Committee lays over bill to speed refunds for cigar wholesalers

The House Taxes Committee on Monday moved House File 926, a bill intended to change when Minnesota’s tobacco tax applies to cigars brought into the state by wholesalers and to speed refunds when inventory is shipped out of state.

Supporters and the Department of Revenue told the committee the measure would ease cash‑flow burdens on small fulfillment businesses while preserving the state’s right to collect tax on products ultimately sold in Minnesota.

House File 926, as amended by the DE2 amendment, would allow wholesalers to document cigars stored in Minnesota that are destined for out‑of‑state sale and to hold those items exempt from upfront Minnesota tobacco tax until sale into Minnesota. The author said the change is modeled on an Illinois law and was developed with the Department of Revenue.

"We store, ship, and fulfill orders for boutique cigar brands across the country," said Angelo Fraboni, identified as one of the owners of Founders Cigar Company. "We are required to pay Minnesota's tobacco tax upfront on every cigar that enters our warehouse, regardless of whether it's ever sold in the state." Fraboni told the committee his firm made 1,528 total shipments and that 207 of those stayed in Minnesota, and described a months‑long refund process for taxes that had already been paid.

Joanna Baerz, legislative director for the Minnesota Department of Revenue, told the committee the…