From New York to Denver to Washington State, tobacco taxes are sweeping the nation. For small business owners, particularly the colorful and stylish sort that tend to run independent cigar stores, maintaining viable profit margins can be a struggle even when the winds blow in their favor, let alone when the culture of mainstream America is rallying against them. Here is a way a few of the cigar manufacturers are helping retailers nationwide.
I just got off the phone with Juan Lopez from Carlos Torano cigars, and he explained to me their new invoicing policies. What they are doing to help combat the excessive tobacco taxes in some states is taking 15% of all cigars purchases (wholesale price), and at the bottom of the invoice, they are adding this fifteen percent as boxes, bands, etc. In essence, they are crediting cigar retailers for the price that goes into the packaging and marketing of the cigar line.
The Drew Estate and Alec Bradley, as far as I know, are the only other manufacturers that are also doing something similar: Alan Rubin of Alec Bradley Cigars stated that he is about to start the same procedure. For the sake of keeping cigar culture afloat in this country, I encourage other manufacturers to follow.
It makes sense after all: packaging, advertising and promotions all cost money! How much do you think a full page ad in Cigar Aficionado costs? From Torano, I just ordered several boxes of Reserva Selectas which come in beautiful wood boxes, and each cigar comes packed in its own glass tube. The packaging alone on this particular box of cigars [without advertising] has to cost at least ten dollars, and with Colorado's 40% tax, I would be paying four dollars in tobacco tax on packaging — ridiculous!
While we wait for the legislatures of our respective states to sort out the ultimate economic cost of these inanely high taxes, it would be in every cigar manufacturer's interest to follow suit with Torano, the Drew Estate, and Alec Bradley. These organizations deserve full credit for taking action when the rest of the industry seems to be paralyzed like a deer caught in the headlights of a trend that has no intention of slowing down or stopping.
As is true in any industry, we can brace against the storm only when we band together.