Reduce Premium Cigar Excise Tax Rate

Second Regular Session Seventy-fifth General Assembly STATE OF COLORADO INTRODUCED SENATE BILL 26-086 LLS NO. 26-0702.01 Stephanie Schrab x4330 SENATE SPONSORSHIP Sullivan, HOUSE SPONSORSHIP (None), Senate Committees House Committees Finance A BILL FOR AN ACT CONCERNING THE TAXATION OF PREMIUM CIGARS, AND, IN CONNECTION THEREWITH, CAPPING THE STATUTORY EXCISE TAX ON PREMIUM CIGARS AT TWENTY PERCENT.

Bill Summary (Note: This summary applies to this bill as introduced and does not reflect any amendments that may be subsequently adopted. If this bill passes third reading in the house of introduction, a bill summary that applies to the reengrossed version of this bill will be available at http://leg.colorado.gov.) Effective July 1, 2026, the bill defines "premium cigar" and reduces the statutory excise taxation rate on premium cigars to 20% of the manufacturer's list price (MLP) from the current rates for all non-cigarette tobacco products other than moist snuff of 36% of the MLP from July 1, 2024, through June 30, 2027, and 42% of the MLP on and after July 1, Shading denotes HOUSE amendment. Double underlining denotes SENATE amendment.

Capital letters or bold & italic numbers indicate new material to be added to existing law. Dashes through the words or numbers indicate deletions from existing law.

2027, effectively rolling back the increases in the statutory taxation rate for such tobacco products since 2005. The bill does not affect taxation of premium cigars under the state constitution, which imposes an additional 20% tax.

Be it enacted by the General Assembly of the State of Colorado: SECTION 1. In Colorado Revised Statutes, 39-28.5-101, add (9.5) as follows:

39-28.5-101. Definitions.

As used in this article 28.5, unless the context otherwise requires:

(9.5) "PREMIUM CIGAR" MEANS A CIGAR THAT IS ROLLED BY HAND, HAS A WRAPPER MADE OF WHOLE TOBACCO LEAVES, AND DOES NOT HAVE A FILTER OR A MOUTHPIECE.

SECTION 2. In Colorado Revised Statutes, 39-28.5-102, amend (1) introductory portion; and add (6) as follows:

39-28.5-102. Tax levied.

(1) Except as set forth in subsection (3) SUBSECTIONS (3) AND (6) of this section, there is levied a tax upon the sale, use, consumption, handling, or distribution of all tobacco products in this state, excluding modified risk tobacco products, at the rate of:

(6) THE TAX IMPOSED UPON THE SALE, USE, CONSUMPTION, HANDLING, OR DISTRIBUTION OF PREMIUM CIGARS PURSUANT TO SUBSECTION MANUFACTURER'S LIST PRICE OF THE PREMIUM CIGARS.

(1) OF THIS SECTION IS TWENTY PERCENT OF THE

SECTION 3. Effective date - applicability. This act takes effect July 1, 2026, and applies to the sale, use, consumption, handling, or distribution of premium cigars on or after said date.

SECTION 4.

Safety clause. The general assembly finds, determines, and declares that this act is necessary for the immediate preservation of the public peace, health, or safety or for appropriations for the support and maintenance of the departments of the state and state institutions.