two-thirds of its revenue to come from smoke-free products, with an eventual goal of moving entirely away from cigarettes. As Goldman Sachs senior analyst Bonnie Herzog told CNBC, "The beauty of this transformation is that they're actually generating faster top-line and faster profitability given the pivot to these businesses."

With Zyn's meteoric rise, PMI has demonstrated that nicotine pouches are more than just a passing trend. They represent a scalable, profitable and consumer-friendly alternative to traditional tobacco products. The question now is: can a similar shift happen in the cannabis industry?

From Nicotine To Nootropics: Pouches Are Just Getting Started

While Zyn has reshaped the nicotine industry, its success is part of a broader shift in how consumers approach smokeless and discreet consumption. Pouches, as a delivery system, are gaining traction across multiple categories, including cannabinoids, caffeine and nootropics. This trend suggests that the appeal of pouches extends far beyond nicotine replacement, opening the door for new product innovations.

Nick Kenny, lead advisor at KBS Strategic Advisory, has worked closely with major tobacco companies exploring these adjacent markets. He points out that Zyn's success has fueled renewed interest in pouches as a delivery method for other substances.

"The widespread adoption of oral nicotine pouches by regulators and adult consumers has spurned renewed interest in the category as a delivery method for cannabinoids," Kenny told Benzinga in an exclusive interview. "Big Tobacco [companies] are consistently looking to diversify and enhance their portfolio of offerings, and where they can leverage existing technology to differentiate, such as in the case of pouches, it's a natural adjacency to take advantage of."

Beyond nicotine, companies are expanding into new bioactive substances that fit well within the pouch format. Cannadips, a California-based company specializing in smokeless, spit-free pouches, has pioneered THC and CBD-infused alternatives to traditional oral tobacco. Co-founder Case Mandel has been at the forefront of this shift, developing pouches infused with THC, CBD, caffeine and nootropics.

"We participate in all those different categories (…) we have brands in all the different verticals," Mandel told Benzinga. "Pouches are becoming an acceptable way to consume many different things."

The appeal of pouches is rooted in their smoke-free, discreet and fast-acting nature. Unlike traditional edibles or tinctures, which must pass through the digestive system, pouches deliver active ingredients through oral absorption, leading to a quicker onset of effects. This efficiency has made them particularly attractive for consumers looking for functional products, whether for focus, energy, relaxation or mood enhancement.

Caffeine pouches have already started to take off, following a similar trajectory to nicotine pouches. Mandel notes that the market has grown significantly, with his company seeing success in partnerships like Upperdeckys, a high-dose caffeine pouch brand that has gained popularity through influencer marketing.

"We have the highest-dose caffeine pouch product on the market," Mandel said. "Every pouch is almost like an energy drink."

Meanwhile, nootropic pouches infused with compounds aimed at enhancing cognitive function have also started to gain momentum. Mandel's company has developed nootropic pouches under the Rebel brand, leveraging ingredients like Alpha-GPC and Cognizin to cater to consumers looking for performance-enhancing alternatives.

"We see that the new age of consumers want healthier products, they want to know where their ingredients are from and they want cutting-edge delivery systems," Mandel said.

With consumer behavior shifting toward discreet, functional and efficient consumption, pouches are proving to be a format with applications far beyond nicotine. The question now is whether cannabis pouches can follow the same path, carving out a substantial market segment like Zyn did in the nicotine space.

Can THC Pouches Follow In Zyn's Footsteps?

While nicotine and functional ingredient pouches have gained mainstream traction, cannabis-infused pouches remain a niche product. Forbes' Will Yakowicz recently reported on the rise of THC-infused pouches, spotlighting companies like Cannadips and Juana Dips that are leading the charge in this emerging category. These companies are working to establish THC pouches as a viable segment within the cannabis industry, but the path to success is far from straightforward.

While Mandel sees major potential, he acknowledges the significant barriers to scaling THC pouches. "We believe THC pouches are going to be a big market in the future," he said. "But due to the incredibly high capital expenditure costs of pouching machines and intellectual property –and this really poorly fragmented state-by-state regulatory model due to lack of federal reform– it's been very hard for us or anyone else to get significant traction in the THC pouch space."

Unlike nicotine pouches, which can be sold nationwide in convenience stores, THC-infused pouches are limited by the patchwork of U.S. cannabis laws. Without federal legalization, each state enforces its own licensing and distribution rules, creating barriers to scaling production and streamlining sales.

Without centralized production and wider distribution, THC pouches won't easily compete with dominant cannabis formats like flower and vapes.

"At some point, we, as well as others, will be able to have a factory in one location, provide product to the country and get it for a price that consumers can afford and can build into their daily routine versus like a novelty," Mandel said.

Price is another major factor. Cannabis pouches are significantly more expensive than nicotine pouches, making it difficult to drive widespread adoption. While a can of nicotine pouches typically costs around $6, THC pouches can be three to four times more expensive due to taxes, compliance costs and limited production scalability.

"When consumers see a circular can, especially if they use Rogue or any of these products, they expect the product to be the same price or close to it," Mandel said. "No one’s going to switch from a $6 product to a $30 product and use it at the same frequency. It's just really hard."

For THC pouches to reach mainstream consumers, Mandel argues that the industry will need some level of federal reform to reduce costs and streamline production.

"Really, in my opinion, it’s going to have to be about commoditization," he said. "Until we can normalize the price of a THC pouch to be at least close to a nicotine pouch, it will be hard for it to be anything more than a novelty product that people use occasionally rather than incorporating into their daily routine."

Despite these challenges, companies like Cannadips are focusing on regions with strong smokeless tobacco traditions to drive early adoption. The company has launched in Arkansas, Missouri and Kentucky, among others, where dip products are already popular, in an effort to establish pouches as a daily-use product rather than a novelty.

"We’re looking at areas of strength where we can put our attention to and really show that this isn't just a novelty product," Mandel said. "This is a product that people are building into their daily lives."

For THC pouches to reach mass-market success, pricing, regulations and consumer awareness will need to improve. If those barriers are addressed, they could become a major category within the cannabis industry. The next question is whether Big Tobacco and large cannabis operators will step in to accelerate growth—or if THC pouches will remain a niche product.

Who Will Fund The Rise Of Cannabis Pouches?

As cannabis pouches attempt to carve out a foothold in the market, the key question remains: Will large-scale industry players, whether Big Tobacco or major cannabis operators, step in to accelerate their adoption?

Nick Kenny believes tobacco companies are closely monitoring the category but will only invest if they see clear market potential and broad distribution opportunities. "Big Tobacco [companies] have the desire and ability to make the category successful. However, they will only do so if they can deliver a product that can differentiate in experience and attain widespread distribution," he said.

Kenny also noted that consumer adoption and regulatory barriers will both play critical roles in determining the success of THC pouches. Unlike nicotine pouches, which benefit from nationwide distribution, THC pouches face restrictions due to fragmented state-by-state cannabis laws, making it difficult for companies to scale efficiently.

Despite these challenges, Case Mandel sees long-term potential. "We created the category. We’ve been doing this now for nine years," he said. "We’ve solved a lot of the issues when it comes to delivery of cannabinoids."

Still, affordability remains a major hurdle. Without economies of scale, THC pouches are significantly more expensive than nicotine pouches, limiting mass adoption.

"Recreational cannabis is really expensive, and it's really expensive compared to traditional [illicit] markets in a lot of states," Mandel said.

One potential avenue for wider availability is hemp-derived THC pouches, which fall under the 2018 Farm Bill. However, Mandel points out that regulations on THC content per pouch make them less competitive than edibles, vapes and drinks. "Because a pouch is only 500 milligrams, you’re looking at a milligram and a half of THC per pouch," he explained.

Rather than trying to force national expansion too early, Mandel's strategy is to focus on regions with strong smokeless tobacco traditions, where dip users may be more likely to embrace the format.

"We’re kind of looking at areas of strength where we can put our attention to and really show, ‘Hey, this isn't just a novelty product. This is a product that people are building into their daily life,'" he said.

The future of cannabis pouches will depend on major industry investment, evolving regulations, and consumer demand. If a major player—either in cannabis or tobacco—commits to mass production and distribution, the market could scale quickly.

For now, THC pouches remain a niche product, but the potential is there. If a dominant player enters the space, cannabis pouches could redefine consumption—just as Zyn did with nicotine.

Lead image via Shutterstock