Cigars International is consistently one of the top rated cigar websites. They are known for incredible blowout deals and samplers. They also have retail stores located in the Bethlehem, Pennsylvania area.
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) and pay little or not tobacco tax on their cigars.
Premium Cigar Tax Laws Cigars International
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 and require the company shipping the cigars to collect the tax when the transaction goes through.
This would create a level playing field for brick & mortar shops and websites like Cigars International. Many brick & mortar shops complain it is unfair they have to pay the cigar taxes while their website competitors do not. This seems to make sense.
Cigars International Cigar Websites
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.
FDA Regulation of Premium Cigars and Cigars International
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.
It is logical to assume the FDA will apply the same rules to the premium cigar industry and end all Internet sales. This would devastate sites like Cigars International and hurt the premium cigar industry overall.
Consequences of FDA Regulation of Premium Cigars for Cigars International
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. Visit Cigars International online at www.CigarsInternational.com