There’s something about a cigar lounge that the government simply does not like.
Around the country, as demand for them increases, a growing number of entrepreneurs willing to risk their savings, sign leases, hire employees, and renovate vacant buildings are discovering that opening a cigar lounge can be one of the most difficult business ventures to launch, at least when it comes to government red tape.
In many states—almost half in fact—it is not enough that customers willingly choose to enter, that employees knowingly accept the work environment, or that owners comply with extensive licensing and ventilation requirements. Government often stands in the way anyway.
To be sure, smoking raises serious health concerns, and a lot of people don’t like the smoking part, but for small business owners and property-rights advocates, the issue burning across America reaches far beyond cigars and tobacco. It raises the question of how much freedom Americans should have to legally use their property, invest their capital, and build businesses that serve willing customers.
And how many regulations are too many to sustain any prosperous small business?
Over the past several years, cigar lounges have been in the thick of things when it comes to answering those questions. Last year in Wisconsin, lawmakers approved legislation allowing new cigar lounges to open under strict regulatory conditions, but Democratic Gov. Tony Evers vetoed the bill, saying it would negatively impact public health and undermine the state’s efforts to protect people from indoor smoke.
That, despite the fact that only willing adults can enter a cigar lounge. Which says that the governor either believes it’s OK for the government to make health decisions for adult individuals or that it’s about something else entirely, namely, regulatory control over the small business sector. Or both.
More than in many other small businesses, the debate showcases not only the tug-of-war between government regulation of Main Street and the rights of entrepreneurs to pursue lawful business opportunities but the tension between government regulation and personal freedom.
When Wisconsin enacted its statewide smoking ban in 2009, the law grandfathered existing tobacco lounges. However, new establishments were prohibited, and Rep. Nate Gustafson (R-Omro) said during testimony on the bill that that created an arbitrary distinction preventing new entrepreneurs from opening the same type of establishment under the same rules.
Among other restrictions, new venues would have been required to generate at least 15 percent of their annual revenue from cigar or pipe tobacco sales, prohibit entry by anyone under 21, prohibit food service, require employee disclosures regarding secondhand smoke exposure, and submit plans demonstrating adequate air filtration and exhaust systems.
“This legislation seeks to allow more of these businesses to open through the issuance of more licenses to meet the increasing demand across the state,” Gustafson testified. “It levels the playing field and ensures new business owners have the same opportunity to succeed as those who came before them.”
Crucially, Gustafson observed, the bill in no way weakened the existing statewide smoking ban but offered a narrow, targeted reform that struck a balance between protecting public health and respecting the autonomy of businesses and individual freedoms.
The most powerful witness on the entrepreneurial side was Kenosha, Wisconsin, resident James Thompson, an insurance and real-estate professional who had explored opening his own cigar lounge.
“I am testifying about how a ban on cigar lounges limits the freedom of Wisconsinites and restricts the American dream of owning a business,” Thompson told lawmakers. “These limits are like none other in any segment of business in Wisconsin. They are not just limits but a tool to eliminate cigar lounges altogether.”
Tobacco licenses were a dying breed, he testified, even though he and others had extensively researched opening an upscale cigar lounge because of the networking and socializing opportunities it would offer in his industry: “We … have been met with roadblock after roadblock due to current legislation.”
According to Thompson, his lounge could create three to five jobs, generate approximately $16,500 annually in sales-tax revenue, occupy vacant commercial property, and increase foot traffic for nearby restaurants, hotels, and retailers.
“[The bill] restores entrepreneurial fairness,” he testified. “It offers a high-end, well-managed alternative to the traditional nightlife.”
He also questioned why other businesses were treated differently.
“You can go to nearly any vape shop and purchase and smoke vapes,” Thompson told lawmakers. “You can go to a bar and drink toxic chemicals that, in excess, are mind-altering. You can go to the hookah lounge and indulge in your favorite flavor.”
What you can’t do, except in grandfathered establishments mostly around Milwaukee and Madison, is go to a cigar lounge. And, after the governor’s veto, cigar aficionados still can’t.
As for the public health debate, state Cory Tomczyk (R-Mosinee) argued that consumers and markets—not government restrictions—should determine success: “[The bill] is a pro-business bill that lets the free market do what it does best. Let the best businesses thrive and survive on their own instead of relying on a law to protect the select few who are currently operating.”
The hurdles are not Wisconsin specific, and governments at every level have posed regulatory obstacles for entrepreneurs. In Roanoke, Virginia, to cite another example, cigar lounge owner Jimmy Lewis spent years pursuing his dream of opening a place where adults could buy cigars, relax, and socialize.
According to a profile in Reason magazine, Lewis said cigar enthusiasts were routinely driving more than an hour from Roanoke to neighboring cities to visit a proper lounge. So he moved his family, invested his savings, and launched Bison Head Cigar & Lounge. The business eventually opened in the city’s historic district, but only after Lewis had to navigate what he called an obstacle course of permits, approvals, and regulations. Ultimately, he spent months waiting for approval simply to construct a humidor that he described as essentially “a gigantic walk-in closet.”
Then came disputes over signage, which ended up costing Lewis another $10,000 to preserve and restore an old dry-cleaning sign left behind by a previous tenant—even though his business was not a dry cleaner and the sign was broken. Historic districts can come with historic regulations.
Of course, any proposed small business would face similar bureaucratic hurdles, whether in Wisconsin, Virginia, or anywhere else. It’s worth noting that Virginia has more than 145,000 regulatory restrictions, while Wisconsin has more than 165,000, and many of them put roadblocks in the way of opening small businesses. As Reason points out, in April 2026, Americans filed more than half a million business applications, but the Census Bureau projected that only 28,479 of them would become businesses with payroll tax liabilities within a year.
All the while, downtown Roanoke itself was struggling. Storefront closures had left gaps throughout the district, and local officials were simultaneously looking for ways to revitalize the area. Businesses like Bison Head represented precisely the kind of private investment many communities claim they want but whose government seems determined to deter.
Making matters worse was the nature of the enterprise, which the government took a dim view of. Being a tobacco den in Virginia, so to speak, meant alcohol was off-limits, by government decree.
“You cannot bring your own alcohol in here, and we can’t sell it or serve it,” Lewis told Reason’s Reem Ibrahim. “So there’s literally just no alcohol, no cigar bars or anything like that, nowhere where you can smoke and drink at the same time.”
Lewis eventually succeeded on the cigar portion, but not before learning how expensive government permission can become.
“The government restricting these businesses does nothing but hurt the economy rather than help it,” Lewis told Reason. “If people are adults, they can make their own decisions on what to put into their bodies.”
Whether the business involves a cigar lounge, a family farm, a home-based food operation, or a small manufacturing enterprise, the pattern is a familiar one. Entrepreneurs are often required to spend huge amounts of time and money obtaining permits to engage in otherwise lawful activity on property they own.
In the case of cigars, several states have moved in the opposite direction in the past several years. New Hampshire amended its liquor laws in 2021 to allow licensed cigar bars and tobacco lounges greater flexibility in serving food. South Dakota has also enacted legislation allowing local governments to issue licenses for new cigar bars under specific conditions, including ventilation requirements, structural standards, public hearings, and minimum cigar sales thresholds.
As South Dakota Rep. Will Mortenson told SDPB Radio, communities that do not want cigar bars can simply decline to issue licenses: “The cities that want to, though, can,” he said. “They can set the parameters, set the fees, and then people can choose to go or not.”
The Premium Cigar Association notes that more than half the states already allow cigar bars or similar exemptions.
