Proprietors of roll-your-own (RYO) tobacco shops have found a legal loophole that they believe will revive their business, reported The Times-Union.
The shops, in which smokers buy loose tobacco and use special machines to roll their own cigarettes, had been growing in popularity due to a tax advantage. Since the loose tobacco was taxed differently than that in a manufactured cigarette, the cost was about half.
That meant a smoker in New York, the most heavily taxed state, could get a carton of cigarettes for less than $50, compared to $100 or more that a smoker would pay for manufactured cigarettes, said the report.
But the federal government cracked down on RYO shops last summer, inserting into a transportation funding bill a rule stating the consumer-made cigarettes should carry the same taxes as those with brands names like Marlboro or Kool on the box.
The rolling machines, which cost about $35,000 and are the size of a large appliance such as a coin laundry dryer, shut down.
But in some locations, including the Tobacco Roll store in Clifton Park, N.Y., the machines have started up again, according to the report.
To use the machine, customers now pay $5 to join a smoking club, Renia Liu, who helps run the family-owned business, told the newspaper. Because the machines are technically owned by the club and not the store, she said customers can buy their tobacco and then rent the machine for $12.50.
Liu said the club plans to donate the proceeds from the machine rentals to local schools or charities.
The club, which has several affiliates, is called the “Freedom Club.”
“We’re still just selling loose tobacco,” Liu said, stressing that the store no longer owns the machines.
Tobacco control organizations said that they consider such clubs a “tax dodge” and plan to fight the legitimacy of the clubs, which have popped up in locations from Staten Island to Massachusetts, the report said.
The report noted that there are now websites touting RYO clubs such as the MYO Smokers Club, whose site says: “Was formed by people who share a common interest in blending tobacco and making cigarettes for the own personal use and consumption.”
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