43
TOBACCO OUTLET BUSINESS
SEPTEMBER/OCTOBER 2012
W
hile no harsh
ruling
should
surprise anyone
in the tobacco
industry
these
days, the one that came down this
summer on retailers that house the large
RYO machines could be considered a
sneak attack.
Tucked into the federal highway bill
(
the
Moving Ahead for Progress in the
21
stCenturyAct,
aka“MAP-21”) signed
by President Obama on July 6 was an
unrelated provision that broadens the
term “tobacco manufacturer” to include
retail operators of commercial RYO
machines. This bill would essentially
require those retailers to obtain a
federal manufacturer’s permit, post an
appropriate bond and be responsible
for paying federal excise taxes on
the cigarettes the machines produce,
meaning those cigarettes would be
taxed at the same rate as packaged
smokes, according to several industry
reports.
The unofficial word is that Big
Tobacco financially backed the rider
to the transportation bill for obvious
competitive reasons.
Rolled Over
For many retailers who got into
business solely to operate these
machines, it was a devastating blow.
By mid-August, nearly 400 such small
businesses had gone out of business,
with the prospect of about 1,000
in total being wiped out across the
country, according to Bryan Haynes,
a partner in the law firm Troutman
Sanders, which represents all segments
of the tobacco industry. “The fact that
this bill didn’t even have a hearing
would strike most people as unfair,”
Haynes asserts.
“
Neither this amendment nor the
associated funding mechanismwas ever
debated on the floor or in committee,
nor was any hearing ever held,” adds
Phil Accordino, president and CEO of
RYO Machine, in a public statement.
A transportation
bill and subsequent
Appeals Court
ruling slap the large
RYO machine
business into limbo.
But this wouldn’t be
the first legislative
blow from which a
profitable segment
of the industry found
recourse.
Rollers
Halt to
a Hold
