Commercial RYO Machine Legislative Update

Thomas A. Briant, NATO Executive Director

During the 2012 state legislative session, 27 states have introduced legislation to regulate operators of commercial roll-your-own (RYO) machines. Of these 27 states, 10 have passed legislation to regulate these RYO machines in various manners.

The State of Arkansas enacted a law completely banning the use of commercial RYO machines in the state. The ban went into effect on Jan. 1, 2012.

In Iowa, a different regulatory approach was enacted that goes into effect on July 1, 2012. The Iowa requirements include RYO operators (1) paying a state excise tax per cigarette manufactured, (2) using only federal tax paid RYO bulk tobacco listed on the Iowa state tobacco directory, (3) maintaining a secure counting meter on the RYO machine that will count the number of cigarettes manufactured and dispensed by the machine, (4) limiting the location of RYO machines to adult-only facilities and (5) requiring compliance with state fire safe cigarette laws as of Jan. 1, 2014.

The Idaho law which passed and goes into effect on July 1, 2012, mandates that these commercial RYO machines be annually certified by the state attorney general's office and this certification process requires that all tobacco used in the machine, regardless of how the tobacco is labeled, be a brand family listed on the state's approved tobacco directory and all applicable state tobacco taxes have been paid.

Similar to Alabama, the State of Oklahoma passed a bill that prohibits the use of RYO machines in the state, unless the operator applies for and possesses a permit to manufacture cigarettes from the Federal Alcohol & Tobacco Tax & Trade Bureau. The Oklahoma law goes into effect of July 1, 2012.

The South Dakota law goes into effect on July 1, 2012, and deems commercial RYO machine operators to be manufacturers of cigarettes while delaying enforcement of the state's fire safe cigarette laws until July 1, 2014.

In Tennessee, the legislation passed by the legislature has two stages and is awaiting the governor's signature. First, as of July 1, 2012, the state would charge a $500 per RYO machine registration fee and require prior notice for any new RYO machines being purchased for use in the state. In addition, the Commissioner of Revenue must report back to the legislature on the status of RYO machines in the state. Then, on Oct. 1, 2013, new provisions would take effect that classify RYO machine operators as cigarette manufacturers, require operators to collect the state cigarette tax rate, and mandate that only RYO tobacco listed on the state's approved directory be purchased to use in RYO machines.

The Vermont legislative has passed a bill banning the operation of RYO machines in the state and the bill is awaiting the governor's signature. If enacted, the law would go into effect on July 1, 2012.

In Virginia and Wyoming, a bill has been enacted into law that classifies RYO machine operators as manufacturers. Both of the laws take effect on July 1, 2012.

The Washington law that takes effect on July 1, 2012 equalizes the state excise tax on RYO cigarettes to the state's cigarette tax rate while requiring operators to use the state's cigarette tax stamp on RYO manufactured cigarettes. The law also requires that RYO stores be licensed by the state.