Crony Capitalism Kills Another Small Business - Jobs Lost, Consumers Suffer Higher Costs
Roll-your-own cigarette operations to be snuffed out
By BETH KARUSCHAK
LAS VEGAS REVIEW-JOURNAL
A tiny amendment buried in the federal transportation bill to be signed today by President Barack Obama will put operators of roll-your-own cigarette operations in Las Vegas and nationwide out of business at midnight.
Robert Weissen, with his brothers and other partners, own nine Sin City Cigarette Factory locations in Southern Nevada, including six in Las Vegas, and one in Hawaii. He said when the bill is signed their only choice is to turn off their 20 RYO Filling Station machines and lay off more than 40 employees.
"We'll stay open for about another week to sell tubes and tobacco just to get through our inventory, but without the use of the RYO machines, we won't be staying open," he said.
The machines are used by customers who buy loose tobacco and paper tubes from the shop and then turn out a carton of finished cigarettes in as little as 10 minutes, often varying the blend to suit their taste. Savings are substantial - at $23 per carton, half the cost of a name-brand smoke - in part because loose tobacco is taxed at a lower rate.
"These cigarettes are different because there are benefits in saving money and in how they make you feel," said Amy Hinds, a partner who operates the Sin City Cigarette Factory at Craig and Decatur.
"These cigarettes don't have any of the chemicals in them, and the papers are chemical-free, unlike the cartons people buy from Philip Morris."
But a few paragraphs added to the transportation bill changed the definition of a cigarette manufacturer to cover thousands of roll-your-own operations nationwide. The move, backed by major tobacco companies, is aimed at boosting tax revenues.
Faced with regulation costs that could run to hundreds of thousands of dollars, RYO machine owners nationwide are shutting down more than 1,000 of the $36,000 machines.
"I feel it's kind of shaky,'' Wiessen said. "The man who pushed for this bill is Sen. (Max) Baucus from Montana, and he received donations from Altria, a parent company of Philip Morris. Interestingly enough, there are also no RYO machines in the state of Montana. It really makes me question the morals and values of our elected speakers."
Sierra Bawden, a single mom with two kids who started rolling her own smokes at Hind's shop three months ago, said cost is only one factor.
"It saves me time and money, and in the end I feel better because I don't get all of the chemicals that the other cigarettes have," Bawden said. "With the brand-name cigarettes, we pay for the chemicals and the name, and I don't want any of that, so I don't even know what I'll do when the shop closes down."
In Southern Nevada, there are two basic RYO business models: traditional smoke shops that also sell brand-name cigarettes, hookah and smoking paraphernalia, and RYO lounges that sell only loose tobacco and materials.
"Our stores are like lounges where our customers can buy the pieces for the product then roll them by hand or use the machine to make their cigarettes," Wiessen said. "It's a relaxed environment. Rolling a carton of cigarettes by hand can take one person up to three hours."
Even before the bill is signed, Hinds' location on Craig Road was already feeling the pinch. They were to close Thursday because suppliers stopped delivering needed materials last week.
Wiessen and others are attempting to mount a petition drive asking for relief from the new regulations and are talking to lawyers now to explore their options.
"As it stands right now, we'll have no choice but to shut down at midnight on Friday, but we're not giving up," Wiessen said. "We have to see what our lawyers tell us and go from there."
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