What if I got a tobacco license?

xmacro

Ok, so I was perusing some online cigar forums, and came across this:

I'm -----------------------------

I find boxes cheap through Craigslist, have friends are the local cigar shops due to spending money at their rates there for years who sell me sticks at whole sale now, and know what sites carry what brands are good prices.

Some times I will buy a box at such a good price online that I'll turn it around on Craigslist and come out with triple of what I spent.

For example just recently I spent 200 bucks and got the following:
1 box of Ancient Warrior churchhill
1 box of Oliva G maduro churchhill
1 box of Oliva G maduro perfecto
1 box of Rocky Patel Decades
1 box of Avo No. 3
1 box of La Gloria Cubana R churchhill sized
1 5 pack of Gurkha Black Dragon in a Presidente size
1 bag of about 30 loose no name cigars that have been aged and are probably from the Carribean areas.

Thanks Craigslist
In the past I've gotten an entire box of Opus X Fuente Fuente along with a box of Gurkha Symphony churchhill size and a few loose cubans for $40 because some one's husband passed away and she didn't know what they were worth.

You can also make a good bit of money buying boxes of Partagas out of Switzerland for $120 and selling them at $20 - $30 a stick out here, if you're not apt to being on the wrong side of the rules.

In the future I'll be saving up some money and getting my own business and tobacco license, so whole sale pricing will open up even more for me - and sell at below what anyone else sells for through Craigslist to community servants (doctors, cops, fire fighters, soldiers, veterans, ect) and donate boxes oversea's to combat zones.

Which means a lot of write offs for my family - more money saved.

I have a lot of free time being disabled, and only going to college.

Bottom line is for about 300 bucks anyone can get their business and tobacco sellers license to buy wholesale direct through vendors. Obviously you won't be able to get all brand names, but there are a lot of places that only want your tobacco sellers license and federal tax ID along with a business name.

Now, it's that last paragraph that interests me - what if I got a bunch of BOTL's together and we collectively bought a license, and then started buying boxes at wholesale? We could split them up amongst ourselves, at least for the cheaper ones. I know some guys I know were thinking of doing the same with an FFL license, but dropped the idea because the whole thing would be too expensive, but if a tobacco license is only $300, it seems the expenses could easily even out

Or is this guy completely full of BS?

kuzi16

im not 100% on this. the way i thought it worked was this: if you buy from the cigar company themselves you need the license. if you buy from private dealers you dont. im sure it also depends on the state.


i could be 100% wrong.

Alex_Svenson

A few observations from my side. Some of those kits he bought are way below wholesale. That $200 lot is worth at least $500 minimum. Interesting that there is a donation component to support the troops which I love but ironic that he admits taking advantage of a widow on a box of opusx. To each their own but an odd observation none the less. What this guy is missing is while you can open a biz with a business license and get a tax ID, he is going to need to pay tobacco taxes on all of these sales and be will never be the cheapest as the cigar industry has pretty thin margins and if you are looking to sell locally you will never compete with the Internet. In terms of a group buy type thing, you would need a state OTP license and would most likely need to also put up a $5k bond against taxes. You also have to report all your inventory purchases and sales to the state monthly. If they found out you were smoking them, they may send you a tax bill. Depends on the state but that could be more than what you can pay online. At the end of the day, if you know how to shop smart, you can get cigars online for about $1 per box over wholesale cost. Actually, many cigars i have seen for sale can be found for less than wholesale on aggressive promotions. Actully, from time to time our daily cigar deal is less than wholesale and I catch local b and m stores loading up because they can get it cheaper from me on the deal vs they regular list price with their supplier. Just my .02

SmokySuit

The cost of the license would depend on what state you would be operating in.

j0z3r

At least in California, as I was told by the owner of the b&m I go to, there are two different licenses, one allows you to only buy from resellers/wholesalers while the other allows you to buy direct from the manufacturer, the other difference between the licenses is a matter of cost, though buying direct from the manufacturer swallows the increased cost of the license as you're not dealing with a middleman.

jship079

Im guessing even with a license you are not going to get stuff much cheaper if you are only buying a few boxs or elese every one that spends more than 1000 bucks a year would spend the 300 bucks to save 20 or 30 bucks at least on every box they buy each month

zoom6zoom

There's as much truth in some Craigslist ads as there is in Penthouse Forum letters. Except that in one of them, someone's only getting screwed in their imagination.

Alex_Svenson

j0z3r:

At least in California, as I was told by the owner of the b&m I go to, there are two different licenses, one allows you to only buy from resellers/wholesalers while the other allows you to buy direct from the manufacturer, the other difference between the licenses is a matter of cost, though buying direct from the manufacturer swallows the increased cost of the license as you're not dealing with a middleman.

The license is not simply something that allows you to buy the products wholesale but the purpose is for paying taxes. Take California for example. Say a box of cigars cost $50 wholesale and has an $80 msrp. A store in CA will buy it for $50, then as soon as they get it, they will have to pay $20 to the state of California in OTP taxes (40% of the wholesale price in CA). They sell a customer the box for $100 (80 retail an d20 taxes) but the bottom line is the box of cigars costs the guy with the license $70 even though he bought it wholesale. That same box could be purchased off the internet for $60. If you buy wholesale and have a license, the distributor you buy from reports that purchase to the state. That is reason for the permit and ID, reporting your purchases to the IRS. Only way to get the $20 in taxes back from the state of CA would be to prove to them that you returned the product or shipped it out of the state and even then, you wont see that check for a while LOL> If you are a regular consumer just like you are now, you can buy online and those purchases are not reported to respective states. It would be up to the recipient in the state the produt is received to voluntarily report the purchase and pay the taxes.

Take amazon.com When you buy something they ship to you, amazon does not tell the state you live in about your purchase, but the state does ask that you tell them and pay taxes on it which 99.9% of people dont do. This example only applies to sales tax as they dont sell tobacco so the savings is only 6% but in cigars the savings is much more significant because you are talking about both sales and tobacco taxes. Again, if you are a consumer getting any goods shipped into your state, it is up to you to report your purchases. If you have a license, your purchases are actually reported to the state via 3rd party.

xmacro

Well, responses have kinda been what I figured - if it were this easy to get cheap cigars, everyone would be doing it :-/

But hey, it's still great to get some more insight into the cigar industry - thanks Alex!

j0z3r

Alex Svenson:

j0z3r:

At least in California, as I was told by the owner of the b&m I go to, there are two different licenses, one allows you to only buy from resellers/wholesalers while the other allows you to buy direct from the manufacturer, the other difference between the licenses is a matter of cost, though buying direct from the manufacturer swallows the increased cost of the license as you're not dealing with a middleman.

The license is not simply something that allows you to buy the products wholesale but the purpose is for paying taxes. Take California for example. Say a box of cigars cost $50 wholesale and has an $80 msrp. A store in CA will buy it for $50, then as soon as they get it, they will have to pay $20 to the state of California in OTP taxes (40% of the wholesale price in CA). They sell a customer the box for $100 (80 retail an d20 taxes) but the bottom line is the box of cigars costs the guy with the license $70 even though he bought it wholesale. That same box could be purchased off the internet for $60. If you buy wholesale and have a license, the distributor you buy from reports that purchase to the state. That is reason for the permit and ID, reporting your purchases to the IRS. Only way to get the $20 in taxes back from the state of CA would be to prove to them that you returned the product or shipped it out of the state and even then, you wont see that check for a while LOL> If you are a regular consumer just like you are now, you can buy online and those purchases are not reported to respective states. It would be up to the recipient in the state the produt is received to voluntarily report the purchase and pay the taxes.

Take amazon.com When you buy something they ship to you, amazon does not tell the state you live in about your purchase, but the state does ask that you tell them and pay taxes on it which 99.9% of people dont do. This example only applies to sales tax as they dont sell tobacco so the savings is only 6% but in cigars the savings is much more significant because you are talking about both sales and tobacco taxes. Again, if you are a consumer getting any goods shipped into your state, it is up to you to report your purchases. If you have a license, your purchases are actually reported to the state via 3rd party.

ok, good info. I didn't think that my post was the whole story, it's too simple that way.

bearb

xmacro:

Well, responses have kinda been what I figured - if it were this easy to get cheap cigars, everyone would be doing it :-/

But hey, it's still great to get some more insight into the cigar industry - thanks Alex!

////I think everyone here is doing it! It of course being, buying cigars inexpensively! The shipping out of state and voluntarily paying the tax is an interesting aspect also.

One2gofst

Ohers have touched on the cigar issue very well, IMO. I just wanted to add that an FFL, aside from C&R, requires that you have a physical address with regular hours. They have cracked down on this severely in the past 5-10 years. You CAN run one out of your home, however they have strict security requirements and they can make unannounced visits at any "business hours" and go over everything in your shop, which if that is your home means going through all your stuff. There are also the issues of bound books and business vs. personal inventory

Kind of like Alex said with cigars, if you know what you are doing and you only intend to do it for your own use, it is a lot of hoops to jump through for little to no gain when everything is said and done

That said, once I finish school again and get settled in my career I would like to see if it is feasible to do some small level firearm business.