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Cuban cigars: lighting up (legally)

NEW YORK (FORTUNE) - Everyone knows Cuban cigars are illegal in the United States, thanks to the embargo on Fidel Castro's goods.

But what you might not know is that Americans can legally enjoy Cubans thanks to a loophole - if the cigars left Cuba before the embargo was imposed in 1962, they're perfectly fine to smoke and sell.

And in all likelihood, they're still good.

"Like wine, if cigars are properly aged, they get much better over the years," says Brad Berko, general manager of Paradise Cigar Company, a distributor to over a dozen luxury hotels and several dozen individual cigar collectors. "Pre-embargo Cubans are for cigar aficionados who enjoy the best of the best."

Indeed, real Cubans are rare and they're not cheap: They run from about $150 to $300, and at luxury restaurants or hotels they can ring up at more than $500. "Buying pre-embargos are like buying a diamond, you have to go to the right person," Berko says.

You also have to know what to look for. The most common types of pre-embargo Cubans are Montecristo, Romeo y Julieta, Ramon Allones and H. Upmann. These cigars tend to be smaller than their modern counterparts – about five and a half inches long and about a half inch in diameter.

The assortment of vintage cigars can be confusing. A true pre-embargo Cuban is made entirely from Cuban tobacco and was wrapped in Cuba - that's the priciest, and don't expect to pay less than $150.

Another variety is the "Clear Havana" - cigars that were made decades ago in U.S. factories with Cuban tobacco (those are called "Clear Havanas" because customs officials used to sit in the factories, and clear the tobacco through customs as it was brought up from the warehouse basement). These tend to run about $50 to $150.

A third variety uses bales of Cuban tobacco that were brought into the United States before the embargo, but that wasn't made into cigars until recently. If the entire cigar – the tobacco filler, the binder leaf and the wrapper leaf - aren't entirely pre-embargo, then expect the cigars to cost less, in the $50 range. If the Cuban tobacco is diluted with Ecuadorian or other tobacco, it should be even cheaper.

Here are the best ways to get your hands on the goods.

Buy at auction: Christie's
Christie's auctions cigars twice a year - in the spring and the fall - at its fine wine auctions in London. The next opportunity to bid on some of Christie's vintage cigars is May 18. The Fine Wine auction at its King Street London location will include about 15 lots of pre-embargoed Cuban cigars, which range from one cabinet of 100 cigars to a box of just five cigars.

Any pre-embargo cigar, regardless of where it's bought, is legal in the United States. Eager buyers can attend the auction, bid over the phone or online at, or bid in advance by faxing a form to the bid office. The catalogs are posted online three weeks before the auction, and two to three days before the auction, full descriptions of the lots are available.

The benefit of buying cigars at auction is similar to that of bidding on wine: a stamp of approval of a reputable name like Christie's means the cigars promise to be well-preserved, and auction houses often have access to impressive collections.

Cigar stores
If you're looking to buy retail, several outposts such as Corona Cigar in Orlando, and J.R. Cigars in Manhattan sell a variety of pre-embargo cigars. In Las Vegas, a town made for splurging, stogies are easy to come by.

Michael Frey, owner of FreyBoy Tobacco, sells pre-embargo Cubans in four of his eight Las Vegas casino stores, for $150 to $300 each. "Someone might win $10,000 on a craps table and come buy a $200 cigar, someone else may buy a cigar and preserve it, like it's a piece of history."

Now, FreyBoy Tobacco is offering its priciest pre-embargo offering yet: a box of 20, 1959 Cuban cigars, in four brands and a variety of sizes, for $10,000. "Vegas is the perfect place to buy pre-embargos, people don't really care about money when they're here."

A handful of luxury hotels and restaurants offer pre-embargo Cubans to make their guests' experience even more exclusive - and expensive. Pebble Beach Resort in Northern California has a Cigar and Cognac program; guests can choose between a $275 1955 Montecristo #2 and a $225 1952 Romeo y Julieta, which can be paired with cognacs that run up to $750 per drink and Scotch that tops $1,000 per shot.

"These aren't cigars and cognacs that you can find just anywhere," says Pebble Beach Lodge's beverage manager. "Cigars remind our guests that they're on vacation, they provide an opportunity to sit back and relax."

The Phoenician Resort in Scottsdale, Ariz., has a rare-cigar menu at its Thirsty Camel Lounge overlooking the desert. A 1953 Montecristo #3 goes for $525 and a 1940 Shaggy Gurkha for $150. Finally the Ritz Carlton in Phoenix and the Doral Golf Resort & Spa in Miami, also offer pre-embargo Cuban cigars.

But wherever you're buying, beware: Cigar dealers warn about making a purchase on the Internet unless it's from a very reliable dealer. In person, it's fairly easy to see if a cigar has been preserved against excessive dampness or dryness. If you can check out a vintage cigar in person, Berko recommends examining the outside wrapper, to make sure it looks fresh and the color isn't faded. Then squeeze the cigar to make sure it's neither too hard nor too soft.

Last but not least? Light up and enjoy.