ALBANY, N.Y. - New York convenience store operators today applauded the initiative of state and local officials to halt the expansion of "roll-your-own" cigarette shops that are circumventing laws relating to taxation, public health and fire safety.

State Attorney General Eric Schneiderman and New York City Corporation Counsel Michael Cardozo yesterday announced they are suing two more RYO shops that dodge cigarette taxes and regulations by claiming they don't technically sell cigarettes, but merely facilitate their customers' use of an on-premise, self-serve cigarette rolling machine.

"We're grateful to Mr. Schneiderman and Mr. Cardozo for confronting the RYO nuisance head-on ?" by putting violators out of business unless they play by the rules," said Jim Calvin, president of the New York Association of Convenience Stores (NYACS), in a press release. By contrast, he said, state budget negotiators are currently considering an RYO plan focused on collecting more tax revenue, without addressing the double standard on enforcing myriad regulations governing cigarette retailing.

By hiking the excise tax on all loose tobacco as much as 800%, that plan would inflict collateral damage on legitimate retailers of take-home pipe and leaf tobacco. "If a tax hike quadruples the price of someone's favorite brand of pipe tobacco, he's not going to quit smoking, he's just going to quit coming to his local convenience store to buy it," said Calvin.

"He will quickly discover that while New York wants to charge him $27 in tax on a six-ounce bag, Pennsylvania, Internet vendors, and tribal stores charge zero tax on the same product. Consequently, tax-collecting, law-abiding New York retailers will lose those customers, and the state and counties will lose all that tax revenue. Has New York State learned nothing from the cigarette tax evasion epidemic it created over the past 12 years through hyper-taxation?"

The better solution is for the Legislature to declare on-premise RYO activity what it really is ?" cigarette manufacturing, making it subject to the same taxes and regulations as pre-packaged cigarettes. A state bill to do that (S.6476 Libous/A.9085 Dinowitz) has been introduced and has widespread support, including NYACS.

Connecticut, West Virginia, Virginia, New York, and Wyoming have recently targeted the RYO machines, as they produce cigarettes at retail businesses that do not incur the same taxes as traditionally packed cigarettes.

Read more about RYO in the January issue of NACS Magazine.

What NACS Is Doing
At the federal level, U.S. Rep. Diane Black (R-TN) introduced H.R. 4134, a bill that would close a loophole in the Internal Revenue Code relating to the installation of RYO cigarette manufacturing machines at retail locations. The legislation would only apply to cigarettes manufactured through these machines after the bill is enacted, so it would not retroactively punish retailers who have been utilizing these machines by forcing them to pay taxes on goods they have already sold.

NACS is encouraging members of Congress to support bill, which would simply clarify that retailers who permit consumers to use commercial RYO cigarette machines to produce cigarettes are classified as "manufacturers" of tobacco products.

Next week, retailers will be discussing this and other key industry issues with House and Senate members and their staff during NACS Day on Capitol Hill.

Be sure to follow the event on the NACS Twitter and Facebook social media pages.