Taxing roll-your-own cigarettes

Brew your own beer, make your own wine — should it come as a surprise that smokers are interested in rolling their own cigarettes?

While not yet widely available, the tobacco marketplace is seeing new businesses that provide supplies and equipment enabling customers to create their own tobacco blends and roll cigarettes — as many as 20 per minute.

With the average cost of manufactured cigarettes about $50 a carton (more than $19 of that being state taxes) the $25-carton option is getting attention from new entrepreneurs like Todd Long, who owns Super Smokes. He isn’t subjected to the host of state tobacco-related taxes; and that is what piques the interest of mainstream cigarette distributors and manufacturers, who view these startups as unfair competition.

Rep. Greg Davids (R-Preston) says these new retailers are “manufacturers” and wants to make sure they pay the same taxes as their tobacco counterparts. He also wants assurance the paper being used meets the fire safety requirements. HF2489 would address the issues. The bill has no Senate companion.

The bill was heard in the House Taxes Committee March 14, and while no action was taken, it sparked a lively discussion about the new ways to manufacture and distribute tobacco.

The bill defines “manufacturer” to include those who maintain a machine at a retail establishment that enables someone to roll tobacco.

However, Long, who owns four stores with the rolling machines, emphasized they are not manufacturers, according to the law. If they were, they would be subjected to a host of regulations that would put them out of business.

“We are a retail store. Our customers use the machine, which is about the size of an ATM machine,” he said.

Bill supporters say it’s a matter of fair competition.

“It is very simple. The bill makes sure that those with roll-your-own machines are treated the same,” said Tom Briant, executive director of the Minnesota Wholesale Marketers Association and the National Association of Tobacco Outlets.

Rep. Melissa Hortman (DFL-Brooklyn Park) was among those advocating an equitable tax on the tobacco instead.

“The more I hear about this bill, it is like putting a round peg is a square hole. … They are not manufacturers, and it’s the tobacco that should be taxed.”