New law

Arkansas , the state which I currently reside, just passed a bill ( and gov signed into law)capping the tax on cigars at 50 cents. This means cigar prices in arkansas are going to drop.... A lot. Currently the tobacco tax in the state is 68% . So as you can see cigar enthusiast in this state have something to be excited for come October wgen prices start to fall . I can't wait!!!

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Rhamlin

Is that 50 cents per stick or per dollar? Either way its better than 68%. Especially if its per stick!

brianetz1

Rhamlin:
Is that 50 cents per stick or per dollar? Either way its better than 68%. Especially if its per stick!

just looked it up....its per stick. that is pretty awesome: http://www.cigaraficionado.com/webfeatures/show/id/16997

ddubridge

Time to start looking for a job and house in Arkansas

Gray4lines

Great news!!

BeltFanDan

Here in NY, we are at 75% and they want to raise it even more.

Lucky you.

Gray4lines

BeltFanDan:
Here in NY, we are at 75% and they want to raise it even more. Lucky you.

That is terrible news....

Welcome to the forum, Dan! I hope you snag some good deals from ccom, and can save a little on that ridiculous tax!

Rhamlin

BeltFanDan:
Here in NY, we are at 75% and they want to raise it even more. Lucky you.

Thats just insane!

curtpick

BeltFanDan:
Here in NY, we are at 75% and they want to raise it even more. Lucky you.

Ya and how are those large soft drinks ? Geezus !

Andrew Dzikoski

My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.

kuzi16

Andrew Dzikoski:
My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.

the smart ones will pass the savings on to their customers.
the lower prices vs. their competitors prices will draw in new customers creating more profit.
the ones with the proposed line of thought will lose business to the ones with the better price shrinking profit. im fairly sure the above mentality wont last long if it does happen.

Trident

Andrew Dzikoski:
My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.

That's what happened in michigan...Some stores dropped, but the big BNMs kept their prices the same, or even increased them blaming it on a price increase from manufacturer...although the prices didnt change in any other state...

brianetz1

Trident:
Andrew Dzikoski:
My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.

That's what happened in michigan...Some stores dropped, but the big BNMs kept their prices the same, or even increased them blaming it on a price increase from manufacturer...although the prices didnt change in any other state...

in this day and age with so many options to purchase cigars i can't believe that a B&M would think that way. Why wouldn't someone call them out on it and tell them that they aren't buying from them anymore. You would think that enough of them telling them that would force them to lower the prices.

Gray4lines

kuzi16:
Andrew Dzikoski:
My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.
the smart ones will pass the savings on to their customers.
the lower prices vs. their competitors prices will draw in new customers creating more profit.
the ones with the proposed line of thought will lose business to the ones with the better price shrinking profit. im fairly sure the above mentality wont last long if it does happen.

There'd have to be significant collusion to make it last, and frankly I dont think all B&M owners would risk losing customers over it. If only a few stores passed the savings on while others did not, those who kept the high price would fall behind in sales and customers..

Depends on how many B&Ms there are in Arkansas. Lots? Or only a few?

macs-smokes

Well I can attest that in Wichita, I frequent the two B&M's that offer me a discount... There are 10 B&M's in town... I frequent 2... if I am by one of the others I might stop in; but if I am going to make more than a 2 to 5 stick purchase I am going to my favorites.

On a side note, these two have some of the best staff in town. Just my 2 cents... well due to inflation that was a dime.

wardc

Andrew Dzikoski:
My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.

Greed is a terrible thing. I think that alot of the BNMs are run by alot of great guys though that do it for the love of the stick rather than to get rich. I bet alot pass on the savings. Just my two cents.

Imgembo

Andrew Dzikoski:
My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.

I think we will see a drop in price at least here in little rock. Both the owners of the two b&m s here are talking about dropping there prices in October to reflect the law. The only question I have is about there stock prior to the new law. My understanding is they pay in order to put them on the shelf. So will there be a long lag before we see a drop.

Imgembo

macs-smokes:
Well I can attest that in Wichita, I frequent the two B&M's that offer me a discount... There are 10 B&M's in town... I frequent 2... if I am by one of the others I might stop in; but if I am going to make more than a 2 to 5 stick purchase I am going to my favorites.

On a side note, these two have some of the best staff in town. Just my 2 cents... well due to inflation that was a dime.

Hey I'm actually from Topeka. Wish I would have had whichitas variety

Amos Umwhat

Gray4lines:
kuzi16:
Andrew Dzikoski:
My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.
the smart ones will pass the savings on to their customers.
the lower prices vs. their competitors prices will draw in new customers creating more profit.
the ones with the proposed line of thought will lose business to the ones with the better price shrinking profit. im fairly sure the above mentality wont last long if it does happen.
There'd have to be significant collusion to make it last, and frankly I dont think all B&M owners would risk losing customers over it. If only a few stores passed the savings on while others did not, those who kept the high price would fall behind in sales and customers..

Depends on how many B&Ms there are in Arkansas. Lots? Or only a few?

I wish I could say I agree with you & Kuzi, but Andrew may be on to something. Think about it, how many american manufacturer's sent their production overseas, because they had to pay Americans $15 - $25 an hour to produce, say, shoes, and then kept the prices the same, or even raised them notwithstanding the fact that they were now paying some Thai kid 35 cents an hour?

On the upside, W. Tennessee is right across the river from Arkansas, I may have to take a motorcycle ride over there and check things out!

pelirrojo

Dang things are getting crazy in AR. First the lottery, then Benton county went wet and medicinal MJ just barely lost. Next thing you know Faulkner county will be wet. I left just before things got interesting.

ddubridge

Trident:
Andrew Dzikoski:
My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.

That's what happened in michigan...Some stores dropped, but the big BNMs kept their prices the same, or even increased them blaming it on a price increase from manufacturer...although the prices didnt change in any other state...

Wow, shows how much I pay attention. I had no idea Michigan had a flat tax on cigars. Interesting.

SleevePlz

ddubridge:
Trident:
Andrew Dzikoski:
My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.

That's what happened in michigan...Some stores dropped, but the big BNMs kept their prices the same, or even increased them blaming it on a price increase from manufacturer...although the prices didnt change in any other state...
Wow, shows how much I pay attention. I had no idea Michigan had a flat tax on cigars. Interesting.

Don't feel bad, it just went into effect back in November, I believe. Many B&M's pretty much stopped ordering stuff for the few months ahead of the change and then stocked up when the new tax went into effect to avoid the pricing issue. Unfortunately, some places still haven't changed their prices yet. I no longer shop at those places...

madurofan

Just a question and thought here guys.

Is that 68% on the sale price or the wholesale that the shop is paying? Sales tax is calculated on what the consumer pays. A lot of these other taxes are imposed on the business and on what the business is paying for the product. 18% of sales price is a whole different animal than 18% of retail.

Don't misunderstand I'm excited to see a state doing this, uber excited actually. However, lets not immediately start jumping on business owners that don't lower prices across the board. Profit margins vary widely in the world of cigars. There are all kinds of factors involved, is the shop buying directly from the manufacturer does he have to go through a wholesaler, etc, etc. Some cigars wholesale to MSRP has a much lower profit margin than others. There are cigars in every shop that the shop isn't actually making money on, but if they are bringing people in then ...

Say your favorite smoke is a Madurofan 5000 but your shop for whatever reason can't get it directly from the manufacturer and is buying it through a wholesaler and to stay competitve is pricing it at a point where in reality after expenses he's breaking even on it. Now lets say that new law goes into affect but the tax is on his wholesale price. That wholesale price is $4 for the sake of the argument, you're going to be angry that he didn't drop is $.72?

Now if they across the board don't lower any of their prices, that may be a little greedy. But in reality guys you're talking about an industry where very few proprietors are getting wealthy and if that tax is on wholesale you're talking about less than $1 on virtually every cigar. I know every penny matters, but when many of these shops are barely scraping by you really have a problem with a government regulation that actually allows a business more profit margin?

Gray4lines

madurofan:
Just a question and thought here guys.

Is that 68% on the sale price or the wholesale that the shop is paying? Sales tax is calculated on what the consumer pays. A lot of these other taxes are imposed on the business and on what the business is paying for the product. 18% of sales price is a whole different animal than 18% of retail.

Don't misunderstand I'm excited to see a state doing this, uber excited actually. However, lets not immediately start jumping on business owners that don't lower prices across the board. Profit margins vary widely in the world of cigars. There are all kinds of factors involved, is the shop buying directly from the manufacturer does he have to go through a wholesaler, etc, etc. Some cigars wholesale to MSRP has a much lower profit margin than others. There are cigars in every shop that the shop isn't actually making money on, but if they are bringing people in then ...

Say your favorite smoke is a Madurofan 5000 but your shop for whatever reason can't get it directly from the manufacturer and is buying it through a wholesaler and to stay competitve is pricing it at a point where in reality after expenses he's breaking even on it. Now lets say that new law goes into affect but the tax is on his wholesale price. That wholesale price is $4 for the sake of the argument, you're going to be angry that he didn't drop is $.72?

Now if they across the board don't lower any of their prices, that may be a little greedy. But in reality guys you're talking about an industry where very few proprietors are getting wealthy and if that tax is on wholesale you're talking about less than $1 on virtually every cigar. I know every penny matters, but when many of these shops are barely scraping by you really have a problem with a government regulation that actually allows a business more profit margin?

I believe taxes, especially %, are on WHOLESALE. I was wondering what a typical B&M markup was....still, say 68% of wholesale $4 is $2.50, now it's $.50 cap, makes a difference!

1,000

SleevePlz

Yeah, the cigar tax is on the wholesale price, so the drop won't be as big as some would expect. Also, as far as I know (and God knows I'm probably wrong), most cigars have a 100% markup. So a cigar with a suggested retail price of $8 is sold to the retailer for $4 and the cigar tax is applied to that number. One of my problems is that retailers try to spin that the cigar tax is on the retail price and adds it there to justify an even larger profit margin. I suppose, if you want a 100% markup on the cigar, might as well add a 100% on the tax as well. Lol, this is why I have no problem shopping online!

pelirrojo

Speaking of Arkansas, I hope you're staying safe in those storms.

madurofan

Gray4lines:
now it's $.50 cap

Oh, $.50 for some reason I read 50%!!! big difference there.

Gray4lines:
1,000

Congrats!

madurofan

SleevePlz:
Also, as far as I know (and God knows I'm probably wrong), most cigars have a 100% markup.

That's my understanding as well, IF they buy directly from the manufacturer. Many manufacturers will only set up accounts with stores meeting certain criteria so the others have to buy through a wholesaler, increasing the cost.

Gray4lines

madurofan:
SleevePlz:
Also, as far as I know (and God knows I'm probably wrong), most cigars have a 100% markup.
That's my understanding as well, IF they buy directly from the manufacturer. Many manufacturers will only set up accounts with stores meeting certain criteria so the others have to buy through a wholesaler, increasing the cost.

Wow, I did not realize it was quite that high, although I certainly understand why especially if a wholeseller is invloved and am not complaining at all... no wonder my B&M can clearance Viajes at half price!

WV is 7% wholesale, but Im moving to KY where it's 15% wholesale... still not bad, but not exciting to pay double the tax either.

raisindot

Andrew Dzikoski:
My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.

My guess is that this is exactly what will happen. For one thing, most casual smokers won't know that the taxes have gone down, so if the prices stay the same it won't make a difference. Another thing is that if a B&M is the only game in town and its already profitable it will have no incentive to lower prices. What may happen is that some B&M's that aren't particularly profitable may lower their prices to try to compete with online retailers or to lure in new customers. Although even with a lower tax I still can't see how B&M's can compete with C.com and other places. I never go into the one local B&M within a 15 mile radius of where I live because their prices are far higher than what the online places charge. Even if the taxes were lowered by a dollar and the place lowered their pries accordingly it will still be overpriced, compared to c.com and its brethrin.

Of course we all know what really will happen. Carpetbaggers will come in Arkansas and clean out B&M's stocks and the roll over the border into states with higher cigar taxes and sell them on the street. I'm thinkin' of flyin' down there and rentin' an Econoline van myself.

Imgembo

raisindot:
Andrew Dzikoski:
My concern would be that a lot of retailers will fall under the school of thought that "well if they are already paying the current price why not pocket the extra profit." I don't think every shop will be like that but I wouldn't be shocked if alot did.

My guess is that this is exactly what will happen. For one thing, most casual smokers won't know that the taxes have gone down, so if the prices stay the same it won't make a difference. Another thing is that if a B&M is the only game in town and its already profitable it will have no incentive to lower prices. What may happen is that some B&M's that aren't particularly profitable may lower their prices to try to compete with online retailers or to lure in new customers. Although even with a lower tax I still can't see how B&M's can compete with C.com and other places. I never go into the one local B&M within a 15 mile radius of where I live because their prices are far higher than what the online places charge. Even if the taxes were lowered by a dollar and the place lowered their pries accordingly it will still be overpriced, compared to c.com and its brethrin.

Of course we all know what really will happen. Carpetbaggers will come in Arkansas and clean out B&M's stocks and the roll over the border into states with higher cigar taxes and sell them on the street. I'm thinkin' of flyin' down there and rentin' an Econoline van myself.