WASHINGTON - An amendment attached to the federal highway measure changes how roll-your-own (RYO) tobacco shops operate, which would effectively make those stores tobacco manufacturers and thus liable for federal excise taxes, The Wall Street Journal reports.
President Obama is expected to sign the bill into law. In April, the U.S. Government Accountability Office projected that RYO cigarettes had lowered federal income by $492 million between April 2009 and September 2011, writes the newspaper.
Congress approved the amendment last week after NACS lobbied that the shops were not following the same regulations as cigarette manufacturers and sellers, which created an uneven marketplace without market certainty. Shop owners countered that retailers and the tobacco industry just wanted to get rid of competition.
RYO shops sell customers "pipe tobacco," which they then pour into RYO machines to make cigarettes. Supporters of the amendment pointed out that RYO shops have reaped the benefit of higher tobacco taxes.
"We applaud Senate Transportation Subcommittee Chairman Max Baucus for inserting language into the Senate transportation bill that will prevent tax evasion by roll-your-own tobacco retailers," Said NACS Legislative Committee Chairman Brad Call of Maverik Inc.
Two years ago, the Alcohol and Tobacco Tax and Trade Bureau ruled that RYO machine shops were tobacco manufacturers, but RYO Machines company went to court and received an injunction on that decision.
For more on RYO, read "Roll Your Own Profits" in the January 2012 NACS Magazine.