State head may have it on (6)

I believe the answer is:

panama

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'state' is the definition.
(Panama is an example)

I don't understand the rest of the clue.

(Other definitions for panama that I've seen before include "Country - hat - canal - cigar" , "Canal state; hat" , "Criticise" , "Country and straw hat" , "Central American state" .)

I've seen this clue in The Times.

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