Jeffrey Armstrong is a soft-spoken guy, of evident Caribbean origin. He\u2019s the owner and sole proprietor of \u201cThe Smoke Zone,\u201d a rented storefront next to the Quizno\u2019s on Rancho Boulevard just north of Charleston — though it\u2019s one of several similar \u201cRYO (Roll Your Own) Filling Stations\u201d in Southern Nevada.<\/p>\n
The basic pitch? Cheap cigarettes.<\/p>\n
The brunette pays about $28 per carton at the Paiute tribal smoke shop, on the reservation north of town, for Smokin\u2019 Joes, which are relatively loosely packed and thus fast-burning. Quality control? A little spotty.<\/p>\n
Armstrong advertises cartons at $21 plus change, and contends the machine in his shop can pack your cigarettes at varying degrees of firmness, generally creating a cigarette that will burn at least twice as long as a Smokin\u2019 Joe, \u201cso you actually smoke less, which saves you even more money.\u201d<\/p>\n
I called the Wal-Mart Supercenter on West Charleston. A carton of Marlboro \u201c100s\u201d now costs $49.70, there.<\/p>\n
I don\u2019t smoke. Armstrong said the regulations governing tobacco distribution are such that he was reluctant to hand the brunette a free sample, but a customer who was in the process of \u201crolling her own\u201d carton cheerfully handed one over. The brunette found it a bit harder to draw than her usual brand, leading to the discussion of the ability to adjust the cut of tobacco going through the machine, the higher relative humidity of the pipe tobacco going into the machine, and most of all the tightness with which the tobacco is packed.<\/p>\n
Ah yes, the machine.<\/p>\n
It dominates the waiting area of the small shop, a red steel rectangle the size of an upright piano.<\/p>\n
Armstrong insists he neither manufactures nor sells cigarettes — a legal fine point the importance of which will soon become obvious.<\/p>\n
\u201cI sell you the tobacco,\u201d he says, holding up a big Zip-loc plastic bag that looks to hold about half a kilo of the brown shag. \u201cAnd I sell you this empty tubes,\u201d he says, taking down from the shelf and displaying a carton of filter cigarettes that turn out to be, well, empty.<\/p>\n
The buyer then dumps the tobacco in the chute at the top of the machine, pours the empty paper tubes in the side, punches a few buttons of the video control screen, and — voici! — the machine goes to work chopping the pipe tobacco, spitting it into the little paper tubes one at a time, and dropping them into a tray down below, where the purchaser gathers up the finished cigarettes and packs them neatly back into the cardboard carton.<\/p>\n
Processing a carton\u2019s worth appears to take about 10 minutes.<\/p>\n
\u201cI never touch the tobacco or the cigarettes,\u201d Armstrong smiles. For a small fee to use his machine — included in the per-carton price — you\u2019ve just \u201crolled your own.\u201d<\/p>\n
Why are they so much cheaper? The rough-cut \u201cpipe\u201d tobacco is taxed at a lower rate. The federal government imposes a hefty tax on cigarette \u201cmanufacturers,\u201d which is not paid by those who \u201croll their own.\u201d<\/p>\n
The entrepreneurs responsible for the \u201cRYO Filling Stations\u201d discovered a niche in the law, and introduced their cost-saving service.<\/p>\n
Needless to say, \u201cBig Tobacco\u201d was not pleased.<\/p>\n
\u201cNow lawmakers, backed by Big Tobacco and convenience-store chains, want to declare such shops to be manufacturers,\u201d reported Mike Esterl in the Wall Street Journal, March 16. \u201cThat would subject them to the same taxes and regulations as the broader cigarette industry, likely snuffing them out.<\/p>\n
\u201cHundreds of such shops — mostly or entirely focused on the roll-your-own machines — have opened since 2009, when Congress increased the federal excise tax on a carton of 200 cigarettes to $10.066 from $3.90 and hiked the tax on a pound of roll-your-own cigarette tobacco to $24.78 from $1.0969,\u201d the Journal reports. \u201cThe tax for a pound of pipe tobacco rose only to $2.8311 from $1.0969.\u201d<\/p>\n
Needless to say, Big Tobacco doesn\u2019t employ all those lobbyists so they can just sit back and let something like THIS transpire.<\/p>\n
Under a Senate bill passed a few days before Esterl\u2019s piece ran in the Journal, \u201cAny retailers making roll-your-own machines available to customers would be treated like mainstream cigarette manufacturers. The provision was included in a rural school financing amendment tucked inside the federal surface transportation bill, which still needs House approval.\u201d<\/p>\n
\u201cRoll-your-own cigarette machines take advantage of an unintended tax loophole, and that isn\u2019t right,\u2019\u2019 said Sen. Max Baucus, D-Mont., who chairs the Senate Finance Committee and sponsored the amendment. Rep. Diane Black, R-Tenn., introduced a separate bill, House Resolution 4134, amending the definition of a tobacco manufacturer to include \u201cany person who for commercial purposes makes available for consumer use a machine capable of producing tobacco products.\u201d<\/p>\n
Governors in Virginia, South Dakota and Wyoming signed similar bills this spring. In New York, state and city authorities in March filed lawsuits against a handful of roll-your-own retailers for allegedly circumventing taxes and regulations — despite the fact ready-made cigarettes still control more than 95 percent of the market.<\/p>\n
RYO Machines LLC of Ohio, the largest maker of the machines, has hired its own lobbyists and lawyers. \u201cThe company and affected tobacco shops say they have no way of complying with the regulatory requirements of being a cigarette manufacturer,\u201d The Journal reports. \u201cThey say they haven\u2019t broken any laws and that large tobacco companies are trying to extinguish competition.<\/p>\n
\u201cI\u2019m David fighting Goliath,\u2019\u2019 said Phil Accordino, part-owner of Girard, Ohio-based RYO Machines, which began manufacturing the nearly five-feet-high machines in 2008. The company has sold about 1,900 machines to tobacco shops in more than 40 states, including roughly 1,000 last year. Stores pay a bit more than $30,000 for each machine, which takes two to three seconds to roll a cigarette — roughly a thousand times slower than machines at big cigarette manufacturing plants.<\/p>\n
\u201cThe transportation bill was a very, very dastardly way to come at us with attaching this type of an amendment to the bill, a bill that\u2019s very necessary for Congress to pass, as far as the road projects,\u201d says Accordino.<\/p>\n
\u201cEveryone understands how backhanded this was, but that\u2019s the way they play.\u201d<\/p>\n
If legislation requires small business owners to pay the full amount of taxes on roll-your-own cigarettes and pass the cost to customers, \u201cWe\u2019d be out of business,\u201d Matt McCune, co-owner of M&M Tobacco in Middletown, Ohio, told the local Middletown Journal.<\/p>\n
The Alcohol and Tobacco Tax and Trade Bureau declared in 2010 that retailers with roll-your-own machines are manufacturers, but RYO secured a preliminary injunction in a federal court in Ohio. RYO also has won injunctions in a handful of states, including Connecticut and Wisconsin.<\/p>\n
The likelihood they\u2019ll win in the end? Come on.<\/p>\n
THIS AIN\u2019T LAISSEZ-FAIRE CAPITALISM<\/p>\n
Two major things are worth noting, here. First, if the big tobacco merchants were true laissez-faire capitalists, their reaction would have been \u201cTaxes so high that they discourage customers from buying our products are inherently anti-business. The solution is to lower OUR taxes so we can sell for the same, lower price.\u201d<\/p>\n
That would have been a harder sell, of course. Tobacco Prohibition zealots would have shrieked at the notion of generally cheaper cigarettes, and then there would be the predictable lies about what such a tax reduction would \u201ccost\u201d government. (Lower tax rates impose no \u201ccosts\u201d on government — they simply reduce government revenue, which would require the abandonment of some of Washington City\u2019s most senseless and costly regulatory boondoggles, which would be A Good Thing.)<\/p>\n
Instead, in a move so predictable that we hardly notice, Big Tobacco took the opposite stance, holding that high taxes and regulations are so good that they should be imposed on everyone.<\/p>\n
Recall that, back in the 1930s, major American business organizations sang the praises of the \u201cindustrial policies\u201d of Fascist Mussolini and even Adolf Hitler. \u201cFascist\u201d and \u201cNazi\u201d have become randomly used hate-words applied to any smaller-government conservative, these days, but the defining policies of those regimes had less to do with jackboots and goose-stepping thugs than an economic policy that allowed the rich Junker class to retain title to their corporations and their profits, so long as they would tolerate close government regulatory supervision and \u201cdirection.\u201d<\/p>\n
Corporate owners grew happy in these \u201cbusiness-government partnerships\u201d not because they allowed healthy competition, but because they stifled it. Costs might go up, but those tax- and regulatory costs could be safely passed along to consumers so long as upstart competitors were nipped in the bud by a regulatory state whose onerous mandates could be met only by established outfits with scores of lobbyists, lawyers, palm-greasers and bag men already on the payroll.<\/p>\n
Big Business and Big Government working hand-in-hand to stymie the \u201ccreative destruction\u201d of true capitalism, ain\u2019t capitalism. It\u2019s nothing like the ideal laissez-faire economic system — a free market restrained only by courts to punish theft and fraud — that America approached in the 19th century, but from which we have been radically diverging since 1913.<\/p>\n
Instead, it\u2019s an economic system which the dictionaries recognize as \u201cFascism,\u201d or \u201cState Socialism.\u201d<\/p>\n
The second thing worth noting about the likely squashing of the Roll-Your-Own shops — which will probably resemble the dramatic conclusion of the animated short subject \u201cBambi Meets Godzilla\u201d?<\/p>\n
Our politicians say they\u2019re desperately searching for ways to \u201ccreate jobs.\u201d The RYOP entrepreneurs came up with $30,000 apiece to buy these rolling machines, then probably invested twice that much again in rent, advertising, business licenses, and everything else our hostile modern regulatory state now requires.<\/p>\n
Yet the minute Mr. Tobacco Lobbyist rang Your Favorite Congresscritter, it was \u201cShut down a thousand-odd small businessmen, crush their dreams and throw them back on the street? Yes, Sir, Yes sir, three bags full!\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Jeffrey Armstrong is a soft-spoken guy, of evident Caribbean origin. He\u2019s the owner and sole proprietor of \u201cThe Smoke Zone,\u201d a rented storefront next to the Quizno\u2019s on Rancho Boulevard just north of Charleston — though it\u2019s one of several similar \u201cRYO (Roll Your Own) Filling Stations\u201d in Southern Nevada. The basic pitch? Cheap cigarettes. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[17,13,18,9,16],"tags":[],"class_list":["post-1022","post","type-post","status-publish","format-standard","hentry","category-big-brother","category-drug-war","category-economics","category-taxation","category-welfare"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/pWqFl-gu","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts\/1022","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1022"}],"version-history":[{"count":4,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts\/1022\/revisions"}],"predecessor-version":[{"id":1030,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=\/wp\/v2\/posts\/1022\/revisions\/1030"}],"wp:attachment":[{"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1022"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1022"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vinsuprynowicz.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1022"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}