RYO Industry Fights New Washington State Levy

OLYMPIA, Wash. -- The roll-your-own (RYO) tobacco industry is taking legal action to block a new Washington state move to tax its product like traditional cigarettes. The levy is set to go into effect July 1.

RYO machines allow customers to produce cartons of cigarettes for much less than the cost of a carton of traditional cigarettes. However, state lawmakers approved House Bill 2565 during the special legislative session this year that would begin taxing RYO cigarettes like all others, according to The News Tribune.

In a suit filed last week, proponents of RYO argued that since the legislation raises taxes it should have required a two-thirds vote to pass the legislature. It passed 27-19 in the Senate, the news report added.

"Most of our retailers would go out of business because of the tax increase," said Bea Gonzalez, spokeswoman for RYO Machine, the Ohio-based manufacturer of the roll-your-own machines.

The lawsuit was filed last week in Franklin County by RYO Machine, the Benton County business 1/2 Price Smokes and a Franklin County roll-your-own customer.

Jason Mercier of the Washington Policy Center, which supports a supermajority requirement for tax increases, told the newspaper that the new lawsuit could force the state Supreme Court to rule on the requirement's constitutionality. Previous court challenges have failed, with courts ruling that plaintiffs didn't have legal standing to sue.

"The only way that you can actually really have standing to change this is if the legislature was to enact a tax without the two-thirds and someone was harmed by that, and that's what you see with the roll-your-own case," Mercier explained.

On the hand, supporters of taxing roll-your-owns as retail cigarettes say the law closes a loophole rather than imposing a new tax. "As technology changes, the legislature is capable of saying: 'This is a cigarette, and this should be taxed like a cigarette,'" said T.K. Bentler, who lobbies for about 4,000 mom-and-pop convenience stores as executive director for the Washington Association of Neighborhood Stores.

The RYO group also filed for a preliminary injunction, which would postpone the enforcement of the law, the newspaper added.

Washington is not the only state looking to address the booming RYO business. In New York, the New York Association of Convenience Stores (NYACS) is making one final push for lawmakers in the Empire State to enact legislation classifying RYO businesses as manufacturers, which are subject to higher taxes. NYACS issued a statement on Friday, June 15 explaining there is a "desperate need" for New York to regulate commercial RYO machines, as reported by The Journal News.

Several states have made similar legislative moves, but nothing has advanced in New York. Instead, officials at the state level and at local levels -- specifically New York City -- have initiated lawsuits against RYO establishments. The lawsuits allege the stores violate law and regulatory statutes, the report added.