Legislation

Michigan Tobacco Tax Cap Approved by Governor

Nov 5, 2021 | By Thomas Pappalardo
Michigan Tobacco Tax Cap Approved by Governor
Photo/Rey Del Rio via Getty Images

A major victory took place yesterday morning just before 10 am in the Great Lake state when governor Gretchen Whitmer signed House Bill 4485, which preserves Michigan’s 50-cent state tobacco tax cap into permanence. The cap will help keep cigar prices low in Michigan, and can save them a few dollars on each cigar they buy.

The vote to preserve the tax cap has been making its way through various committee hearings and legislative votes since March of this year, culminating in the tax cap having a landslide bipartisan victory last week with Michigan’s state senate.

Dave Jessup, executive director for the Michigan Premium Cigar & Pipe Retailers Association told Cigar Aficionado, “It’s a success for retailers and consumers. Michigan will be taking advantage of its tax status relative to other states that have higher tax rates. We hope consumers will come to Michigan and patronize our brick-and-mortar retail outlets.”

Jessup also felt the passing was a means by legislators to assist retailers who have struggled in the midst of the pandemic and is a pro-small business measure.

Usually divided by party lines, the measure has been a largely unifying measure with the majority of Michigan Democrats and Republicans both voting to pass the bill. In Michigan, the legislature is controlled by a Republican majority, while Governor Whitmer is a Democrat.

“I’m pleased to see the bipartisan approach to politics in Michigan has been successful,” Andy Hyde, president of the Michigan Premium Cigar and Pipe Retailers Association and owner of Nolan’s Cigar Bar in Traverse City, Michigan told Cigar Aficionado. “It’s great to see a consistent tax platform for retailers to continue to sell cigars in Michigan at the same tax rate we have been for the last decade.” 

The tax cap was originally passed in 2012 as an experimental means to aid brick and mortar stores in competing with online retailers, reducing a 32.4 percent tax on the wholesale price of a cigar to a 50-cent tax. 

Most cigars sell for twice the wholesale price, so a $10 cigar would have a $1.62 tax under the old levels, and a $20 cigar would have a $3.24 tax; the cap provides savings of $1.12 and $2.74, respectively, in those examples. The tax cap was set to expire this October. 

Hyde also said he hopes that this measure will inspire other states to preserve their tax caps or inspire other states who have higher tobacco taxes to put in place tax caps of their own.

More in Legislation

See all
North Carolina Gets Cigar Tax Max

North Carolina Gets Cigar Tax Max

Applause is in order for the Tar Heel State.

Dec 2, 2021
Michigan Tobacco Tax Cap Passed by State Senate

Michigan Tobacco Tax Cap Passed by State Senate

Michigan retailers and cigar smokers get victory on tax cap.

Oct 28, 2021
D.C. Court Rules Against Cigar Industry, Rejects Appeal In FDA Lawsuit

D.C. Court Rules Against Cigar Industry, Rejects Appeal In FDA Lawsuit

A Washington D.C. Court of Appeals has delivered a blow to the cigar industry.

Jul 21, 2021
Bill To Exempt Premium Cigars from FDA Regulation Returns to House

Bill To Exempt Premium Cigars from FDA Regulation Returns to House

The cigar bill is back—again.

Jun 22, 2021
J.C. Newman Hoping To Import Cuban Tobacco

J.C. Newman Hoping To Import Cuban Tobacco

Newman is asking the U.S. to rethink its position on importing Cuban tobacco leaf.

Jun 3, 2021
Michigan Tax Cap Bill Passes in House of Representatives

Michigan Tax Cap Bill Passes in House of Representatives

The Great Lake State is one step closer to making its tobacco tax cap permanent.

May 19, 2021
z