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Michigan Senate Passes Cigar Tax Changes, Tobacco Purchasing Age Increase

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This week, the Michigan State Senate passed a group of tobacco-related bills that include an increase to the state’s minimum age to purchase tobacco purchasing age as well as addresses the state’s cigar tax.

SB 781 would increase the state’s cigar tax but preserve a capped rate. Currently, Michigan’s cigar tax rate is 32 percent of the wholesale price but capped at 50 cents per cigar. The bill would increase that cap to 65 cents beginning Nov. 1, 2020, and then raise it to 75 cents on Nov. 1, 2021.  That means that a cigar with an MSRP of $9.50 would go from costing $10.50 at the register to $10.80 and then $11, by halfwheel estimates, and before any additional sales taxes are added.

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It would also enact a tax on liquid nicotine products, which it calls “consumable materials,” levying an 18 recent tax on the wholesale price as of Jan. 1, 2021. Alternative nicotine products would be subject to a tax rate of 50 cents per ounce. That bill has already received criticism from the American Cancer Society Cancer Action Network of Michigan, who want those products taxed at the same rate as traditional tobacco products.

SB 785 would raise the state’s minimum age to purchase tobacco products to 21-years-old, which would bring Michigan in line with the federal minimum age to purchase tobacco products, which was raised as part of a spending bill signed by President Trump in December 2019.

Raising the age would serve two purposes: first, it would allow for local agencies to enforce the federal minimum age. The U.S. Food & Drug Administration (FDA) has stated that upon signing that the new law went into effect immediately, however it is halfwheel’s understanding that while the law might have changed, FDA likely lacks the authority to enforce the 21-years-old minimum age standard until several procedural steps are finished, which are likely to be completed by the end of 2020. However, the Premium Cigar Association (PCA), National Association of Convenience Stores (NACS) have advised their retail members to comply with the increase to 21 as a precautionary measure. FDA has stated that it is not yet enforcing the 21-years-old standard through its compliance checks program.

Second, it allows the state to have access to federal money designed to be used for substance abuse programs, which could be upwards of several million dollars.

Also passed by the Senate was SB 783, which also addresses the minimum age to purchase nicotine products, allowing a person who was at least 21-years-old to purchase a vapor product of any flavor, essentially preventing a ban on flavored vapor products. However, it would prohibit retailers retailers from advertising such products in a way that would cause a minor to believe that they offer health benefits or compare them to the health effects of traditional tobacco products.

As a tie-in to the tobacco purchasing age increase, SB 786 would amend the state’s Age of Majority Act that would specify that it would not apply to the state’s Youth Tobacco Act.

SB 782 addresses retailer licensing, requiring a retailer to have a license from the state in order to sell a tobacco or nicotine as of Oct. 1, 2020., with the license to cost no more than $100 for a one-year period and renewals to cost no more than $75. SB 784 also addresses retailing, addressing civil infractions for selling to a person under 21 and allowing the state’s Department of Health and Human Services to conduct unannounced compliance checks on retailers. It also imposes penalties for failing a compliance checks and requires that the results of those checks be publicly available.

All of the bills now head to the states House of Representatives.

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Patrick Lagreid
About the author

I strive to capture the essence of a cigar and the people behind them in my work – every cigar you light up is the culmination of the work of countless people and often represents generations of struggle and stories. For me, it’s about so much more than the cigar – it’s about the story behind it, the experience of enjoying the work of artisans and the way that a good cigar can bring people together. In addition to my work with halfwheel, I’m the public address announcer for the Colorado Rockies and Arizona Diamondbacks during spring training, as well as for the Salt River Rafters of the Arizona Fall League, the WNBA's Phoenix Mercury and the Arizona Rattlers of the Indoor Football League. I also work in a number of roles for MLB.com, plus I'm a voice over artist. I previously covered the Phoenix and national cigar scene for Examiner.com, and was an editor for Cigar Snob magazine.

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