August 22, 2019
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A tobacco tax hike has the owner of Maine’s last cigar cafe worried about its future

Troy R. Bennett | BDN
Troy R. Bennett | BDN
Owner Ali Bahmani, 60, has an espresso and cigar in his Cafe Calabash in South Portland last week. Bahmani fears a new 23 percent point hike on the wholesale price of cigars will harm his business.

SOUTH PORTLAND, Maine — The Cafe Calabash is unique, a throwback, the last of its kind. It’s the only joint left in the whole state where you can still legally puff a cigar, nurse a beer and snarf a burger at the same time.

The nearly 30-year-old cigar lounge is a smoky oasis for stogie lovers and a grandfathered survivor of Maine’s increasingly restrictive smoking laws. But a new 23 percentage point tax hike on cigars just signed by Gov. Janet Mills will soon take a heavy drag on business, said owner Ali Bahmani.

“It’s a huge jump,” said Bahmani, 60. “I’m losing sleep over it because I don’t know what my future is. I’m not ordering anything, I’m not expanding, I’m not going to remodel the store ‘til I find out what’s going on.”

The tax increase was signed into law on July 2. It’s set to take effect on Jan. 2, 2020, and brings the wholesale levy on all tobacco products in line with that of cigarettes: 43 percent. That includes cigars, pipe tobacco and vaping products, which were previously taxed at 20 percent. The wholesale tax does not include the additional sales tax rung up at the register.

The original tax proposal was introduced by Rep. Joyce McCreight, D-Harpswell. The law also sets aside more than $7 million for tobacco use prevention and cessation programs.

“We need to both prevent youth from becoming tobacco users and support current tobacco users of any age to quit,” McCreight said in a statement.

Bahmani said he doesn’t understand why the pipe tobacco and cigars he sells are lumped in with cigarettes and vaping supplies. He said his products are leisure activities funded with discretionary cash, not compulsive habits like cigarette smoking.

“Cigars and pipe tobacco are different than cigarettes and vape,” Bahmani said. “They’re two different cultures. It’s like comparing Germany to Uganda.”

Passing on the cost

Troy R. Bennett | BDN
Troy R. Bennett | BDN
Sam Blake, a writer from Biddeford, puffs a stogie at Cafe Calabash in South Portland last week. Blake said he was not in favor of a tax hike on cigars. "The vast majority of cigar smokers are over 30 and they should be able to make their own decisions,” Blake said.

Bahmani, who doesn’t sell vape products or cigarettes, said he will have to pass the tax hike on to his customers to stay in business. He hopes they won’t head for New Hampshire to buy their smokes.

“A 43 perecent tax will be devastating to us. There’s going to be a point where people stop supporting their local shops because the state is gouging them,” Bahmani said.

Kelly Shemeth, a cigar wholesaler who does business throughout New England, agrees. She points out tobacco taxes are much lower in New Hampshire.

“It’s like Maine is saying, ‘Please go buy your cigars out of state,’” Shemeth said. “They’re pushing people to find ways around it.”

In New Hampshire, premium, all tobacco cigars like those in Bahmani’s humidor are exempt from the state tobacco tax. There is also no sales tax in Maine’s only bordering state.

Massachusetts cigar retailers pay a 40 percent wholesale tax. In Vermont, most premium cigars carry a $2 per stick rate.

Taking out his calculator, and looking at three of his most popular cigars as examples, Bahmani did the math based on their wholesale prices and his markup.

An Ashton Monrach will go from $18 to $20.95. An Arturo Fuente Double Chateaux that now sells for $11.55, will jump to $13.55. Finally, an Avo Uvezion Classic No. 2 now going for $13.95 will be $16.95 after the tax hike.

Bahmani thinks some of his customers will simply start buying their cigars online. A quick internet search of all three cigars finds them already going for less in tax-free web stores.

“They’re going to go online and order it,” he said. “The state has no policing or enforcement in place to stop internet tobacco sales. I can, right now, on my phone, order $10,000 worth of cigarettes, not pay a penny in tax and have them shipped for free to my door.”

A new Mainer’s dream

Troy R. Bennett | BDN
Troy R. Bennett | BDN
The Cafe Calabash sits tucked into a nondescript strip mall in South Portland near a Staples and Burlington Coat Factory. It's operated quietly there for almost 30 years.

If Bahmani’s business goes up in smoke, it won’t just be the end of a cigar lounge. It will also be the end of an immigrant’s American dream, one that he worked hard for and built from scratch.

Bahmani was born and raised in Iran. His grandfather worked in the tobacco business in the 1940s. After high school, Bahmani enlisted in the Irianian navy.

“But my uncle told me, ‘Dark clouds are coming,’” Bahmani said. “He urged me to get out of the country.”

His uncle was not wrong. The Islamic revolution, the Iran-Iraq War and the hostage crisis followed.

To escape the trouble, Bahmani started applying to colleges in the United States. The first to say “yes” was Husson in Bangor. With his acceptance letter in hand, he applied for a visa at the U.S. Embassy.

“Four out of five applications were denied,” Bahmani said. “I was one of the lucky ones. I got a visa.”

He flew to New York, landing in the city during the Blizzard of 1978. He spent two nights on the floor at LaGuardia Airport before flying to Bangor. Bahmani was 19 years old and didn’t speak much English.

But he pressed on, eventually mastering the language and earning his business degree.

Bahmani started his tobacco career at the Tinderbox in the Bangor Mall while attending Husson.

That led to managing Perkins Tobacco at the Maine Mall. When Perkins closed, Bahmani opened the Calabash as a kiosk in 1990. Three years later, he moved to the Jetport Plaza in South Portland, two doors down from where it is now. Eventually, Bahmani added food, beer, wine and the word “cafe” to his business.

Now, in a fluke of ordinances and grandfather rules, the Calabash is the only establishment left in Maine allowed to sell both cigars and alcohol. Bahmani is quick to point out that he doesn’t run a bar. He’s not open late and the drinks are not the main attraction.

“The majority of our business — 75 percent — is in tobacco,” Bahmani said. “Beer and wine is just a little side thing where people can come here and have a cigar with something to drink.”

It’s not just Bahmani who depends on the Calabash for a living. He also employs seven full-time and part-time workers.

“It sucks. It’s really worrying. It really is,” said Keri Lynn Robbins, who has worked at the lounge for more than a year. “This is the best job I ever had.”

A smoking crossroads

Troy R. Bennett | BDN
Troy R. Bennett | BDN
A new 23 percent tax hike on the wholesale costs of cigars will raise the prices of three of the Calabash's best selling sticks. An Ashton Monrach (left) will go from $18 to $20.95. An Arturo Fuente Double Chateaux (center) that now sells for $11.55, will jump to $13.55. Finally, an Avo Uvezion Classic No. 2 now going for $13.95 will be $16.95 after the tax hike.

On a recent afternoon, most patrons sipped tiny espressos with their smokes. Some chatted and ate at the counter. Others relaxed on leather couches. One man sat in the back doing business, laptop open, a bluetooth headset in his ear. Not everyone was speaking English.

When Arash Hejabian came in, Bahmani greeted him in his native Persian language. They chatted for a minute while a server made coffee. Hejabian, a Portland car dealer, was there to relax after a stressful auto auction. He said he regularly hears many languages spoken at the Calabash, from Balkan dialects to Russian to Turkish.

“I’ve seen folks from all different walks of life, with all kinds of differences come together over cigars,” said Robbins from behind the bar, puffing on her own.

Hejabian said he’d hate to see the Calabash close.

“Maine would be a much more boring place than it already is,” he said, smiling. “We already have four or five months of winter.”

He’s not too worried though and said he won’t be taxed out of his smoke.

“This is a choice,” he said, holding up his smoldering stick. “I enjoy every drag of it. I won’t stop. No one will stop smoking because of the price. They’ll just smoke something cheaper.”

At the bar sat Sam Blake, a writer from Biddeford, puffing away in a wreath of smoke. When told of the coming price increase, he said he wasn’t sure if it would curb his time or money at the Calabash.

“But it will piss me off,” Blake said. “No young people smoke cigars. The vast majority of cigar smokers are over 30 and they should be able to make their own decisions.”

It’s illegal in Maine to sell tobacco products to anyone younger than 21. However, according to the 2017 High School Youth Risk Behavior Survey, 9.9 percent of high school boys in Maine reported currently smoking cigarettes, while 10.3 percent reported currently smoking cigars.

What’s coming next

Troy R. Bennett | BDN
Troy R. Bennett | BDN
Server Keri Lynn Robbins (above left) takes a drag off her own cigar behind the bar at Cafe Calabash in South Portland last week. "This is the best job I ever had," said Robbins. A smoker's mantra (above right) is written on a mirror at Cafe Calabash.

Part of the new tax law stipulates that whenever taxes go up on cigarettes, all other tobacco products will follow, too. Bahmani is acutely aware that the original proposal was an 81 percent tax instead of 43 percent. He also thinks lawmakers will look to place further restrictions on vaping in the future. He hopes cigars won’t also get caught up in that fervor.

There’s also the looming specter of a floor tax that would force him to pay the 23 percentage point hike on the current stock of cigars in his gigantic, walk-in humidor.

“They’re still trying to figure that out,” he said, referring to lawmakers in Augusta.

Until then, Bahmani said he’ll try and stay upbeat and in business. He’s got a daughter to put through college.

“I understand tobacco products are not good for you but adults should have the right to choose what’s right for them,” Bahmani said, “and not be forced out of it by a sort of fascist action.”

 



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