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  • Cigar Industry Preparing for Trump’s Tariffs

    Cigar Industry Preparing for Trump’s Tariffs

    Yesterday (April 2), President Trump announced that the United States would be implementing widespread tariffs on nearly all products imported into the U.S., which would seemingly include cigars and smoking accessories.

    The Administration is implementing a 10% baseline tariff on nearly all imported goods from all countries except goods that are compliant with the USMCA free trade agreement between the U.S., Mexico, and Canada. Additionally, a group of approximately 60 countries is facing additional reciprocal tariffs that are half the rate they charge to the United States.

    “We are monitoring the situation and engaging with appropriate stakeholders to protect the robust premium cigar market in the United States,” said Joshua Habursky, executive director of the Premium Cigar Association. “The administration is well aware of the importance of small business retail in main streets across the country, and we are hoping to mitigate cost burdens on retailers, manufacturers, and consumers overall. America is first in the premium cigar retail space, and we plan to continue to hold that position.”

    The announced new reciprocal tariffs for countries that are relevant to the U.S. cigar industry include:

    • Dominican Republic and Honduras: 10% (matching the universal rate).
    • Nicaragua: 19% (reflecting its 36% tariff on U.S. goods).
    • Costa Rica: 10% (despite a 17% tariff on U.S. goods).
    • Mexico: USMCA-compliant cigars remain at 0%, but non-compliant goods face a 12% tariff if existing fentanyl/migration measures lapse.
    • China: 34 percent
    • European Union: 20 percent

    Writing for halfwheel, Patrick Lagreid said, “The largest percentage increase will not affect cigars, but the accessories used to light and cut them. Products imported from China, which produces a significant amount of cigar accessories, from lighters to cutters, ashtrays, humidors, and other products, will be subject to a 34% reciprocal tariff. This is in addition to a previously implemented 20% tariff, bringing the total to 54%. Last year, multiple executives at cigar accessory companies told halfwheel they were concerned about the potential tariff if Trump were to win the election.”

    The baseline 10 percent tariffs are scheduled to take effect April 5 at 12:01 am ET, and the reciprocal tariffs are slated to go into effect April 9 at 12:01 am ET.

    “We are fully committed to protecting the premium cigar industry, which plays an essential role in supporting American small businesses and consumer interests,” Rob Burgess, of Connector Inc., a PCA Government Affairs representative said. “The PCA’s government relations team is working diligently, engaging actively with government officials and key stakeholders to address the implications of these tariffs. Our aim is to reduce financial pressures while ensuring the United States continues to lead in the premium cigar market, benefiting retailers, manufacturers, and consumers alike.”

    In a statement sent out to its members, Cigar Rights of America said that it is “carefully reviewing the scope and details of today’s policy shift to understand its potential impact on the premium cigar industry, including supply chains, pricing, and retail operations. As the federal government moves forward with implementation, we will continue to monitor developments closely and engage with relevant agencies. We are committed to keeping stakeholders informed and will provide timely updates as additional information and guidance become available.”

    The tariffs come the week before the American cigar industry’s most important sales week: the annual PCA Convention & Trade Show. Most manufacturers will offer retailers aggressive discounts to try to get larger orders, but it’s unclear whether some companies will modify their promotions to account for these tariffs.

  • Washington: State Lawmakers Want to Increase Taxes and Ban Products

    Washington: State Lawmakers Want to Increase Taxes and Ban Products

    Democratic lawmakers in the state of Washington have revamped their approach to banning flavored tobacco products and combined it with an increase in cigarette taxes. The new legislation, House Bill 2068, revives the ambitious and controversial prohibition that made little progress in the state so far this year.

    The initial proposal banned flavored e-cigarettes and nicotine products beginning 90 days after the legislative session ends. The new ban, however, would begin July 1, 2027, allowing the state to continue collecting tax revenue for a budget that is predicted to have a $16 billion deficit over the next four years.

    Critics of such bans argue they lead to increased cigarette use as consumers look for alternatives, and that people who’ve turned to electronic cigarettes to quit smoking traditional cigarettes would no longer have flavored options. 

    Also in the new bill, according to Jake Goldstein-Street writing for the Washington Standard, the age to purchase nicotine pouches would be raised to 21 and “a $2-per-pack tax on cigarettes would be added that would rise with inflation. The first $5 million from the new tax would go toward preventing youth tobacco and vape use, while the rest would go into the state’s general fund.” Washington smokers already face one of the nation’s highest state cigarette taxes, totaling $3.77 between excise and sales taxes, he said. The tax new provisions would take effect Jan. 1, 2026.

  • Tennessee Bill Would Outlaw Most Vape Products

    Tennessee Bill Would Outlaw Most Vape Products

    A bill in Tennessee that would impose a state tax of up to 10% on vape products – a higher rate than tobacco – and effectively ban the sale of many vape products in the state by requiring application for FDA approval before products are sold is headed for a final Senate vote this week. Senate Bill 763 passed the Senate Finance Committee in a 9-2 vote, and a counterpart House panel with bipartisan support.

    Bill sponsor Ken Yager said the bill is aimed at stopping “the influx of Chinese vape products that are addicting our children and wreaking havoc on our schools” ― not an attack on Tennessee’s vape industry. However, critics say it is a “legislative weapon for big tobacco to crush competition.”

    “I don’t take my orders from big tobacco,” Yager told reporters.

    If signed into law, the bill would ban the sale of vapor products including hundreds of disposable and flavored products in Tennessee that are not approved or in the process of being approved by the U.S. Food and Drug Administration. Currently, just 34 vapor products have been approved by the FDA, and all are tied to big tobacco companies. Most vape products sold in the U.S. are imported from China. If passed, the bill would fine vape retailers $500 to $1,500 per product illegally sold.

    According to The Tennessean, Tennessee is one of about 20 states that does not currently levy a tax on vape products. If passed, the bill would impose a 10% tax on open system vape products and a 7% tax on closed system vape products. Tennessee taxes tobacco products at 6.6%. Yager told reporters his proposed tax on vape products “is really no different from the tax on other nicotine products.”

  • Bulgarian Cigarette Prices Set to Rise for Second Time in 2025 

    Bulgarian Cigarette Prices Set to Rise for Second Time in 2025 

    Starting on May 1, the price of cigarettes in Bulgaria will rise by 40 to 50 stotinki (22 to 28 cents) per pack. This increase follows the latest adjustments to excise duties on tobacco products, which were approved as part of the 2025 budget.

    The new excise duty rates mark the second price hike this year, following a similar increase earlier when excise rates were raised by nearly 6%. This earlier rise was part of a planned, gradual increase that had been set in place since late 2022, when a four-year schedule was introduced. However, the government accelerated the schedule, deciding that the 2026 rates would be applied a year earlier.

    The Bulgarian Tobacco Industry Association clarified that there was no truth to recent rumors about a price surge of 2.50 leva ($1.38) per pack starting in April as several groups warned that the new excise duty directive would lead to a significant price hike. The Bulgarian Tobacco Industry Association refuted these claims, stating that the proposed changes to the excise duty directive, which would have raised the minimum rate to 180 euros per 1,000 cigarettes, had not been implemented. They noted, however, that the European Commission is expected to increase the minimum tobacco product excise duties more substantially in the coming years.

    According to the Ministry of Finance, the current excise structure will see a phased increase. As of January 1, 2025, the minimum excise duty for every 1,000 cigarettes was raised to 202 leva ($111). This will rise to 210 leva ($115.50) per 1,000 cigarettes starting in May, with a further increase of 12 leva each year until 2029. Similar increases are expected for other tobacco products and those containing tobacco substitutes.

  • France Wants EU to Raise Tobacco Taxes in Luxembourg

    France Wants EU to Raise Tobacco Taxes in Luxembourg

    Believing higher cigarette prices directly correlate to lesser use, France has continued to tax nicotine products in hopes of reducing smoking in the country. Though the number of cigarettes purchased in the country declined 26% between 2017 and 2022, the same can’t be said of the smoking rate which remains at 29.2%, a slight improvement from 33% in 2017. The problem is that consumers, predictably, will seek out better deals, and in this case need only to cross the border into Luxembourg.

    A pack of 25 cigarettes in Luxembourg costs €8, whereas the same pack across the way in France costs  €15. A recent study by the French Observatory of Drugs and Addictive Tendencies shows that the sales drop for cigarettes at the border is even more dramatic, at 46.2%. As such, French officials are petitioning the EU to level the playing field.

    “Public health policies aimed at reducing tobacco consumption see their effect limited, in particular, because of the development of the parallel market,” French MP Frédéric Valletoux said in a recent motion for a resolution calling for changes to anti-smoking regulations at the European level.

    “Aligning tobacco taxation across the 27 Member States would reduce price disparities and limit cross-border purchases,” according to a report on tobacco published in March 2024 by a European Parliament working group. The report acknowledged the challenges of achieving this goal, as taxation remains outside the EU’s jurisdiction, and price differences between member states continue to widen.

    Another solution being pushed by the French would be to impose tobacco delivery quotas within the EU, as outlined in the World Health Organization protocol to eliminate illicit trade in tobacco products. The quotas would limit tobacco deliveries to each country based on domestic consumption. For example, Luxembourg receives three billion cigarettes annually, despite its domestic consumption being only 600 million.

    Luxembourg is raising the prices on the cheapest cigarettes in its market by €0.30 but otherwise isn’t likely to take more aggressive actions as its Customs and Excise Administration says cigarette sales reached 4.9 billion units in 2024, generating €1.4 billion in revenue for the country. This figure is expected to rise to €1.6 billion in 2025 and €1.9 billion by 2028.

  • Vietnam Told Gradual Tax Hike Will Prevent Illicit Tobacco Surge 

    Vietnam Told Gradual Tax Hike Will Prevent Illicit Tobacco Surge 

    Vietnam is reviewing new tax policies for tobacco products, with experts recommending a gradual tax increase every two years instead of higher annual hikes. The Vietnam Tax Advisory Association (VTCA) has raised concerns that sharp, sudden tax hikes may backfire, leading to higher illicit cigarette trade and reduced tax revenue.

    According to the draft law, the government plans to impose a hybrid tax system on tobacco products, combining the current 75% ad valorem tax with a specific absolute tax increase on each pack of cigarettes. The VTCA submitted its recommendations for two proposed scenarios:

    The first scenario suggests an annual increase of VND 2,000 ($0.08) per pack starting in 2026, leading to a total tax hike of VND 10,000 ($0.40) per pack by 2030.

    The second scenario proposes a VND 5,000 ($0.20) increase in 2026, followed by an additional VND 1,000 ($0.04) increase per year from 2027 to 2029, also culminating in a total increase of VND 10,000 ($0.40) per pack by 2030.

    VTCA has urged policymakers to be cautious, citing examples from other countries where abrupt tax increases led to unintended consequences, mainly that smoking rates didn’t drop as consumers turned to cheaper illicit products.

    If this proposal is not accepted, VTCA has recommended that lawmakers adopt the first scenario, which calls for an annual increase of VND 2,000 ($0.08) per pack starting in 2026, reaching VND 10,000 ($0.40) by 2030.

  • Legislation Introduced to Close Tobacco “Loopholes”

    Legislation Introduced to Close Tobacco “Loopholes”

    U.S. Senate Democratic Whip Dick Durbin, U.S. Senator Ron Wyden, U.S. Representative Raja Krishnamoothi, and several others today (March 4) introduced the End Tobacco Loopholes Act, legislation that would “lower tobacco use and reduce healthcare spending” by increasing the taxes on tobacco products. The legislation would establish a federal tax on e-cigarettes, update the federal cigarette tax rate, and harmonize the tax rate across tobacco products.

    “Big Tobacco’s deadly profit scheme relies on addicting children,” Durbin said. “Our most effective strategy to reduce smoking and prevent a new generation from becoming addicted is to price these dangerous tobacco products out of the reach of children. But federal law has not been updated in 16 years, creating loopholes that Big Tobacco has used to hook kids. The End Tobacco Loopholes Act would help reduce tobacco and e-cigarette use, save billions in healthcare costs, and improve the health of children for generations to come.”

    According to Durbin’s website, the legislation would “close tax code loopholes for tobacco products by increasing the federal tax rate on cigarettes, pegging it to inflation to ensure it remains an effective public health tool, and setting the federal tax rate for all other tobacco products at this same level.” It would also “follow the lead of 30 states and Washington, D.C., that have set their own state taxes, by setting a federal tax on these vaping products. The legislation also closes numerous tax and regulatory loopholes that the tobacco industry has exploited for large cigars, smokeless tobacco, and pipe tobacco by shifting production and sale schemes to avoid taxes and oversight, resulting in nearly $4 billion in lost federal revenue between 2009 and 2018.”

    Durbin added that “large cigars, smokeless tobacco, and pipe tobacco remain dramatically undertaxed compared to cigarettes, at a time when their use—especially among youth—is trending at a comparable rate to cigarettes.”

  • Florida Court Expands “Smoking” Definition

    Florida Court Expands “Smoking” Definition

    A Florida appeals court widened the definition of “smoking” Wednesday (Feb. 26) in affirming a judge’s determination that Global Hookah owed the state $1.4 million in taxes. The 2-1 decision said the company wasn’t entitled to recoup excise taxes because its tobacco leaves fell within a state statute’s definition of “other tobacco products” regardless of whether the tobacco was actually smoked by customers.

    Global Hookah argued that its products, which consist of tobacco leaves mixed with glycerol, sugar syrup, and flavorings, are heated, not combusted, and thus should not be considered tobacco for tax purposes. It was seeking a refund from taxes paid between April 2016 to January 2019.

    The First District Court of Appeal ruled that “a fair reading of ‘smoking’ encompassed the process of consuming the vapor that occurs through the process of using the leaves,” and that the state’s 1985 law was intended to tax tobacco products regardless of the details in which they were consumed.

    “As a means to yield vaporized nicotine for inhaling, there is no meaningful difference between combusting cut-up tobacco leaves, on the one hand; and subjecting those cut-up leaves to high heat by burning something else,” Judge Adam Tanenbaum wrote for the majority. “Global’s claim that the vapor from its product differs from ‘traditional’ smoke feels like splitting hairs — the ordinary person, whether in 1985 or today, would not recognize the difference.”

    Judge L. Clayton Roberts dissented, saying, “While there may be policy reasons to tax all nicotine delivery products, we cannot use the intent of the Legislature to effectively amend the adopted text.”

  • EU Commission to Talk Alternative Tobacco Taxes

    EU Commission to Talk Alternative Tobacco Taxes

    Tobacco tax reform is not on the EU’s agenda for 2025, however, the Polish Presidency Council (which sits atop the Commission along with Denmark and Cyprus until June) is looking to move forward with discussions for taxing alternative tobacco products, according to a non-paper seen by Euractiv.

    Unlike cigarettes, alternative products do not fall under the EU-wide excise framework. The non-paper notes that the tobacco market has undergone “dramatic changes” in recent years, with novel products like e-cigarettes, heated tobacco, and nicotine pouches rapidly gaining popularity.

    EU diplomats are scheduled to discuss the matter today as part of the working party on Indirect Taxation. Euractiv reported that sources close to the discussion confirmed that some industry players are mounting pressure on the Commission to tax new products to avoid an outright ban as their regulatory limbo drags on.

    Each country is free to make its own rules in terms of handling tobacco products. For example, France recently banned disposable e-cigarettes and this week reportedly will do the same for nicotine pouches, joining countries such as Germany, Austria, Belgium, and Luxembourg that have already done so. Other countries are looking to take it even further.

    “We don’t just need a smoke-free generation, we need a nicotine-free generation,” Estonian Health Minister Riina Sikkut said. “Many health ministers support this idea. After the pharmaceutical package, tobacco legislation should be next.”

  • North Dakota Votes to Up Taxes on All Nicotine Products

    North Dakota Votes to Up Taxes on All Nicotine Products

    The North Dakota Senate voted 26-21 Monday to raise taxes on tobacco and alternative products. Senate Bill 2281 would raise North Dakota’s cigarette tax from 44 cents per pack to 69 cents, and also impose a 31% tax on the wholesale purchase of cigars and a 28% tax on the wholesale purchase of alternative products.

    North Dakota has not raised taxes on cigarettes in over 30 years and this increase would move the state from the third-lowest to the 10th-lowest state cigarette taxes in the nation. The increases would be used to establish a Tobacco Tax Distribution Fund, which would be slated to provide an estimated $12.9 million in grants to local public health units and $12 million to organizations providing 988 crisis hotline services.

    The bill previously received a 5-1 recommendation to pass from the Senate Finance and Taxation Committee, and now must pass the House and receive the governor’s signature to become law.