Tobacco tax tucked into transportation bill
A change in federal rules makes so-called "roll your own" cigarette shops subject to the same taxes and regulations as larger cigarette makers.
Tess Vigeland: This will come as a surprise to exactly no one, but that giant transportation bill passed by Congress last week has some elements that don't involve transportation.
One example: It changes the definition of a tobacco manufacturer to include businesses that let smokers "roll their own" cigarettes. As Marketplace's David Gura tell us, the change means convenience stores and other "little guys" in the tobacco business now face the same taxes as big tobacco.
David Gura: A “roll your own” machine is the size of an ATM. It’s even got a touchscreen. Here’s a web ad for one of them, called the Freedom Filler.
Fredom Filler ad: We’ll insert the tubes, pour our tobacco into the hopper, press the “start” button, and now we’re ready to roll high-quality cigarettes. It’s just that simple.
It can make the equivalent of carton of cigarettes in eight minutes.
Steve Marascia is an analyst with Capital Securities Management. He says “roll your own” machines became popular as the price of a pack of cigarettes went up.
Steve Marascia: The tobacco tax in essence has helped push people toward this, where you can get cheaper cigarettes.
Tobacco companies have argued these cigarettes should be treated like any other. Philip Morris told us today that means they should be taxed, and regulated by the FDA. That’s bad news for Phil Accordino. He runs RYO Machines -- “RYO,” like “roll your own.”
Phil Accordino: This is the end of our business. There is no strategy going forward. This is the law.
He says shops that own these machines are retailers, not manufacturers. The machines, he says, are like coffee grinders at the grocery store.
Samantha Shepherd works at Let’s Roll Tobacco, in Bay City, Mich. She says she thinks the store will stay open, but it’s taking a big hit.
Samantha Shepherd: We had to let go four workers; so that’s four jobs.
The machines, Shepherd says, are sitting in the store, unplugged.
In Washington, I'm David Gura for Marketplace.