New Tobacco Tax Good For Pryor Business

Wednesday, April 1st 2009, 5:16 pm
By: News On 6

By Jeffrey Smith, News On 6

PRYOR, OK -- Oklahoma smokers are digging deeper into their pockets. A new federal tobacco tax kicked in on Wednesday, bringing the overall state and federal taxes on a pack of cigarettes to $2.00.

The federal tax on a pack of cigarettes is now more than $1.00. That's up more than 60 cents.

The increase means big business for Xcaliber, a regional company run out of a Pryor warehouse.

"It's a burden on top of employment issues and financial struggles that the American public is having," said Keith Burdick, Xcaliber owner.

In Tulsa, a pack of Marlboro's will now cost more than $5.00.

Robert Colley has been a smoker for 35 years. He says this week he called the state Tobacco Hotline.

"It's costing me too much, me and my wife both smoke. We're looking at probably $150 a week," said Robert Colley of Tulsa.

For Xcaliber, these are the sounds of success.

"We sell inexpensive cigarettes. We manufacture inexpensive cigarettes, which I think will become something people are looking for now," said Burdick.

Xcalibur sells Echo cigarettes. They make five million of them every day.

Burdick says it costs tobacco companies $3.00 to make a carton. Marlboro charges $40. Echo is less than $30. Burdick says that's because they aren't a famous brand.

"We operate on a thinner margin. We make cents per carton; they make multiple dollars per carton," said Burdick.

Until now, the federal tax on a carton of cigarettes was in the $3.00 range, but now that tax is more than $10. But because Echo cartons are sold so cheap, the company boss says they can come out on top.

"We expect our sales to increase," said Burdick. "I think 20% is a doable number, for the next year. I think there will be a lot of people switching over the next 60 to 90 days."

Burdick says despite the taxes, his company isn't going to get boxed in.

Xcalibur sells Echo cigarettes to nine states, with a staff of 50 employees. If the company sees significant growth this year, Buskirk says they will expand their operation with the ultimate goal of selling from coast-to-coast.