How to Start a Cigar Shop in Your State

DISCLAIMER: The information found below is for informational purposes only, we are not providing legal advice and, do not claim to be attorneys. All of the attached information can be used to guide a new retail tobacconist but, we heavily suggest you seek the advice of counsel prior to and during the process. 

A NOTE: There is a longer copy that goes into each point in detail. If you are interested in learning more about opening a cigar shop, we strongly urge you to pursue the full document here

Step 1: Research and Business Plan

Know Cigars 

One of the most important parts of operating a cigar shop is to make sure you understand the products you are selling. We suggest that any potential business owner makes sure that they are familiar with the products they will be selling as well as all of the terminology within the industry. You will be there to help guide cigar smokers and educate them on the products when they have questions. 


It is important to seek out candidates who will enjoy the work while also being able to provide guidance to the consumers. 

A Local Guide 

An attorney that represents your business can usually help you with your startup in several integral ways such as: tax strategy, incorporation, liability management, insurances, permits, regulation compliance, trademarks, inspectors, and financial services. An attorney can help you build up your business and will know many ways to help you make more of a profit.

Business Plan 

A detailed business plan has been attached to the end of this guide. A detailed business plan will also ensure that all business partners know their role and are on the same page for the operations and all of the costs associated. We encourage anyone who is considering starting a retail tobacconist location to go through the attached business plan outline and fill it out. This will allow the future potential business owner to determine what they may need help on or, where to start. 

Startup costs 

Determining the exact cost of entry to start a retail tobacconist location varies widely but gave a rough number of $93,000 plus an operating cost of around $19,000 a month. This is a very rough estimate with assumptions that will not be applicable for all businesses. 

Know Your Market

You must determine how you will fit into the local marketplace. Consider other businesses that will affect your growth or sales. You want to find a region that does not have retail tobacconists close while also having customers to come into the store. A helpful tip is once you determine the region you want to set up shop, visit all of the other tobacconists in the area to see where you fit into the market. 

Step 2: How to form the LLC

This step will be very easy for those of you who plan to hire an attorney to aid you in the startup process. If you do not have legal counsel, not to worry there, are just some extra steps you must complete. The first step is to register your new business with your state’s business registration office, which can be found online. Next is to get your Employee Identification Number (Business Tax ID). This can be done on the IRS’s website, where you will fill out the application.

Step 3: Relationship Building and Inventory

We encourage any new cigar shop owner to reach out to The Premium Cigar Association for help in how to fill the shelves of your business. It is important to consider who your customers will most likely be, and tailor your inventory to fit your market. 

For further relationship building opportunities, The Premium Cigar Association offers a unique chance to co-mingle with other retail members and industry leaders at our annual trade show. At this event our retail members will have the chance to speak with some of the biggest names in cigars while also getting exclusive deals on orders for your retail location. 

Step 4: Legal Preservation (trademarks, insurance etc.)

An important aspect of owning and operating a business is to protect it. First, make sure you meet the mandatory minimum requirements by your state for insurance you business must have. Next is the protection of your intellectual property. This includes the name of your business, the logo and any merchandise that has your branding on it. As stated above, we highly suggest that you speak with a small business attorney to help guide you through this confusing process. 

Step 5: Financial Requirements

Banking Requirements

Your business will be required to have a bank account, so it is important to consider choosing a bank that has the ability to help small businesses. There may be a local bank that is the right fit for you, just make sure they have financial advisors on staff as well as access to small business loans that will be helpful to you. 

Understanding Your Profits

A competitive market like cigars; it can be hard to understand where the profits are coming from and understanding the profit margins. These factors will change from business to business and, for that reason we suggest that you seek out the advice of a fiduciary to help you understand how much you can make from this venture, how to raise money, and what amount you should keep in the business. 

Step 6: Real Estate

Real estate will most likely be one of the most important decisions you make for your startup. This process can get confusing so, we suggest that you seek the guidance of either a real estate agent or an attorney. 

Step 7: What You Need to Know in Your State  

Now that you know how to start your business, there are further regulations, licenses and permits you may need depending on the state in which you are starting your cigar shop. Attached on is the list of all associated regulations and licenses that you must comply with to operate. If you have any questions we at The Premium Cigar Association are here to help, please reach out to us. 

Business Plan Outline 

  1. Statement of Purpose
  2. Description of the business
  3. Sales plan
    • Your market 
    • Advertisements 
    • Presentation 
  4. Competition analysis
    • Price analysis 
    • Other locations close to you 
    • Consider online sales as competition (Price matching) 
  5. Operations and employee plan
    • Management
      • Cost/pay 
    • Management structure 
    • Employees needed
      • Cost/pay 
    • Real estate
      • Cost 
      • Location(s) 
    •  Benefits or retirement plan 
  6. Ownership structure and voting members
    • Agree on annual meeting/quarterly meetings
    • Decide on financial obligations for owners 
    • What role will the owners play day to day or big picture 
    • Voting powers
  7. Profit and financial analysis/ Financial plan
    • Loans needed 
    • Associated banks
    • Balance Sheet
    • Financial timeline (breakeven)
    • Capital on hand
    • Investor relations/finding investors  
  8. Insurances
    • Determine all insurances needed
  9. Legal cure
    • Determine liability 
    • Protect intellectual property 
    • Legal preservation through proper licenses and permits 
    • Decide if you would like an attorney on retainer for your business (Highly suggested if you do not have extensive business experience) 
  10. Two year timeline for your business, as detailed as possible