48
TOBACCO OUTLET BUSINESS
SEPTEMBER/OCTOBER 2012
“
We heard that this might be the
way to go with RYO now—a club
situation as opposed to vending to
the public. If that could work out, I’m
still interested,” he tells
TOB
.
Jacobs and his partners recently
opened the retail business for the
profit they thought they could make
with commercial RYOmachines. But
even before the recent legislation,
it hasn’t been easy to get it off the
ground. Cartons for Less purchased
one commercial RYO machine and
paid a “territory fee” to the tune
of about $19,000 back in May (a
territory fee guarantees that the
manufacturer won’t sell another
machine to a nearby competitor). At
press time, Jacobs still hadn’t received
anything from the manufacturer,
which he does not want to name
because of a possible pending lawsuit.
He says he was told it was delayed
due to a “machine malfunction.”
With the new legislation in place, he
says he is having trouble even getting
a call back from the company.
Retrench & Refocus
But rather than shutting down,
Cartons for Less is biding its time
by focusing more on a hookah
lounge and hookah accessories. “It’s
not nearly as lucrative as what we
expected with the RYO machines,
but we wanted to run a smoke
shop, so that’s what we’re doing,” he
reports. “We took a risk when we did
this; we knew it wasn’t going to be
easy.”
To the best of Haynes’ knowledge,
no commercial RYO machines have
been sold since July 6. However,
the word on the street is that some
machine companies report to be
selling more than before—some
“
entrepreneurs” are choosing to beat
the legislation by taking matters
into their own hands and putting
machines in their own garages.Thus,
the black market/RYO underground
has reportedly begun.
It seems when the government
overreaches, the resulting human
response is to circumvent. Some in
the tobacco industry are in favor
of commercial RYO machines,
others are competitively against it.
But all should be behind a more
level playing field where big business
cannot bully the small business
man.
TOB
“
We heard that
this might be the
way to go with
RYO now—
a club situation
as opposed to
vending to the
public. If that
could work
out, I’m still
interested.”
