Cigarettes for $2.70 a pack, but you have to help

Posted: 1/29/2011

From The New York Times:

The small group that gathered at lunchtime inside a strip-mall storefront in Skokie had not come to eat. They had come to Smokes & Such to admire the new $30,000 machine that spits out a carton of custom-made cigarettes in eight minutes flat -- at $27 a carton. That's $2.70 a pack, or about a third of what smokers would pay at the CVS pharmacy across the street.

The cigarettes are so cheap because the machine uses pipe tobacco instead of cigarette tobacco. There's not much difference between the two. The pipe tobacco is a coarser cut, but more important, it's taxed at roughly $2.80 a pound - about 10 percent the rate of cigarette tobacco (nearly $25 per pound).

The popularity of custom-made cigarettes has resulted in a spike in the amount of pipe tobacco entering the American market, and a precipitous corresponding drop in roll-your-own tobacco labeled for cigarettes.

Through the first nine months of 2010, more than 20.5 million pounds of pipe tobacco had entered the national marketplace compared with 10 million pounds in the same period in 2009, according to the most recent data from the Treasury Department's Alcohol and Tobacco Tax and Trade Bureau. Meanwhile, through the first nine months of 2010, the federal government had levied taxes on 5.5 million pounds of roll-your-own cigarette tobacco - less than half of what they registered in the first 10 months of 2009.

Taxes in Illinois are a sore point among anti-smoking advocates, who were disappointed earlier this month when the State Legislature voted against adding $1 to the cigarette tax. Although cigarette taxes in Cook County and Chicago are considerably higher, the state levies a tax of just 98 cents a pack - a sum that earned Illinois's tax rate a "D" from the American Lung Association.

The roll-your-own machine at Smokes & Such, which hums and bangs like an oversize printer in need of service, is only one of five in the state. Customers choose a type of tobacco and filter, the materials are loaded into the machine, and the customers push a button to start the production process. This small but critical step means the customers are technically making their own cigarettes - exempting the machine's owners from state regulations and tax requirements.
No one knows how long this loophole will last, and Marcia Smith, co-owner of Smokes & Such, said she was conflicted about the machine's growing popularity.

"On the one hand, I think people should be able to choose what they smoke," she said. The machine, she said, allows customers to see exactly what goes into their cigarettes - in this case, she added, just tobacco. "But I know these machines are under government scrutiny, and as an industry we're not looking for a lot of publicity."

If last Wednesday's crowd is any indication, it's too late to worry about letting the cat out of the bag. The machine is something of a celebrity among area smokers, drawing in people from other areas.

Lawmakers appear stalled in their attempts to close the tax loopholes that enable roll-your-own cigarette franchises. In September, the Alcohol and Tobacco Tax and Trade Bureau issued a ruling prohibiting companies from selling cigarettes made by roll-your-own machines, only to be slapped down in December by a Federal District Court in Ohio, which issued a preliminary injunction barring the agency from enforcing the ruling. The office of Attorney General Lisa Madigan of Illinois released this comment: "This scenario poses a number of complicated legal issues that we will work with the Department of Revenue to address."

Stewart Awdisho of Chicago has been smoking since he was 17. Now 41, he favors Winston Lights but arrived at Smokes & Such on the recommendation of his aunt, who tried the roll-your-own machine and loved it. Mr. Awdisho was offered a sample cigarette made with light tobacco, and a few minutes later he returned, smiling. "It's really good, yeah," he said. "Maybe even better than my usual. I don't know, it just tastes cleaner."

That's a familiar claim among proponents of roll-your-own cigarettes - that they're healthier because they don't contain the chemicals in commercially manufactured cigarettes.

Chris Smith, a local landscaper who stopped in to buy a carton of cigarettes and a handful of lottery tickets, said he didn't put much weight on either side of the "healthier" cigarette debate. "Price," he said. "That's the only reason I'm here." 

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