State going after tobacco shop

A local tobacco shop owner fears her fledgling business could close because the state claims her roll-your-own (RYO) cigarette machines are not allowed without a manufacturing license.

Amber Arneson, the owner of Smokey Joe's, 528 S. Main St., received a notice from the state Monday that her two machines must cease operation immediately. Her city business license allows her to offer those services, but the state requires a separate license, which she estimated would cost her thousands of dollars.

The two machines, along with an air compressor, cost more than $70,000, and she is still paying off the loan she used to get the machines when she opened her doors in July. Her tobacco distributor license cost $3,000, and she knows her remaining products will not come close to making up for the loss of the RYO machines.

"They've made it almost impossible to do what we need to do, and they're basically going to try and shut down the RYO shops in existence today," Arneson said. "We've got a lot of upset people here."

The Wisconsin Department of Revenue estimates there are 50 to 100 roll-your-own machines in the state, according to The Associated Press. Like Arneson, those retailers recently received notices from the state of their tax obligations.

Arneson has until Oct. 25 to either remove the machines or get the necessary permits. She plans to circulate a petition of support to send to the state.

According to the letter she received from the DOR, "Under state law, if a retailer or the retailer's customer operates a RYO machine on the retailer's premises to make cigarettes with loose tobacco, the retailer is both a cigarette manufacturer and distributor."

Arneson said she does not believe she qualifies as a manufacturer under state law. Under Wisconsin Revised Statutes 139.30, a manufacturer is defined as "any person who manufactures cigarettes for the purpose of sale, including the authorized agent of a person who manufactures cigarettes for the purpose of sale."

She said she does not manufacture the cigarettes. The customers do, and they must pay a $12 rental fee to use the machines. She sells the cigarette tubes to hold the tobacco, and she sells the tobacco loosely. The total, with tax, comes to $31.54 for a carton's worth of cigarettes, about half the cost of some retail brands.

"Philip Morris makes 25,000 cigarettes a minute. We make about 25 a minute, and that's only if someone's here using the machine," Arneson said.

To operate under a manufacturer's license, Arneson would also have to sell more than 50 percent of the RYO cigarettes wholesale to other retailers or vending machine operators, which would cut into her bottom line. Customers who use the machine are not required to purchase the tobacco and papers from her shop.

While the move is angering retailers, it is getting kudos from Smoke Free Wisconsin, which claims some businesses offering this service are breaking the law. Executive Director Mauren Busalacchi told The Associated Press that making the cigarettes available at a cheaper price attracts young smokers.

Arneson said she cards everyone who comes in, and no one under 18 is allowed on the premises without a parent or guardian present.

Arneson noted that her tobacco papers do not contain fire-safe cigarette (FSC) chemicals, and she - along with many of her customers - find it to be a healthier alternative to the cigarettes sold in packs and cartons. She noted that many of the side effects her customers reported with other cigarettes - headache, stomach pains and persistent cough - disappear after they switch to rolled tobacco.

"They smoke less, and I've even had some people quit," Arneson said.

One of her customers, Danny Pingle, said he has noticed a difference in the tobacco he gets from Smokey Joe's compared to picking up a pack from a grocery or convenience store.

"I don't have the cough anymore. I definitely see a difference," Pingle said. "It's the same with my girlfriend."