Cigars International is consistently one of the top rated cigar websites. CI is known for incredible blowout deals and samplers. CI also has retail stores located in the Bethlehem, Pennsylvania area.
Cigars International Legal Loopholes CI
Cigars International and other cigar websites exploit a legal loophole in the way tobacco taxes are collected on premium cigars. For example if a person lives in a state with high cigar taxes (i.e. New York or California) they can order cigars from a low tax state (Florida or Pennsylvania). Thereby paying little or no tobacco tax on their cigars.
This is perfectly legal. Cigars International is doing nothing wrong by exploiting this. The system is broken.
It would make much more sense for each state to impose a cigar tax cap at possibly $.50 per cigar. They could then require the company shipping the cigars to collect the tax at the point of sale.
Cigars International Tax Cap CI
This would create a level playing field for brick & mortar shops and websites like Cigars International. Many brick & mortar shops complain it is unfair to have to pay the cigar taxes while website competitors do not. This seems to make sense.
Websites like Cigars International will always have an advantage because of their volume. They will always be able to offer great deals even if they are required to charge the state cigar taxes.
It is unclear whether or not it will make a difference in Cigars Internationals business if they have to charge the taxes. Most people think it will make only a small difference if there is a cap in place. Otherwise it could make a big difference in high tax states.
Cigars International FDA Issues CI
The biggest issue facing mega cigar websites like Cigars International is the looming enforcement of FDA regulation of premium cigars. If the Swedish Snus industry is any indicator of the FDA’s intentions to regulate premium cigars, they are in trouble.
The Snus industry was huge on the Internet. It was difficult to buy snus locally so most consumers were purchasing on the Internet.
One of the first things the FDA did to the Snus industry was kill Internet sales. It is now illegal to sell snus on the Internet just like cigarettes. The thing that should scare Cigars International the most is that the FDA’s main reason was the lack of ability to consistently verify age.
Snus Industry and effects on Cigars International CI
While brick & mortar retailers would love the end of Internet cigar sales it is a double edge sword. With now over 50% of all cigars sold on the Internet, the cigar manufacturers would take a massive hit on sales and their ability to blow out old blends. This may in turn limit their ability to create new blends and be profitable.
It will be very interesting to see how this plays out in the next year or so.