Taxes impacting tobacco businesses, and specifically those in the cigar industry, have been increasing over the years in California. In the summer of 2017, the tax on tobacco products hit an all-time high of 65.08 percent (of the wholesale price of the product). One method that had been used to help combat the high tax rate was for companies to operate as both a distributor and wholesaler. This allowed for products to be imported at a much lower price point and make additional revenue through service fees before selling products to retailers.
More information on California’s cigarette and tobacco products tax and licensing can visit cdtfa.ca.gov/industry/cigarette-and-tobacco-products.htm, or call the Customer Service Center at (800) 400-7115.
