I’m often asked, “Why do a bunch of rolled-up leaves cost so dang much?” It’s a complex situation, but the two main factors are time and tax.

As the old saw goes, time is money. That bunch of leaves you’re smoking is at least 18 months old and probably more like three years old. From seed to harvest takes around five months. Another six weeks in a curing barn to dry the leaves out and then two months to ferment. The leaves then go into the aging room for at least 30 days, some for many years. All the while each tobacco leaf is handled hundreds of times by various employees. While labor is cheap in many cigar-producing countries, it’s not free. All those hands add up. Sitting on tobacco leaves for years generates no income for the company. It’s only when they are rolled and shipped that the money comes rolling in.

Once the tobacco is aged, it’s rolled. The labor cost of a top-grade seven-roller can add a buck to each cigar, which is part of the reason that shaped figurado you’re smoking is much more expensive than a simple robusto. A nice solid wood chest with German-made hinges can cost $10 compared to $1 or less for a cardboard box. A plain cigar label is only pennies, but an elaborate die cut and embossed label like an Opus X can run 50 cents each. All these little costs add up to make the substantial difference in price between a bundle cigar with no band or box and little aging to an Ashton VSG with well-aged tobacco, an intricate band and ornate box.

Now comes the fun part: taxes. Most smokers are not aware that each state has its own set of rules and regulations for cigar tax and licensing. If you are lucky enough to live in Pennsylvania, Florida or New Hampshire, you have no cigar tax. However, if you live in Vermont, it’s 92 percent.

That’s right, 92 percent.

The average state cigar tax is about 25 percent; that means if a cigar costs a retailer $1 wholesale, their “first cost” is $1.25. If you’re in Vermont, that first cost is now $1.92. If the retailer takes a standard markup of 50 percent on the whole amount, that cigar now costs you $3.84. In a no-tax state like Florida, it would be $2. Now apply that math to a more expensive cigar like a Fuente Opus X. Assume wholesale is $8, Vermont tax is $7.36 for a first cost of $15.36. Retail price is now $30.72 — or only $16 in no-tax Pennsylvania. Even in a relatively low 20 percent tax state, that Opus will still cost $19.20. In high-tax states, a retailer often can’t afford to take a full markup in addition to the massive taxes. So, in the end, the state is making more money on cigar sales than the struggling retailer. Now add in one more cost from each state: retail tobacco licenses. In some states, it’s only $20 a year, no big deal. However, in New York it’s $1,000 to $5,000 annually. That’s why starting this year you’ll seldom find cigars for sale at local golf courses in states with pricey tobacco licenses. They simply can’t make enough money selling cigars to cover the cost.

Despite the relative high cost of the average cigar, many still consider them an “affordable luxury.” Where else can you buy something that is the best in the world for $10, $20 or even $30? What else can give you an hour or more of pleasure at that price? What other item will keep your significant other and/or kids from bothering you for an hour? Exactly. Now go enjoy a cigar and stop worrying about how much it costs.

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