Discount Smokes to shut down roll-your-own machines in face of new federal law

Discount Smokes to shut down roll-your-own machines in face of new federal law

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A provision of the federal highway bill passed on Friday has prompted the owners of eight Discount Smokes stores, including ones in Portage, Reedsburg and Sauk City, on Sunday to stop running their centerpiece roll-your-own machines.

"As of midnight Saturday to be in compliance with the law, we will not be running the large rolling machine," co-owner Lon Chester said Friday evening.

The stores' business model was to rent time on jukebox-size rolling machines that could crank out 200 "smokes" in about 10 minutes. Each customer was required to handle machine operation so that the owners would not be considered manufacturers. In turn, customers could expect to pay about half the price of a store-bought cigarette carton.

Section 10122 of the federal highway bill undercuts that model by declaring owners of such machines to be manufacturers and thus subject to higher taxes on the product and the need for a manufacturer's permit. The Wisconsin Department of Revenue last year made a similar ruling, and RYO stores across the state shut down for two weeks until a restraining order allowed them to reopen.

The bill passed the House of Representatives on Friday with a 373-52 vote. Minutes later, it cleared the Senate, 74-19.

Chester said his stores will stay open for the next couple of weeks in the hope that a similar restraining order against the federal law will be made.

"We figure in two weeks we'll be back up and rolling," he said. "We are telling our customers to check back every two to three days."

His stores started opening last spring. By now, he said, each has a couple thousand regular customers of the RYO machines.

"If this restraining order does not go through," he said, "then we would be probably looking at closing a few stores."

RYO Machine LLC of Girard, Ohio, which manufacturers the RYO Filling Station machines each store uses, has stopped reloading machines because of the new federal legislation, according to the company's website.

"We are disappointed in the recent legislative initiative to limit our business model and hope that many of you successfully transition into permitted manufacturers under the new law," President Phil Accordino said in a statement on the website.

The company recently said there were more than 1,000 of its machines in operation across the nation.

Jeff Larsen, who owns Holy Smokes in Tomah, one of the first RYO stores to open in Wisconsin, said that while he planned to keep his three stores open long enough to see whether the federal legislation will stand, he knew some of the stores under the Holy Smokes name would have to close soon.

"I really think it's going to hurt us bad," he said. "This is the best time of year for us."

Wayne Johnson, another Holy Smokes owner, said he began to deal with the new law by cutting store hours.

"We're going to ride the storm out for right now," he said.

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