Michigan Senate passes tax on roll-your-own cigarette shops

A bill to increase taxes on Michigan’s roll-your-own cigarette retailers was passed today by the State Senate. 

The bill would require the shops to pay a $2 per-pack state tax – the same as packaged cigarettes.

It would also classify the shops as manufacturers.

Patrick Brazil owns the “That’s How We Roll” tobacco shop in Lansing.

He says the bill will cost jobs and lose revenue for the state.

Brazil also says such a law would force him out of business  because he couldn’t become a manufacturer, even if he wanted to.

"The federal government doesn't recognize us as a manufacturer, therefore we can't get a manufacturer's license," Brazil says. "So when the Vendor's Association says we can get one, they're mistaken. We don't qualify."

Brazil says even if they could get a license, the 32 roll-your-own shops in Michigan would have to move out of retail-zoned areas.

Sen. Roger Kahn sponsored the bill, which applies to cigarette tobacco. He says the state loses $3 million to $4 million dollars in revenue to the roll-your-own industry.

Kahn also accuses  the shops of buying cigarette tobacco, and relabeling it as pipe tobacco, which has a lower tax rate.

When asked how he knew this, Kahn abruptly ended the interview.

Brazil denies Kahn's accusation.  He claims big tobacco companies are behind the legislation to kill competition.

Tobacco shop customers use machines that produce about 24 cigarettes per minute.  Brazil says he charges $29.95 per carton -- the equivalent of 10 packs --  including taxes.

Large cigarette manufacturers turn out about 20,000 cigarettes per minute. A carton of brand-name cigarette sells for more than $60 in Michigan.

Brazil says the bill was passed despite ongoing federal and state litigation.