Thanks to Congress, a cigarette is a cigarette in Washington state, no matter where it is manufactured, sending the lawsuit brought by roll-your-own stores up in smoke.
Always looking for a less expensive means to continue the nicotine habit, smokers had recently turned to stores with roll-your-own machines. Customers could load their tobacco into a store’s machine, pack it into blank cigarette tubes and walk out with a pack of smoke, sans state tax.
Taking advantage of the tax loophole in state law, more than 60 retailers bought into the RYO technology and began selling cigarettes on average for about $3.45 a pack, a substantial savings over the $9.89 average for pre-rolled smokes.
But the Legislature, eager to recoup its estimated $12 million in lost annual tax revenues, passed a law classifying the RYO-machined butts as cigarettes. It was supposed to go into effect July 1, until a roll-your-own store filed suit claiming the reclassification had not received a two-thirds vote in the Legislature, and that it was a new tax.
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A Franklin County Superior Court judge agreed, setting up the state Supreme Court to finally rule on the constitutionality of voter initiatives requiring a two-thirds vote in the Legislature to increase taxes.
But Congress came to the rescue. The recently approved transportation bill contained a provision defining roll-your-own cigarette shops as manufacturers, subject to all the same taxes as pre-rolled tobacco products. And federal law trumps state law.
It’s unlikely the lawsuit would have succeeded, because the Legislature was merely identifying a new product appropriately, not creating a new tax that didn’t previously exist.
There’s no need to feel sorry for those retailers who invested in the roll-your-own machines. They were consciously flirting with a tax loophole, which they should have known would someday be closed.