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Legislation Could Deal Roll-Your-Own Cigarette Stores a Kick in the Ash

President Barack Obama is expected to sign a federal highway bill that includes a provision defining roll-your-own retailers as cigarette manufacturers. The law would place strain on local businesses like Roll-n-Go.

It’s been a seesaw battle for the past year, but it looks like a legislative deathblow will be written into law for local tobacco retailers that offer cigarette-rolling machines at their businesses.

President Barack Obama is expected to sign a federal highway bill on Friday that includes a provision redefining roll-your-own (RYO) cigarette stores as manufacturers of cigarettes. As a result, small RYO tobacco stores like Ciggy Shack in Menomonee Falls will be required to pay the same taxes and obtain the same permits as big-name tobacco manufacturers to continue allowing customers to use rolling machines on the premises.

Rather than dig deep into their pocket books, RYO storeowners are simply shutting down their machines, which could force some of these businesses to close completely. Once Obama’s pen signs the bill, it will be illegal to roll cigarettes in the store.

The law still allows the businesses to sell rolling machines, the tobacco, and papers; however, thrifty smokers will need to take their raw materials home and roll them from there.

Roll-n-Go in Muskego just opened about a month ago to capitalize on the new business opportunity emerging around the country. The rolling machines are the main draw for customers.

Roll-n-Go sells tobacco, papers and filters, and for a fee customers can rent the  large RYO machine that rolls the cigarettes. A customer can build his or her own box of smokes, equivalent to a carton, for about $30 — avoiding significant tax charges.

That’s less than the $35.21 just in taxes charged on a typical carton of 200 cigarettes purchased at a convenience store. Roll your own tobacco is taxed at $24.79 per pound at the federal level, and a pound yields approximately two cartons worth of homemade cigarettes.

The federal law is going to make business difficult at Roll-n-Go.

Throughout Wisconsin, 110 rolling machines operate in 84 retail outlets. In total, the businesses employee anywhere from 300 to 400 people. The new law could cause many of those people to lose their jobs if businesses close.

“This law will put 300 to 400 people out of work in Wisconsin,” said Paul Carne, of RYO machine distributor WISUP, LLC. “Many of whom came out of the unemployment line in the first place.”

An employee at Smokes I on Appleton Avenue in Menomonee Falls also said they will cease providing small toaster-sized rolling machines to adhere to the law. Customers could roll a carton of cigarettes in about 45 minutes to an hour. A large-scale manufacturer can pump out 20,000 cigarettes per minute.

Small business owners are framing the legislation as a battle between big tobacco and the proverbial “little guy.” In fact, according to the Chicago Sun-Times, Altria-owned Phillip Morris USA has strongly supported the legislation.

“They are cigarette manufacturers,” David Sutton, a Philip Morris spokesman, told the Sun-Times. “And [they] should make tax payments, be regulated by the FDA and make state settlement payments just like other cigarette manufacturers.”

Friday’s legislative signing isn’t the first battle RYO retailers have fought in Wisconsin. In September 2011, the Wisconsin Department of Revenue put RYO businesses on notice to cease operating their rolling machines. Business owners could face fines or seizure of property for failing to cooperate.

However, the machines started a month later after a Dane County Circuit Court judge issued a temporary restraining order preventing the DOR from taking steps needed to force roll-your-own tobacco business owners to comply with certain regulations. They have been rolling since then.

In October, the United States Alcohol and Tobacco Tax and Trade Bureau ruled that a business operating a cigarette-making machine at its premises is engaged in cigarette manufacturing, and must obtain proper permits.

However, a U.S. District Court in Ohio filed a temporary restraining order preventing the federal bureau from enforcing the provisions outlined in its decision. Local and state governments across the country have been working to craft legislation that would deem RYO businesses cigarette manufacturers.

Barack July 06, 2012 at 08:12 PM
The laws should be made to help people. As you mentioned there are thousands of people associated with this industry now and there are tens of thousands perhaps who have budgeted their incomes based on their savings of Roll your own. All these people will be in trouble once the bill is signed by president Obama. Many of these people were unemployed before the start of RYO industry and there is a possibility that several people might be getting assistance from their respective states before rolling their own as they could not make both ends meet while buying tailor made cigarettes. Talking from a business owners perspectives, these business owners invested their savings of several years to start this business while complying with laws. Once the business has started the new laws should not be implemented so quickly, they should be given a chance to atleast get their investments back so they can invest their money in other businesses otherwise all their investments will be dumped as these very expensive machines will be not more than a box. This will be a non-productivity for our nation's economy. We need these business owners to keep on investing money, this will help our economy.
Mark Braun July 06, 2012 at 10:06 PM
I have my own machine and prefer handrolled ones with a cardboard tip. Old school
TOM July 07, 2012 at 11:51 AM
WE NEED TO PUT THE TAXING PARASITES OUT OF BUSSINESS IN NOVEMBER STARTING IN THE WHITEHOUSE EMPTY IT FUMEIGATE IT START OVER!!
Ric Bell July 08, 2012 at 10:44 AM
Here we go again with the government infringing our rights to choose. When will people realize and stand-up for our rights. No, we sit on our butts and let others choose for us....hogwash ! I have found that when I roll my own with a cigarette machine----the tobacco is not evenly distributed thoughout the tube. When a machine at a tobacco store rolls the tobacco, there is a more even distribution.
LYNNHAMPTON July 08, 2012 at 01:38 PM
I DON'T SEE ANY NEW TAXES ON ALCOHOL--COULD BE THEY ARE ALL DRUNKS IN WASHINGTON. MORE PEOPLE DIE FROM ALCOHOL RELATED DEATHS THAN CANCER. PEOPLE DIE FROM CANCER WITHOUT EVER SMOKING OR BEING AROUND SMOKERS. IF EVERYONE QUITS SMOKING--THEY WILL BE TAXING THE AIR YOU BREATHE. WHERE IS THE FREEDOM OUR TROOPS ARE PAYING SO DEARLY FOR? THE CONSTITUTION DOESN'T APPLY ANYMORE, JUST ALL THE AMENDMENTS THEY HAVE ADDED. OUR FORE-FATHERS ARE DOING CARTWHEELS IN THEIR GRAVES OVER OUR LACK OF FREEDOM
Dan Tha Man July 09, 2012 at 03:20 PM
Does anyone know how this was attached to the federal highwaybill, specifically which congressmen sponsered and cosponsered this bill ?
Bruce S. July 09, 2012 at 04:52 PM
Excellent!

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