Governor J.B. Pritzker signed the state budget into law, including CAA’s provision establishing a 75-cent cap on excise tax for cigars in Illinois.  The event marks the culmination of a multi-year effort led by the Cigar Association of America (CAA) and local stakeholders including, Mike Gold of Arango Cigar Company and Phil Ledbetter of Up Down Cigars. The bill also had support from the Premium Cigar Association and Cigar Rights of America.

Senator Cristina Castro and Representative Bob Rita sponsored the legislation and supported CAA during its negotiations with the Illinois Department of Revenue, eventually securing their support for a cap rate of 75 cents.  From there, it was a matter of convincing the leadership in the General Assembly to include the tax cap as part of the budget.

“Without the resources of CAA, this legislation could not have been negotiated successfully and would not have garnered the support necessary to see it signed into law this week,” said Mike Gold, owner of Arango Cigar Co., a leading national importer/distributor based in Illinois. “The tax cap supports everyone selling cigars in Illinois, and that benefits the consumers we well.”

“This tax cap has been many years in the making. We are grateful for the work of Senator Castro and Rep. Rita and all the supporters of the bill,” said Ledbetter. “The collection of meaningful tax cap data, along with the tireless work of many including CAA state lobbyists, staff and legal team were instrumental in achieving this victory.  It’s a great day for cigar retailers in Illinois,” Ledbetter said.

Across the country, CAA maintains a team of more than 65 lobbyists and attorneys with expertise in state and federal tobacco law – the cigar industry’s only advocacy network of its kind.  The ability to put boots on the ground and be physically at the table when legislation is moving, ensures CAA can fight for the industry at each step in the process. 

The state was initially skeptical that a tax cap could be of mutual benefit.  But, with support from CAA attorneys at Fox Rothschild and Triplett & Associates, the Association began working directly with the Illinois Department of Revenue to negotiate both a tax cap rate and secure favorable terms for local retailers and cigar producers.  CAA was also able to point to the temporary tax cap it had negotiated in the neighboring state of Michigan, which was so successful that the legislature made it permanent.  CAA then drafted the base legislation and engaged its lobbyists with John T. O’Connell LTD and Taylor Uhe LLC – local firms based in Springfield, IL – to educate legislators about the project and to secure support from leadership in the House and Senate. 

Beginning January 1, 2027, through December 31, 2029, Illinois will cap its excise tax on cigars at 75 cents per cigar. Currently, the state taxes cigars at 45% of the wholesale price.  Illinois is now the 18th state to adopt legislation capping its cigar excise tax.