Colorado Governor Vetoes Internet Cigar Tax Break

Colorado Gov. John Hickenlooper (D) has vetoed a bill that would have made permanent a tax break for out-of-state tobacco sales, forcing at least one retailer to move.

Under current law, any retailer that ships tobacco products out-of-state can claim a reimbursement for the state’s 40 percent tax on other tobacco products. That provision is set to expire on Sept. 1, but S.B. 179 would have the reimbursement permanent. The bill passed the Colorado House and Senate but was vetoed by Hickenlooper last Friday citing negative health impacts.

That veto will have at least one negative consequence.

Danny Szarmach, general manager of Payless Cigar & Pipes, told halfwheel that the company will move its online cigar business to Florida—where there is no tax on cigars—due to the new tax. Payless Cigar & Pipes is owned by Smoker Friendly, which operates a variety of tobacco businesses and is based in Boulder, though owns stores in Florida.

Szarmach told halfwheel none of Smoker Friendly’s other businesses will move, though it could end up distributing cigars to its wholesale network out of the new Florida warehouse.

Charlie Minato

I am an editor and co-founder of halfwheel.com/Rueda Media, LLC. I previously co-founded and published TheCigarFeed, one of the two predecessors of halfwheel. I have written about the cigar industry for more than a decade, covering everything from product launches to regulation to M&A. In addition, I handle a lot of the behind-the-scenes stuff here at halfwheel. I enjoy playing tennis, watching boxing, falling asleep to the Le Mans 24, wearing sweatshirts year-round and eating gyros. echte liebe.