The Briar and the Burley in downtown Bloomington sells cigars and tobacco products. Borders said they also have a smoking lounge, and see 50 to 70 customers a day for tobacco and cigar sales.
(WTIU News, Bente Bouthier)
Local businesses and convenience stores are bracing for an increased tax on cigarette and tobacco products in Indiana.
Matt Borders, manager of The Briar and the Burley in downtown Bloomington, said the store relies on the sale of tobacco. The store also sells other items.
“We sell luggage, leather goods, shaving accessories, writing instruments, all kinds of other things,” Borders said. “But those are not items that you turn every day. Pipe tobacco and cigars are basically what keeps the lights on.”
But with tariffs and state tax increases coming in July, he said Briar and the Burley will have to raise its prices.
A $2 billion budget shortfall led state legislators to change Indiana’s tax on a pack of cigarettes from one dollar to three — with a proportional tax increase on other tobacco products.
If country-specific tariffs go into effect, major cigar countries like Honduras and the Dominican Republic will remain at the 10 percent baseline President Donald Trump implemented, Borders said. But Nicaraguan tobacco products and cigars could go up by more.
As new products come in, prices will go up by at least 10 percent, Borders said. When the state tax increase starts, “they're going to go up an additional at least 6 percent.”
Borders said his customers mostly buy online but come into the store for the experience and convenience. He expects that with Indiana’s tax increase, people will buy more from states that have lower excise taxes like Florida and New Jersey.
Borders said the store doesn’t sell many cigarettes and is not as concerned with that increase as it is with tobacco.
Joseph Lackey, president of the Indiana Grocery and Convenience Store Association, said the tax increase to cigarettes will have consequences for members of the group.
A 2020-2023 analysis from IBSWorld said Indiana has approximately 700 convenience stores.
Indiana’s tax was lower than its neighbor states, and Lackey said people crossed state lines to buy cheaper cigarettes here.
“That's tax money that Indiana got, that Hoosiers didn't pay, that came from out of state,” Lackey said. “That money is now all going to go away. And how much money is that? We don't know exactly, but we'll find out fairly quickly.”
People might decrease cigarette and tobacco usage, Lackey said. But he predicted Hoosiers will start purchasing cigarettes and other products online, and from people bringing them in from out of state.
Lackey said 25 to 30 percent of a convenience store’s business is tobacco products.
“So, you're going to take that away from them,” he said. “Then you take a lot of the incentive away for them to be open. Additionally, you're also going to lose those jobs.”
He added small retailers and stores on state lines will feel the change most acutely.
