Concerning the taxation of premium cigars, and, in connection therewith, capping the statutory excise tax on premium cigars at twenty percent.
Summary
SB 26-086 would create a statutory definition of “premium cigar” in Colorado law and set a special excise tax rate for those cigars at 20% of the manufacturer’s list price, effective July 1, 2026. The bill applies this lower rate to the sale, use, consumption, handling, or distribution of premium cigars and distinguishes them from other tobacco products subject to Colorado’s general tobacco tax structure.
The measure is framed as a rollback of prior increases in the statutory tax rate on non-cigarette tobacco products. Under the bill, premium cigars would be taxed at 20% rather than the higher rates that apply to other tobacco products under current law. The bill also states that it does not affect the separate constitutional tax on premium cigars, which remains an additional 20%.
In practical terms, the bill would amend Colorado Revised Statutes sections 39-28.5-101 and 39-28.5-102 by adding a definition for premium cigars and carving out a reduced excise tax rate for that category. It would affect cigar retailers, distributors, consumers, and tobacco tax administration by creating a distinct tax treatment for a narrow class of tobacco products.
The overall sentiment reflected in the available record is limited, but the bill did not advance out of the Senate Finance Committee and was postponed indefinitely on March 3, 2026. That outcome suggests the proposal did not have sufficient support to move forward, even though no committee transcript or recorded vote details are available here.
The main point of contention appears to be tax policy: whether premium cigars should receive a lower statutory excise tax than other tobacco products. Supporters would likely view the bill as a targeted tax reduction for a specific product category, while opponents may have viewed it as a reduction in tobacco tax revenue or an unwarranted preference for premium cigars over other tobacco products.
Impact
The bill would amend Colorado’s tobacco tax statutes to create a separate, lower excise tax rate for premium cigars and define that term in statute. It would not alter the constitutional premium cigar tax, but it would reduce the statutory tax burden on premium cigars relative to other tobacco products, affecting tax collection, retail pricing, and compliance for cigar sellers and distributors.
Sentiment
The available legislative record shows little direct discussion, but the bill’s failure in the Senate Finance Committee indicates a generally unfavorable or insufficiently supportive reception. Because it was postponed indefinitely, the proposal appears to have encountered resistance or lacked the votes needed to proceed.
Contention
The central dispute is whether premium cigars should be treated differently from other tobacco products for excise tax purposes. Likely supporters would argue that premium cigars merit a distinct, lower tax category because of their product characteristics and market niche, while likely opponents would object to reducing tobacco tax revenue or creating a special tax preference for a tobacco product. The bill’s interaction with the existing constitutional tax may also have been a point of concern, since the statutory reduction would only partially lower the overall tax burden.