Minnesota lowers premium cigar tax!

June 26, 2017

Effective July 1, 2017, Minnesota is lowering the tax on premium cigars to support small businesses, create jobs, and keep business local. The new tax will allow local retailers to compete with internet pricing, and offer a larger selection of premium cigars. But, that's only half the battle. Let me explain...

 

I moved to Minnesota 5 years ago, after being in the cigar and pipe business for almost 20 years. Two and a half years ago, I decided to get back in the business. Other retailers heard I was opening, and called me crazy. The tax was at 95%, and most every consumer was getting their sticks online, saving themselves a small fortune with every purchase. For the past 10 years or more, the state taxes were oppressively high, and they had driven all premium cigar business out of state. Maybe I was crazy, and, in my insanity, chose anyway to open my retail shop, Big Apple Cigar and Pipe in Forest Lake, MN. I found a great location, offered almost 400 facings, and plugged away. Business was good, but definitely not as much as I expected.

 

In the Fall of 2016, I heard about previous efforts to get the tax lowered in the state. A small group of retailers had made an unsuccessful effort several years prior, but gave up hope that the tax could ever be lowered. I had seen ridiculously high taxes on cigars get lowered in other states successfully, so I knew it could be done. I called Mark at Stogie's on Grand. He was the one that led the effort in the past. He agreed that we should make an effort, so he and I began contacting other premium retailers in MN, which turned out to be just a handful of shops. 

 

Of everyone contacted, most said it would never work, and didn't want anything to do with it. When discussing the cost of hiring a lobbyist, one retailer told us that she'd rather spend $2000 on shoes, than to contribute to our cause. One pipe dreaming attorney even suggested we spend $350,000 to sue the state for unfair taxation instead. (sue for unfair tobacco taxes, what??) Only six retailers were willing to contribute time and funds to the effort - Big Apple Cigar & Pipe, Stogie's on Grand, Churchill's, Burn, Tobacco Grove and Ramsey Smoke Shop. Additionally, we received corporate donations from Boveda, Oliva and Gurkha. The awesome folks at IPCPR kicked in the lion's share, and gave us the ability to hire a lobbyist, Sonnie Elliot at Faegre Baker Daniels in Minneapolis. Sonnie proved to be invaluable to our efforts.

 

In January 2017, we began our lobbying effort. We met with members of the legislature and found sponsors for our bills. We met with the House and Senate tax committees, to discuss the economic impact of our requests. Every step of the way, we were met with challenges, and the lies of anti-tobacco groups. A rather well-fed woman from Blue Cross had no qualms about trans-fats, but made claims that premium cigars were killing Minnesotans. We knew this wasn't true, since a recent FDA-funded study showed that smoking 1-2 premium cigars a day posed no increased health risks. A 15 year old, from her school's anti-tobacco group, claimed that increased taxes keep premium cigars out of the hands of children. She went on to say that many of her minor-aged friends had tried cigars - particularly Swisher Sweets they got at a gas station. Ha! Another recently published, FDA-funded study showed that teens were not smoking "premium" cigars, but rather cheap, mass market products, containing more additives than actual tobacco. These weren't the products we were discussing, and her poorly planned avenue of attack actually supported our arguments that the premium cigar industry caters only

 

to adults. A woman from another anti-tobacco group, whose name I don't care to waste the time looking up, said that Minnesotans were quitting smoking premium cigars due to the high taxes, and touted the health and financial benefits to society at large. Well, we all know this wasn't true. Customers told us all the time of how they were buying a couple of sticks to hold them over until they received their shipment from some guy at an un-humidified, tax-free warehouse in PA. They didn't quit at all. They just stopped buying their cigars in Minnesota. We all knew that.

 

 Governor Mark Dayton pandered to the antis and general public, claiming the evils of "Big Tobacco" and that our $1.6 Million dollar tax cut was somehow destabilizing Minnesota's budget of $46 Billion. We are not big tobacco. We are family owned and run small businesses. The tax break is huge to us. It means keeping employees and feeding our families. To the state, it's a mere .0034% of the overall budget. Insignificant? I believe so. With all his squawking, the governor still signed the budget into law (he knew how important is was for small businesses), while trying to save face with the antis. I love politics.

 

We did it!!! We got the tax lowered. Yay! Or, not so fast...

 

Getting the tax lowered was just the first step. The next step is much more difficult. Now, we need to change consumer habits. Cigar smokers in Minnesota don't even think about buying cigars locally. We have to let them know that our prices are competitive with the internet and with competing retailers just over the state line. We need to shout it from the treetops. We need cigar smokers to tell their friends. We need consumers to care about supporting local businesses, especially when it won't cost them an extra penny.

 

We got your taxes lowered, now need your help. Visit us. See our new pricing. Discuss with us the pricing you're getting online. Know who you are doing business with. Get fresher cigars. Tell everybody! It's time to bring the premium cigar business back to Minnesota. It's time to create jobs. It's time to relax and enjoy a fine cigar without breaking the bank. Please forward this article to every cigar smoker you know in Minnesota and let them know to support the local businesses that made this possible. 

 

 

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