Wholesale Price of a Premium Cigar
To determine whether a cigar meets the definition of a premium cigar, “wholesale price” is the price that a retailer or cigar subjobber pays a distributor for the cigar.
Wholesale price is different from “wholesale sales price” defined in Minnesota Statute 297F.01, subd. 13a., which is generally the price that the distributor/taxpayer pays their vendor for their cigar products.
The following table includes examples of cigar price scenarios. The table assumes that the cigar meets all other necessary characteristics to qualify as a “premium cigar."
| You are a: | A retail operation acquires cigars: | Does the price meet the wholesale price definition of a premium cigar? |
|---|---|---|
| Minnesota distributor | Sold to a Minnesota retailer |
No. If the price paid by your retail customer is less than $2.00. This price does not meet the minimum wholesale price for a premium cigar and this cigar is taxed at 95% of the wholesale sales price. Yes. If the price paid by your retail customer is $2.00 or more. This price meets the minimum wholesale price for a premium cigar and this cigar is taxed at 95% of the wholesale sales price or 50 cents, whichever is less. |
| Minnesota distributor | Sold to a Minnesota subjobber |
No. If price paid by the Minnesota subjobber is less than $2.00. This price does not meet the minimum wholesale price for a premium cigar and this cigar is taxed at 95% of the wholesale sales price regardless of the price that the subjobber sells the cigar to the retailer. Yes. If the price paid by the Minnesota subjobber is $2.00 or more. This price meets the minimum wholesale price for a premium cigar and this cigar is taxed at 95% of the wholesale sales price or 50 cents, whichever is less. |
| Minnesota distributor who is also a retailer |
Purchased for the retail operation of a distributor – you purchase cigar products from a cigar manufacturer or out of state distributor for sale in your retail operations |
No. If the price you pay for the cigars is less than $2.00. This price does not meet the minimum wholesale price for a premium cigar and this cigar is taxed at 95% of the wholesale sales price. Yes. If the price you pay for the cigars is $2.00 or more. This price meets the minimum wholesale price for a premium cigar and this cigar is taxed at 95% of the wholesale sales price or 50 cents, whichever is less. |
