Congress OKs AWMA-Backed RYO Regulation Language
Legislation AWMA supported to classify retailers who offer "roll-your-own" (RYO) machines to their customers as "manufacturers" was approved Friday, June 29 by the U.S. House of Representatives and the U.S. Senate. The provision was included as part of the bipartisan Highway bill conference report, HR 4348, and will take effect as soon as President Obama signs it into law.
The new restrictions could force hundreds of tobacco shops that let smokers roll their own cigarettes on commercial machines to go out of business, according to The Wall Street Journal (subscription required). "Roll-Your-Own Smokes Shops to Close Under Feds' New Rules," reads the headline in the Pittsburgh Tribune-Review.
AWMA lobbied in favor of this RYO issue during our annual "AWMA Day on the Hill" event in May. In meetings with over 60 legislators, our members urged lawmakers to codify an Alcohol and Tobacco Trade and Tax Bureau (TTB) ruling that deemed proprietors of retail establishments that "rent" RYO machines to consumers to be "manufacturers" of tobacco products and thus subject to enhanced regulatory requirements associated with being a manufacturer.
AWMA was joined by many others in the industry – including NACS and NATO – in supporting this effort to codify the TTB ruling. The passage of this RYO language will ensure much-needed market certainty and will promote a more level competitive playing field. In addition, this legislation ensures there will be no liability for such back taxes and does not address any increase in tobacco taxes.
The actual language adopted by the House-Senate conference committee is below:
SEC. 100122. ROLL-YOUR-OWN CIGARETTE MACHINES.
(a) IN GENERAL.—Subsection (d) of section 5702 of the Internal
Revenue Code of 1986 is amended by adding at the end the following
new flush sentence:
''Such term shall include any person who for commercial purposes
makes available for consumer use (including such consumer's personal
consumption or use under paragraph (1)) a machine capable
of making cigarettes, cigars, or other tobacco products. A person
making such a machine available for consumer use shall be deemed
the person making the removal as defined by subsection (j) with respect
to any tobacco products manufactured by such machine. A person
who sells a machine directly to a consumer at retail for a consumer's
personal home use is not making a machine available for
commercial purposes if such machine is not used at a retail premises
and is designed to produce tobacco products only in personal
use quantities.''
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to articles removed after the date of the enactment of
this Act.
