Rhode Island lawmakers are considering H7127, a bill that would impose a 300 percent increase on the cigar tax cap, raising it from $0.50 per cigar to $2.00 per cigar, effective September 1, 2026.
This proposal would directly harm small, locally owned cigar retailers across Rhode Island and push adult consumers to purchase cigars in neighboring states instead. Premium cigars are already subject to high taxation, and dramatically increasing the cap will make legally sold cigars in Rhode Island uncompetitive almost overnight.
Cigar retailers are not large corporations. They are small businesses that employ local workers, lease commercial space, and contribute to the economic vitality of their communities. When prices rise sharply due to excessive taxation, consumers do not stop buying cigars. They simply buy them elsewhere. That shift reduces in-state sales, lowers tax collections, and weakens Rhode Island’s small business sector.
Rather than generating new revenue, H7127 risks accelerating cross-border shopping and undermining compliance with state tax laws. Once customers establish purchasing habits outside Rhode Island, those sales are often lost permanently.
The Premium Cigar Association urges Rhode Island retailers, customers, and small business supporters to contact their legislators and ask them to oppose H7127. A balanced and predictable tax structure supports local commerce and state revenue. This bill does neither.
Please take action today and make your voice heard.