As the legislative session winds to a close this week, the New York Association of Convenience Stores is making a final push for legislation that essentially would put roll-your-own cigarette stores out of business. The chances of passage aren’t looking so great—neither house has passed the legislation.
The bill would classify roll-your-own cigarette stores as manufacturers, which are subject to higher taxes. The association put out a statement Friday that said there is a “desperate need” for New York to regulate commercial roll-your-own cigarette machines.
“The Senate and Assembly must act now to stop the spread of unregulated RYO shops, before they do more damage to law-abiding retailers, New York taxpayers, and public health,” James Calvin, president of the organization, said in the statement.
Calvin said Arkansas, Connecticut, Iowa, Idaho, Illinois, Michigan, Oklahoma, South Dakota, Tennessee, Vermont, Virginia, Washington, and Wyoming all have either enacted, or are in the process of enacting, legislation to require commercial roll-your-own shops to abide by the same rules as other tobacco retailers.
“This is not about trying to put anyone out of business,” he said. “Rather, it is about holding everyone in the cigarette retailing business to the same standards. It’s only fair.”
State Attorney General Eric Schneiderman has filed two lawsuits, one jointly with New York City, against several roll-your-own stores. The lawsuits allege the stores violate law and regulatory statutes.
Roll-your-own cigarette stores refute the argument that they are manufacturing cigarettes. They sell pipe tobacco to customers, but the customers operate the machines.
Locally, there are several shops in Rockland County. A roll-your-own store in New Rochelle recently went out of business. Smokers can buy inexpensive pipe tobacco in the store and operate a machine that takes the tobacco and tubes and spits out a carton’s worth of cigarettes. The process takes about 10 minutes. Taxes on the loose tobacco are very low compared to cigarettes, so smokers save hundreds or thousands of dollars a year.
The federal government increased the excise tax on a pack of cigarettes to $1.06 per pack in 2009, along with similar hikes on roll-your-own tobacco and small cigars. The excise tax was for roll-your-own tobacco was set at $24.78 per pound. That prompted a shift toward using pipe tobacco, whose excise tax is $2.83 per pound, for roll-your-own cigarettes. New York has an excise tax of $4.35 per pack of cigarettes.
The federal Centers for Disease Control and Prevention estimated that New York lost $16.9 million on potential tobacco tax revenue between April 2009 and August 2011. Another recent report, published by the Government Accountability Office, estimated the market shift cost the fedral government between $615 million and $1.1 billion between April 2009 and September 2011.