Spokane Journal of Business

Nic Nac Naturals nicotine lozenges hit market

Funded and operated by family, startup now sells products in c-stores, online

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Nic Nac Naturals LLC owner and co-founder Nicco Magnotto didn’t use nicotine until about five years ago, but he says he believes potential benefits of the substance are so compelling that he established the Spokane-based startup to make and market a new type of nicotine lozenge.

Headquartered in a 6,500-square-foot building at 3703 E. Central, in Spokane’s Hillyard neighborhood, Nic Nac Naturals lozenges hit shelves last month. The lozenges are sold online directly to customers in states and countries that allow such transactions and at 20 retail locations around Spokane, as well as at one location in Sioux Falls, South Dakota.

“I guess someone kept requesting the product, so the owner reached out to us,” Magnotto says of the Great Plains outlier. 

Spokane retailers of Nic Nac lozenges include Sunset Grocery, at 1908 W. Sunset Blvd.; Hico Market, 817 S. Perry; Towners Conoco, 1906 N. Ash; and Buruk Mini Mart, 1928 E. Mission. One container of lozenges retails for $5.99.

Magnotto, 31, says Nic Nac has made almost $100,000 in sales, and he expects the startup will be profitable by year-end. He funded the launch of the company in late 2018 through a friends-and-family funding round, which he says raised about $650,000. Magnotto isn’t opposed to additional fundraising, but says he has no immediate plans to do so.

Nicotine, an addictive chemical stimulant commonly found in tobacco, has been used in dissolvable lozenges in the U.S. since the 1980s, primarily as a smoking-cessation aid. Nic Nac is marketed as one such aid. 

Magnotto claims that a few things about Nic Nac products set it apart from other nicotine lozenges.

Although it’s generally accepted that oral ingestion of nicotine products is much safer than smoking and vaping, common ingredients in such oral products include aggressive pH adjusters, like sodium carbonate, which controls acidity, but can be irritating to oral tissues, Magnotto says.

“That's one of the big innovations we came up with—how to make nicotine absorbable without aggressive pH adjusters,” he adds.

Nic Nac lozenges are flavored with essential oils. Flavors currently offered include peppermint, spearmint, wintergreen, blood orange, and grapefruit.

Although Nic Nac lozenges don’t contain tobacco, they’re considered a tobacco product and are regulated and sold as such. Manufacturers in the industry aren’t required to disclose ingredients. 

“We're super transparent,” Magnotto claims. “In this industry, you're not required to put ingredients on the label, and we do it voluntarily to show off how clean our product is.” 

Magnotto declines to reveal how Nic Nac’s nicotine supplier synthesizes nicotine from nontobacco sources. 

“Our supplier's manufacturing process is proprietary, but they start with all-natural ingredients and synthesize lab-grade nicotine from there,” he says.

In addition to nontobacco nicotine and essential oils, Nic Nac lozenges contain xylitol, a sugar-free sweetener, as well as silica, a flow agent that makes the manufacturing process more efficient, and stearic acid, a binding agent.

Magnotto says he wanted to be thoughtful about packaging for Nic Nac lozenges. Typically, nicotine lozenges come in plastic or metal containers, he says. Nic Nac uses biodegradable, plant-based bioplastics for its packaging.

“We wanted to provide our customers with some type of premium packaging, and it just seemed wasteful to us to be throwing away so many cans,” Magnotto says.

Magnotto earned his bachelor’s in electrical engineering and his MBA at Arizona State University and briefly worked in utilities. He says the pace was too slow for him, so in 2018 he joined his father’s company, Moses Lake-based Dynamic Food Ingredients. DFI makes sweeteners erythritol, xylitol, and lyxitol, as well as some dietary supplements.

While at DFI, Magnotto came across research about the potential health and cognitive benefits of nicotine.

“Weirdly enough, nicotine kept showing up as something that may have health benefits,” Magnotto says. “I can't make any claims on behalf of our company, but if you take a dive into nicotine and what it does to the human body, it's super fascinating.”

A 1979 study conducted at UCLA showed that nicotine increases levels of dopamine, a neurotransmitter that plays an important role in attention, movement, and memory.

An ongoing study called the Memory Improvement Through Nicotine Dosing Study by a team involving National Institutes of Health, Alzheimer's Drug Discovery Foundation, Vanderbilt University, and University of Southern California is examining nicotine’s potential for treating conditions such as Parkinson’s disease, schizophrenia, depression, and attention-deficit/hyperactivity disorder.

Nicotine also carries side effects and risks. It’s commonly known that nicotine increases blood pressure and heart rate, which can contribute to side effects such as dizziness, nausea, and insomnia. Ingesting nicotine through lozenges or gum also is known to cause indigestion, loss of appetite, and sore throat. Nic Nac products are required by federal law to carry a label warning of the risk of nicotine addiction.  

Conversely, Magnotto says he has read about some people who use nicotine as a nootropic. Nootropics are substances that are thought to improve thinking, learning, and memory. They’re also called smart drugs and cognitive enhancers and were the inspiration for the 2011 movie “Limitless.”

He adds, “I find there's a time and place for it that I believe enhances my life. I think of it as another tool on the toolbelt. It's certainly something that requires a lot of respect, because it is addictive.”

Nic Nac lozenges come in 3-milligram and 6-milligram dosage options. According to a University of Florida handout on nicotine and tobacco products, single cigarettes contain between 1.1 and 1.8 milligrams of nicotine.

After researching nicotine, Magnotto says he realized there was a gap in the market for tobacco-free nicotine products that don’t use ingredients such sodium carbonate, and he began experimenting with lozenge prototypes.

Magnotto is one of five co-founders of Nic Nac. He says his brother, Marco Magnotto, has been especially crucial in establishing the business and has been hands-on in creating the brand from its Spokane headquarters.

The other co-founders are Dominic Morris, Robert Koczon, and Raymond Che, all of whom live in the Spokane area. None of the founders own other businesses here, Magnotto says. However, he says Marco Magnotto ran a sweetener company based in California called Zero Worries Foods Inc., and others working at the company have experience working at small companies that have since expanded, such as a brewery chain in Arizona. 

Seven total employees work at Nic Nac, Magnotto says. Most of the employees are related to Magnotto by blood or marriage.

“That's the only way to make it possible, especially now, when labor is crazy expensive for a startup,” Magnotto says. “It's totally a family operation.”

Magnotto says he’s focusing on developing brand awareness. His goal is to sell Nic Nac lozenges at up to 100 locations around the Spokane area by the end of 2023, then secure regional distributor contracts.

“Ideally we'll get this into stores across the U.S. and hopefully some international distributors,” he says.

Magnotto says that he’s dedicated to the Spokane community, and he’ll be satisfied if the business is financially solid.

“If it ends up being a big success, great,” he says. “If it's just a great local business, we'll take that too.”

Virginia Thomas
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Reporter Virginia Thomas has worked at the Journal since 2017 and covers the health care industry. As a reporter, she loves learning about Spokane's many growing industries. She enjoys traveling with her husband, snuggling with her cats, and cross stitching.

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