Governor Mark Dayton signed the tax increase last week which will go into effect July 1st. Under the old law cigars were taxed at 75% the wholesale cost, meaning every cigar carried at least a dollar in tax depending on how retailers priced them. The new tax increase raises other tobacco product taxes to 95% but will have a cap in place at $3.50 a cigar.
Despite the increase some cigar retailers see it as a victory. Jeff Haugen, owner of Tobacco Grove, along with many cigar industry professionals, has been trying to get the point across on what premium cigars are. “The main goal that we had this year was getting a clear definition of what a premium cigar was,” said Haugen. Through the cap premium cigars will be recognized as separate from other tobacco products like sniff, snuff, roll your own and small cigars.
Men and women in the cigar industry have been trying to educate the legislature on how the premium cigar world works and what separates cigars from other tobacco products. Although the tax increase isn’t good news for cigars, we’re happy to hear that premium cigars are at least being separated from other tobacco products.