On January 18, 2025, Virginia lawmakers introduced Senate Bill 1162, a legislative measure aimed at establishing a distinct category for premium cigars within the state's tobacco products tax framework. The bill mandates the collection of data specifically on the sales of premium cigars, differentiating them from other cigar types. This initiative seeks to assess the fiscal implications of potentially capping the tobacco products tax on premium cigars at 30 cents each.

The bill defines "premium cigar" in accordance with federal regulations, specifically referencing 21 C.F.R. § 1114.3. The Department of Taxation is tasked with updating its data collection forms to facilitate this new categorization. Furthermore, the Department is required to compile and report the collected data, along with an analysis of the estimated fiscal impacts, to the Chairmen of the House Committee on Finance and the Senate Committee on Finance and Appropriations by December 1, 2025.

As the bill progresses, it is expected to spark discussions regarding the implications of tax policy on the tobacco industry, particularly concerning premium products. Proponents argue that the bill could lead to a more equitable tax structure, while opponents may raise concerns about potential revenue losses for the state. The outcome of these discussions will likely influence the future of tobacco taxation in Virginia, as well as the broader economic landscape for cigar retailers and consumers.

In summary, VA SB1162 represents a significant step towards refining the state's approach to tobacco taxation, with potential ramifications for both the industry and state revenue. The bill's progress will be closely monitored as stakeholders weigh in on its implications.