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Try Pipes By George on Hillsborough Street one block from the YMCA. George has been there for years and has a great selection and great service. His website is pbgeorge.com/page2.html
Though I haven't been in it, some people from a dinner party at the Angus Barn (http://www.angusbarn.com/cigar.htm - broken link) bought cigars there. Small walk-in, no idea of prices or quality - though I imagine it would be high end stuff. It's not downtown though, but it is in Raleigh.
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