Cigar Shop Owners Sing Stogie Blues as New Tax Takes Effect

The fumes roiling inside the Politically Incorrect cigar shop Friday at the Westside Pavilion did not rise from the slow burn of a lit stogie. Instead they seethed from owner Greg Hill.

Between sales to customers, a furious Hill packed up his West Los Angeles shop as he prepared to leave California for Carson City, Nev., where he will merge his business with a friend’s store.

The tax hike on cigars that took effect Friday and another one coming in July under Proposition 10 make staying a losing proposition, he said.

“I’m really mad,” Hill said. “I’m so mad at California right now because they killed my dream.”

At the Hi-Time Smoke Shack in Costa Mesa, owner Chuck Abarta contemplated the future now that a $10 cigar will cost about $13.51. He predicts that serious cigar smokers will have their favorite brands shipped from other states to bypass the tax.

“There are a lot of very irate people,” Abarta said. “They feel it is very unfair.”

Anticipating the tax hike, customers raided their favorite smoke shops during the holiday season to stock up on cigars before Friday’s tax hike.

“People who usually bought one cigar, bought a box,” said Larry Wagner, owner of the Cigar Warehouse in Sherman Oaks. “People who usually bought a box, bought five, six or seven boxes.”

Wagner has withstood tax increases during his 21 years in business. But this time, the unusually hefty hike is prompting customers to look for cigars elsewhere--and never before have there been so many ways to get out-of-state tobacco products. “I expect Internet sales to increase,” he said.

At Prissy’s High Society cigar shop in Stanton, store clerks were too busy Thursday afternoon even to talk.

Chris Moore, a salesclerk at Alfred Dunhill at South Coast Plaza in Costa Mesa, said cigar sales increased substantially as smokers stocked up on their favorite brands.

“Yesterday I had a guy who bought a box of Don Diego cigars by Playboy for $550,” a Dunhill clerk said. “He hadn’t planned to buy them yet, but we told him that one day later the price would go to $780.”

The previous tax on cigars was 26.17 cents on every dollar. But it went up an additional 35.48 cents Friday. In July, the tax will go up again.

Proposition 10 raises prices on all tobacco products to collect $700 million annually for social services, especially for families with children under age 5. Funds also will go toward smoking cessation programs, immunizations and domestic violence prevention.

In 1996, when cigar chic peaked and glossy magazine covers displayed models and movie stars smoking cigars, Hill’s cigar shop grossed about $300,000. But attacks on smoking over the years have chipped away at his business. The smoking ban in bars and restaurants wiped out a large part of his weekend business, he said, as men stopped dropping by for a cigar before heading out for the night.

Now he plans to leave California before profits from his Christmas sales are depleted by the new tax.

“Let’s say my business costs $10,000 a month to run,” Hill said. “That means I’d have to sell $30,000 to $40,000 a month, which I can’t do now” because prices would be too high.

Not all tobacconists share Hill’s outlook. Some hope that the tax can be successfully challenged in court.

Other stores, such as Hi-Time and Alfred Dunhill, rely on the sales of other items to offset the vicissitudes of the cigar market.