This article was written by Daniel Temos (Dalamscius) and is the first installment of a two-part series. Be sure to back next week when the final portion of this article is available.
It’s a Friday night, you head out to your local B&M (Bricks and Mortar) Cigar shop with plans to hang out with some of the folk there and enjoy a good cigar. You pick up a well-priced $6 or $7 Nicaraguan cigar from one of the local boutique manufacturers, sit down on a couch in the lounge and order up a fine glass of Scotch (neat of course!). You’ve done this on a regular basis and it’s become an enjoyable vacation from the everyday life. Now how would you feel if that changed for the worse? This is the first section of a two-part article discussing how your Friday night could change.
My name is Daniel Temos, (Dalamscius). I live in Toronto, Canada and have been enjoying cigars since 2005. My passion for cigars was sparked during one of my yearly fishing trips to the pristine lakes of northern Ontario. A friend of mine brought some cigars which we all split, smoked, and enjoyed. As many of you know, the laws regarding Tobacco and smoking in Canada are quite different from those in the USA. Although most of my cigar orders come from shops in the US or from vacations, I do spend some time at my local shops. My time at cigar shops nearby is usually spent purchasing cigar accessories or the not so often sampler of 1 or 2 cigars. On a recent trip to Florida, I spent a fair amount of time at a local shop and learned how different the culture is in the USA compared to Canada. Let’s delve into the world I live in and see how long you would continue to support your local B&M if…
Tobacco Taxes and Duties Drastically Increased.
Just like the USA has different tax rates in each state, Canada has different rates in each province. On top of the provincial rates there are also federal duties that Canada imposes. For the purpose of examples, this article will be using Canadian rates from Ontario.
Without getting into the intimate details of every duty and tax we will simply use a generic example and estimated duties and taxes. Let’s start from the manufacturer and go all the way through to the consumer.
- Manufacturer Cost: $5.00
- Duties + taxes + profit margin: $3.00 + $4.00 + $1.50
- Importer Cost: $13.50
- Taxes + profit margin: $3.00 + $0.50
- Retailer Cost: $17.00
- Taxes + profit margin: $2.00 + $1.00
- Consumer Cost: $20.00
Keep in mind these are approximate and quite lenient, but it gives you an idea of how much prices get increased throughout the supply chain. Now lets translate this into how it will effect the customer at a local B&M.
If you went to your local B&M on our hypothetical Friday night you would typically spend about $6.00 on a decent cigar, lets say a CAO La Traviata. That same cigar in Canada would cost you around $20-$25. Is it worth it now? What happened to your Friday night now if you wanted to light up 3 or 4 cigars? It just got a lot more expensive!
Selection at Your Local B&M Slowly Dwindles Away.
These expensive prices not only have an effect on consumers, but it also causes some ill effects on the manufacturers and importers. The direct result of this is that they sometimes feel it’s not worth bringing in certain cigars. So now your Friday night has gone from expensive to expensive with a very limited selection. Things are slowly going downhill!
Your local B&M will also feel the sting as you start to hold your wallet a little tighter and look for other sources for your cigars. The first most logical step would be to search other states. Unfortunately, borrowing from the laws in Ontario, shipping cigars across state lines is now illegal. Actually, you are not allowed to put any tobacco products in the mail at all. So now you start seeking online shops in foreign countries. Yet another roadblock gets in your way, all your shipped cigars will be susceptible to the same duties and taxes as mentioned above. Marking them as a gift won’t help you either, tobacco products are excluded from this list. The best local solution is to seek out a shop that is located in a duty-free zone within your own province/state. These are few and far between. I only know of two in my province. These shops are still taxed but not to the same extent so you get a slight discount. That same CAO La Traviata will still cost you about $15. So now, as with most Canadians, the main source of cigars comes from vacations or vacationing friends since they are the best value.
Local B&M’s Start Disappearing.
So after all that, are you still willing to buy from your local B&M? I’m sure some of you still would but probably not as frequently as you used to. So what happens to all those B&M’s since they start losing all your hard earned dollars? Well, just like any other business that loses money they will slowly start disappearing. This will require you to start driving even further to get to your nearest B&M. The nearest B&M with a decent selection to me is about a 1 hour drive, and the one after that is another 2 hours away. Not exactly convenient.
Now, as Walt once said to me, the world is beginning to crumble. Let’s bring a little bit of light into this darkness. Would you still support your nearest B&M after all this if…
The Embargo Was Lifted But Cuban Cigars Were Very Expensive.
So this point is a bit of a double edged sword. Taking into account everything that we discussed so far, let’s remove the embargo and bring Cuban cigars to your local B&M. Now would you go support them? I’m guessing I might win a few people back here but not too many considering what the prices will be. The B&M’s will still be suffering from other ill effects and although they have access to Cuban’s they will likely only carry a very slim selection.
Now we’ve gone through a variety of changes that will no doubt give you a different perspective next time you walk into your favorite B&M on a Friday night. I’m sure a lot of people would still visit the B&M’s and mostly bring their own cigars. This will still make a fun Friday night enjoying a cigar and a drink with friends in the comfort of their wonderful lounge. These are still just a portion of the proverbial iceberg that we have touched upon. Part 2 of this article will talk about a few more aspects that could impact your Friday night. The downward slope isn’t over yet…
Daniel Temos (a.k.a. Dalamscius) writes articles and cigar reviews with Tony Casas on www.casasfumando.com. Be sure to check out the site. He is an IT Professional from Toronto, Ontario, Canada and enjoys cigars, scuba diving, hockey, fishing, nature and anything that challenges his mind. If Daniel’s not sitting on his big comfy couch or at work you can usually find him in a boat on top of the water or 100ft under the water enjoying a dive. He is engaged to a wonderful Fiance and looking forward to his wedding. Feel free to contact Daniel anytime via email (dalamscius[at]gmail[dot]com). And make sure to follow him on twitter http://twitter.com/Dalamscius