The Premium Cigar Association in Partnership with Retail Tobacconists in the States
During the course of the last six months, the Premium Cigar Association has been engaged with nation’s retail tobacconists as the industry confronted a diverse slate of issues during the course of the 2021 state legislative session. The following represents the significant issues addressed in 2021:
Maine State Representative Joyce McCreight introduced HP 1039 which would raise the level of taxation on all tobacco products, and specifically would raise the OTP (Other Tobacco Products) tax on premium cigars, from the current rate of 43% to 86% of the wholesale price. PCA engaged with member state retailers, monitored committee action with allied industry associations and engaged retailers and consumers through CigarAction.org, which collectively, resulted in a defeat of the tax increase proposal!
PCA supported and petitioned the Connecticut legislature for H.B. 5305 in Connecticut.
This measure would allow for the expansion, change in location and establishment of tobacco bars.
The measure exempts tobacco bars from buildings that people can smoke in from current law. The tobacco bar must have first began operating on or after October 1, 2021 and must:
(i) be located in a stand-alone building,
(ii) have a walk-in humidor on the premises,
(iii) not be located within a five-mile radius of any existing tobacco bar, or
(iv) if such tobacco bar is connected to another building, use its own heating, ventilation or air conditioning system to prevent the comingling of air. The bill was successfully reported from the House, when time expired in the session.
PCA, working in support of the New York Tobacconists Association, is advocating for passage of the following bills in the New York legislature: New York State Senator Jessica Ramos, has introduced S.B. 6741 that will work to protect New York’s premium retail tobacconists, will assist in their economic recovery from the COVID Pandemic, and bring revenue to the state. It will also provide relief for New York’s cigar patrons, as they too emerge from the strain of the last year. This measure will establish a tax of tobacco products tax exclusively for premium cigars or cigars at 75 percent of the wholesale price or 50 cents, whichever is less. And there is New York S.B. 6742 which would allow for a license to sell liquor at retail for consumption on-premises in a cigar lounge and it will require cigar lounges to provide written notification warning employees of the dangers of exposure to tobacco smoke. This measure will provide requirements for a license to sell liquor at retail for on-premises consumption in a cigar lounge.
PCA, in cooperation with the premium cigar shops and lounges of Delaware, supported S.B. 131. This Act lowers the tax rate for premium cigars from 30% to 15% of the wholesale price so that Delaware’s tax rate is consistent with the tax rates for premium cigars in surrounding states. S.B. 131 was successfully reported from a major Senate committee and awaits further legislative action. PCA provided oral and written testimony in support of the bill.
Working in concert with the retail tobacconists of Minnesota and members of the state legislature, PCA partnered for defeat of a tax increase, and preservation on the .50 tax cap. Minnesota Representative Jennifer Schultz introduced HF 1721 which represented a threatening attack on the Minnesota small businesses that sell premium cigars, and the premium cigar industry as a whole.
HF 1721 would have taken the .50 cent tax cap and raised it to $5.00 per cigar or the rate of 97 percent (previously 95%) of the wholesale sale price of a premium cigar. This bill would have made Minnesota one of the highest tax states on premium cigars in the nation.
Indiana State Representative Julie Olthoff introduced HB 1434 which would have raised the wholesale tax on premium cigars and pipe tobacco by 15%. Indiana State Representative Carolyn Jackson introduced HB 1076 which would have banned sales of flavored tobacco products. The prohibition includes the sale of flavored tobacco products and components that contain an overly broad term “characterizing flavor”. This bill also proscribes a Class C misdemeanor and allows the State Alcohol and Tobacco Commission to revoke a retail certificate. This overly broad term could negatively impact premium cigar & pipe retailers, consumers, and manufacturers in the state depending on administrative interpretation of “characterizing flavors.” PCA engaged Indiana retail tobacconists and consumers with CigarAction.org, and both bills were defeated for the year.
The Kansas House of Representatives Committee on Taxation introduced H.B. 2428 which would raise the level of taxation on all tobacco products, and specifically would raise the OTP (Other Tobacco Products) tax on premium cigars, from 10% to 55% of the wholesale price. PCA engaged Kansas retail tobacconists and consumers with CigarAction.org, and the bill was defeated for the year.
Missouri HB 266 would have allowed local governments throughout the state to propose tax increases on tobacco products. Introduced by Missouri Rep. Peter Merideth, the bill would allow for each locality to have a different tobacco tax level. By having the tobacco tax differing from region to region, it would instill an uneven playing field which would harm premium retail tobacconists throughout the state. PCA and Missouri’s premium tobacconists monitored and petitioned the legislature through CigarAction.org in opposition to the bill.
The Michigan House Tax Policy Committee voted to advance House Bill 4485, a bill that would make Michigan’s $.50 tax cap permanent, to the full House for a vote. The future of Michigan’s tax cap on cigars hinges on enactment of this bill. If the Legislature and Governor take no action, the state’s current cap on cigar taxes is set to expire October 31, 2021 leaving premium cigar retailers exposed to a dramatic tax increase.
PCA and the leadership of the Michigan Premium Cigar & Pipe Retailers Association also partnered this year on combating and successfully reversing the pandemic sparked smoking ban in Michigan cigar shops, lounges and bars.
Tennessee legislation H.B.113 would have forced all businesses that sell tobacco products to obtain a new tobacco sellers license. This kind of regulation raises the bar needed for a small business to start and opens the door to new regulations and taxes that could be imposed through licensees in the future. The focus of the bill is vapor products, and was obviously the intended target for the additional regulations. PCA alerted its Tennessee members through CigarAction.org and the legislation never received a hearing.
PCA opposed legislation in the Kentucky legislature that would have allowed employers to discriminate against those that enjoy premium cigars and other tobacco products, as well as legislation that would have allowed enhanced local regulatory and tax authority over tobacco products.
SB 258 was a measure that would remove protections against employment discrimination based upon an individual’s status as a smoker or nonsmoker. SB 258 would allow employers to refuse to hire, discharge, or discriminate against an employee or applicant because the individual utilized any form of nicotine, in the form of legal tobacco products. The legislation would also allow employers to require abstention of tobacco products outside the course of employment.
HB 147 would allow any Kentucky city or county government to impose restrictions or requirements on the use, display, sale, and distribution of tobacco products that are stricter than those imposed under state law. Thanks to industry wide opposition and a grassroots campaign through CigarAction.org, neither bill obtain momentum this year.
In partnership with the Georgia premium retail tobacconists, PCA through CigarAction.org launched a grassroots campaign to defeat this year’s dramatic tax increase bill.
PCA organized testimony and a grassroots campaign through CigarAction.org in opposition to Florida Senate Bill 334 that would grant local governments authority over beach and associated outdoor smoking regulations. Over the course of the last several years this legislation has continued to build support, making a diligent effort to defeat it, all the more important. The PCA and Florida retail tobacconist’s testimony coupled with strong grassroots outreach, made this year’s victory possible.
PCA engaged with the premium retail tobacconists of Maryland to oppose sweeping flavor ban and tax legislation, as well as providing support on pandemic inspired regulations against smoking in Montgomery County, Baltimore City, Baltimore Co, and Prince Georges County. PCA also worked with the Maryland Premium Cigar Association to lower the tax on pipes.
PCA worked with local retailers in Washington, DC on Covid related lounge closures and an overly broad flavor ban.
Additional States Engaged on Critical Legislation
PCA supported legislation that would allow for new cigar bar licensing in Montana.
PCA supported legislation that would allow for new cigar bar licensing in North Dakota.
PCA supported and provided testimony in support of a streamlined tax collection system, in partnership with the state’s premium cigar retailers and manufacturers.
PCA opposed legislation that would have allowed for enhanced local tobacco regulatory measures.
PCA is actively engaged with the community retail tobacconists of Massachusetts in opposition to a dramatic tax increase proposal and is executing a grassroots campaign through CigarAction.org to support the state efforts.
Massachusetts State Senator Harriette Chandler has introduced S.B. 1809 which would raise the level of taxation on all tobacco products, and specifically would raise the OTP tax on premium cigars, from the current rate of 40% to 80% of the wholesale price, making it among the highest in the region.