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    Roll-Your-Own Machines Draw Legal Attention

    West Virginia is the latest state to take a closer look at RYO machines and the issue of taxation.

    CHARLESTON, W. Va. -- The West Virginia Attorney General's office is taking a closer look at the roll-your-own cigarette machines that have been popping up in retail shops across the state.

    The West Virginia Department of Administration brought what it calls a "new phenomena" to Attorney General Darrell McGraw's attention in a letter dated June 24. According to The West Virginia Record, the letter stated that customers can buy bulk tobacco and rolling papers, then roll their own cigarettes in hand-cranked machines.

    "Purchasing cigarettes in this manner allows the customer to circumvent state cigarette tax," Administration Secretary Robert Ferguson wrote. "To the extent that this practice impacts your ability to work with the tax department to collect revenue pursuant to the Tobacco Master Settlement Agreement, it was the hope of the [Tobacco Settlement Finance Authority] that bringing it to your attention would be helpful to your office."

    In response, the attorney general's office stated it was aware of the roll-your-own machines and has been "engaged in active litigation with respect thereto for the past six months," Managing Deputy Attorney General Barbara Allen wrote in a letter dated June 27.

    Roll-your-own machines have been on the radar of officials in several other states as well, including New Hampshire. The states argue that by rolling their own, customers avoid paying the state's cigarette tax like they do when they purchase a pack or carton of cigarettes.

    Last month, the New Hampshire Supreme Court ruled against a tobacco shop in a case that saw officials arguing that roll-your-own machines jeopardized approximately $50 million in annual tobacco payments to the state. In an unanimous ruling , the court agreed with an earlier Superior Court decision that said Tobacco Haven must either shut down the machines or ensure the state gets per-cigarette tax payments established as part of a 1998 settlement regarding health-related costs from smoking, according to the Nashua Telegraph.

    Tobacco Haven had argued that because customers roll their own cigarettes with tobacco and papers they bought at the store, they should be exempt from the payments.

    This legal battle dates back to August 2009 after Tobacco Haven installed the machines and drew crowds of customers. The state quickly filed suit, asking that the company either stop using the machines or make sure the escrow payments, of roughly 50 cents per 20-cigarette pack, were made.

     

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