Local Cigar Shops Contend with High Tax Rates

SARATOGA SPRINGS — Stroll through the grounds of the Saratoga Race Course on a balmy summer afternoon, and amidst the ballyhoo and thundering of hooves, your nose will likely catch the scent of floating, dissipating cigar smoke.

The enjoyment of premium cigars (handcrafted, artisanal cigars as opposed to mass-produced products) has long been a staple of horse racing. That’s partly why the Saratoga area has more than a few cigar lounges with stocked humidors offering celebrated brands like Arturo Fuente, Davidoff, and Rocky Patel.

Of course, no matter how elegant or meticulously rolled these sticks might be, they are still tobacco products that pose potential risks to smokers (The Centers for Disease Control and Prevention warn that “cigar smoke contains toxic compounds and chemicals that can cause cancer”). Thus, New York State slapped a 75% tax on the wholesale price of cigars and other tobacco products in an attempt to discourage their use. This tax is the second-highest in the country (after Utah), and local cigar shop owners say it’s hurting their mom-and-pop businesses.

Kathleen Kelly, the president of the New York Cigar Association and the owner for more than three decades of Queensbury Cigar and Pipe, said this tax burden has made it difficult for new shops to open, especially because cigar aficionados can purchase less expensive products online or in a neighboring state with lower tax rates (Pennsylvania doesn’t have a tax on cigars, New Jersey’s rate is 30%, and Connecticut has a 50-cent cap).

“Cigars are more than just cigars,” Kelly said, referring to the economic impact of the hundreds of premium cigar shops in New York.

“We can’t compete with the online [stores] because of that 75% tax,” said James and Sons Tobacconists’ Kyle “Moe” Kommer, who has both a store in downtown Saratoga Springs and a booth at the racetrack. “Especially as manufacturers increase their prices, that just puts us further and further away.”

Kelly said her organization has spoken with a number of state legislators, such as Senator Jessica Ramos, who represents parts of Queens and is currently running for Mayor of New York City. Ramos is the sponsor of the bipartisan Senate Bill S4413A, which would create a flat tax cap of 50 cents on premium cigars. A similar bill in the Assembly (A3376A) was sponsored by Carrie Woerner, who represents Saratoga Springs. A 50-cent tax cap, Kelly said, would help increase “fairness” and “level the playing field.”

“Losing a small business, any small business, is a tragedy, given how important they are to their respective communities and to the [state] economy,” the New York Cigar Association says on its website. “Our members all want to pay their fair share, but a 75% tax rate is not fair and if we can’t make a change, more shops will close.”

Another piece of legislation, sponsored by Assemblyman Philip Ramos (no relation to Jessica) would allow cigar lounges to serve alcohol.

In total, the bills are designed to help support struggling small businesses that, in addition to selling their wares, also have a strong social component.

“You create a family in a cigar lounge,” Kelly said. “It means a lot to people.”

Stop by the family-owned James and Sons on Broadway, and you’ll likely see what Kelly means: friends, strangers, and solo smokers all enjoying each other’s company in a laid-back setting.

“Guys go out on their boats together, vacations, have dinner together all the time,” Kommer said. “That’s what’s nice about it. That sense of community, everyone just kind of takes care of each other and hangs out and becomes lifelong friends.”

A short walk from James and Sons is the former home of the Adirondack Cigar Shoppe on Putnam Street, where locals used to pass the time together enjoying cigars and watching football. The now-empty store could be a sign of what’s to come.