Premium Cigars, Pipes Avoid Tax Hikes in Maryland

The tax rates for premium cigars and pipe tobacco in Maryland will not increase as part of a new bill moving through the state’s legislature.

Yesterday, the Maryland House of Representatives passed H.B. 732 by a vote of 89-44 with one not voting and seven abstaining. The bill will adjust the tax rates for some tobacco products, but premium cigars and pipe tobacco will remain at their current rates.

For premium cigars, that rate is 15 percent of the wholesale price. Pipe tobacco is taxed at 30 percent of the wholesale price.

H.B. 732 would have increased those rates to 70 percent, which will be the tax for other tobacco products like chewing tobacco, snus and hookah tobacco.

Currently, halfwheel estimates that a cigar with an MSRP of $9.50 retails for $10.93 after Maryland’s 15 percent wholesale tax is applied. That same cigar would have like increased to $16.63 if the 70 percent wholesale tax was passed for premium cigars.

Under Maryland’s current definition, premium cigars are defined as:

(1) have hand-rolled wrappers made from whole tobacco leaves where the filler, binder, and wrapper are made of all tobacco, and may include adhesives or other materials used to maintain size, texture, or flavor;  or

(2) are designated as premium cigars by the Comptroller by regulation.

“After an intense lobbying effort by PCA’s lobbying team and our Maryland members, we are pleased to report that premium cigars and pipe tobacco were exempted from the drastic tax increase to 70% on other tobacco products,” said the Premium Cigar Association in a statement. “PCA would like to thank our members who activated and spent time at the Capitol to help secure this victory.”