Oregon Voters Approve Cigar Tax Increase

Just as they will be doing in Colorado, cigars in Oregon will be getting more expensive as voters have approved a ballot measure that will double the tax cap on cigars from 50 cents to $1 per cigar as of Jan. 1, 2021.

The measure’s passage was called by both The Oregonian and Oregon Public Broadcasting on Tuesday evening, with the former making the call with 70.4 percent of voters approving it as of 8 p.m. local time, while the latter’s most recent report, along with the Associated Press, showed a 66.75 percent approval.

In practical terms, a cigar with an MSRP of $9.50 will jump from $10.50 at the register to $11.50, by halfwheel estimates. Additionally, it would require that all cigars sold individually in the state have a minimum wholesale price of $3, unless they are sold in a package of four that has a minimum wholesale price of $12.

The increase is smaller than had been originally proposed, as the original version of the bill removed the cap completely. Had that version gone to voters, that same cigar with an MSRP of $9.50 would increase to $15.68, by halfwheel estimates, as it would be subject to the full tax rate of 65 percent of the wholesale price. That change came thanks to an amendment made by Sen. Mark Hass, D-Beaverton.

While the tax on cigars will double, cigarettes, e-cigarettes and vaping products will see an even more substantial increase. Under the new law, cigarettes will get a $2-per-pack increase in the tax, going from $1.33 to $3.33 per pack of 20, as well as defining e-cigarettes and other nicotine vaping products as tobacco products in order to impose the state’s tax rate of 65 percent on those products.

Retailers will also be hit with a floor tax of 10 cents for each cigarette in their possession or under the control of the dealer as of 12:01 a.m. on Jan. 1, 2021.