Smoke shop owners are feeling the heat in Michigan as 300 shops received warnings in March from the Michigan Department of the Treasury, according to the Detroit News.
Using an "automated roll-your-own machine," which the Department of the Treasury claims amounts to the illegal manufacture of cigarettes.
The smokes from the machine can be up to 50% cheaper than buying brand name cigarettes.
From the Detroit News:
Every day in a dozen or so Metro Detroit smoke shops from Westland to Waterford, tax-weary, recession-wracked smokers create their own cartons of cigarettes for half the $60 they'd pay for manufactured name brand smokes.
Thanks to a $30,000 automated roll-your-own machine from an Ohio manufacturer and a bargain tax rate on pipe tobacco created by Congress, smokers can take a box of pre-made cigarette tubes, 8 ounces of tobacco and 15 minutes to produce a carton of freshly rolled cigarettes for under $30 — less than just the federal and state tobacco taxes they would pay for a pre-made carton.
Although the machines have been around for years, state and federal tax officials now are trying to stub out the controversial RYO Filling Machine that automates the cigarette rolling process.
In March, the Michigan Department of the Treasury warned 300 smoke shop owners that using the machine on their premises constitutes the illegal manufacture of cigarettes. That follows a similar federal ruling, which has been stayed by a restraining order filed by the machine manufacturer, RYO Machine Rental LLC of Girard, Ohio.
Even if the RYO machines are banned, the low tax rate on pipe tobacco means plenty of smokers will continue to light up on he cheap.
In 2009, Michigan received $985.6 million in tax revenue from cigarettes, as opposed to $55.9 million from non-cigarette tobacco products, including pipe tobacco.
-Brian Short, Michigan Radio News