COLUMBIA — Roll On Premium Smokes will roll its last cigarette this week, as a new federal highway spending bill containing a short provision regarding roll-your-own smoke shops is signed into law.
Tacked onto the 252,161-word omnibus bill, the 175-word Section 100,122 has Roll On owner Bruce Hendren fuming and is cause for concern for 32 roll-your-own shops in Missouri and more than 1,000 nationwide. The section amends a portion of the Internal Revenue Code of 1986 to classify those who own roll-your-own cigarette machines as manufacturers rather than retailers.
"On page 520, there's a paragraph about yea big that classifies businesses like mine as a manufacturer (of tobacco)," Hendren said while puffing a cigarette and holding up his fingers to illustrate the brevity of the provision. "They call us a manufacturer, but they won't give us an avenue to play by the rules."
Known as MAP-21, or Moving Ahead for Progress in the 21st Century, the bill includes provisions dealing mainly with federal highway spending, but also addressing tobacco and college student aid.
President Barack Obama is expected to sign the bill into law Friday. By classifying roll-your-own cigarette businesses as manufacturers, it would require them to place warnings on packages, obtain new permits for operation and pay an excise tax on cigarettes created in store.
Senate Finance Committee Chairman Max Baucus, D-Montana, explained the new tobacco law in a news release last week.
"Under current law, there is a disparity in the tax treatment of cigarette tobacco and pipe tobacco," Baucus said. "This creates a loophole for in-store roll-your-own cigarette machines to avoid the standard cigarette tax by improperly labeling a product as pipe tobacco. The proposal would expand the definition of a tobacco manufacturer to include businesses operating a roll-your-own machine. As such, the machine’s owner would be responsible for federal excise taxes on the tobacco products manufactured using his or her machine."
Hendren has made the rolling machine the centerpiece of his business at the eastern end of Broadway in downtown Columbia. The machine allows customers to roll 200 cigarettes in about eight minutes and at about half the cost of store-bought cigarettes.
Hendren opened his business on June 28, 2011. The bill was finally approved by the Senate and sent to the president exactly one year later.
The machine at Roll On is the only one within 75 miles and one of 32 in the state. Although it cost $32,000, it soon will be nothing more than "a big chunk of wood with a lot of metal parts that don't move anymore," Hendren said.
Customers at his store can pick from 10 different types of tobacco, including four Kentucky selects, two menthols and an organic variety. Most customers mix and match kinds to create their own unique blends.
Over the course of a year, Hendren has built a following of 200 loyal customers who regularly visit his shop to roll cigarettes.
Holly Cass visits Roll On every two to three weeks and uses a blend of two types of tobacco known as gold and red, which the store mixes before she rolls them. Cass prefers the roll-your-own cigarettes.
"These cigarettes are so much better" because of their taste and after feeling, Cass said.
"I just got paid today, so I'm going to stock up on as many cartons as I can afford to buy until they restart business," Cass said. "I'll have to either greatly cut back or consider quitting. I've given up a lot of other bad habits, but this one I just don't want to."
Hendren is not optimistic about the future of his business in its current form.
"I don't see being able to stay in business," he said. "I was just getting to a point where I was turning a profit. I don't know if there's enough of a market in tobacco alone to make it sustainable."
Hendren estimates he can continue for 30 days before he will have to make cuts to his business, including possibly laying off his four part-time staffers.
"We're not opposed to a moderate tax increase on tobacco but opposed to them singling out tobacco and attacking a certain part of the population, especially such an aggressive increase," Hendren said.
U.S. Reps. Vicky Hartzler and Blaine Luetkemeyer, Republicans who represent the 4th and 9th districts, respectively, voted in favor of the bill. Neither was available to directly comment on the vote.
Luetkemeyer's spokesman Paul Sloca issued a written statement.
“Blaine was proud to support the highway bill last week, which provided funding along with needed reforms to federal transportation programs, reauthorized and reformed the national flood insurance program, and prevented student loan rates from increasing," Sloca said. "One of the provisions in the bill responded to a Government Accountability Office report that detailed that the federal excise tax on cigarettes was not being paid on cigarettes manufactured at 'roll-your-own' tobacco shops.
"The highway bill clarifies that all manufactured cigarettes are taxed at the same federal excise rate. This is yet another example of why the complicated maze that is our federal tax code should be reformed and simplified to foster economic growth and lower the burden it imposes on all Americans.”
Roll On will end roll-your-own services on Friday, leaving customers with fewer options and higher prices.
Supervising editor is Scott Swafford.