39
TOBACCO OUTLET BUSINESS
MAY/JUNE 2009
For all intents and
purposes, the big roller
machine business lived
a short, profitable life;
but actually, there are
still a few stragglers
“operating” (non-
commercially) as clubs
now. And then there are
those who turned their
focus around.
By Renee M. Covino
I
t has been more than a year since the large RYO machine business
was essentially steamrolled over—but not quite to its death.
Asmost are aware,the flattening blow came in July of 2012when a
federal highway bill signed by President Obama broadened the term
“tobacco manufacturer” to include retail operators of commercial
RYOmachines (likened to the size of a large appliance, such as a refrigerator
and costing upwards of $30,000 each).
Basically, the new law required those retailers (many of whom got into
business only months before solely to operate the machines) to obtain a
federal manufacturer’s permit, post an appropriate bond, and be responsible
for paying federal excise taxes on the cigarettes produced by the machines. In
other words, those “in-store machine-rolled” cigarettes would be taxed at the
same rate as branded smokes, essentially wiping out huge profit for retailers
and huge savings for consumers—and ultimately, wiping out the short-lived
RYOmachine retail channel.
Of course, not everyone was devastated, least of all Big Tobacco, which
(unofficially) was said to have been the backer of the transportation bill rider
for obvious competitive reasons.
Mixed Emotions
And then there were the competing retailers—both from the tobacco
outlet channel and the convenience channel—who revealed mixed emotions.
Many displayed the sentiment of “good riddance.”
“We never had them and now they’re gone—you bet I’m glad about that,”
states Randy Drott, owner of Town Crier, based in Louisiana.
“They’re gone; thankGod they’re gone for good,”saysTerry Schmitz,zone
leader of Tobacco Outlet Plus, a division ofWisconsin-based KwikTrip Inc.
“We never had them and I was surprised they were around as long as they
were,”adds Shon Ross, vice president of Texas-based Nothin’Butt Smokes.
Other retailers were relieved that they didn’t get involved in a venture they
