Commercial RYO Machine Legislative Update
To date, legislative bills have been introduced in 25 states that would classify operators of commercial roll-your-own ("RYO") cigarette machines as either manufacturers or impose other regulations on the operation of these RYO machines.
Of these states, three state legislatures have passed the legislation including Arkansas, South Dakota and Virginia with the Governors of Arkansas and Virginia both signing the legislation into law. The bill passed by the South Dakota legislature has been sent to the governor for action.
The states with RYO bills pending include Arizona, Florida, Idaho, Indiana, Illinois, Iowa, Kentucky, Louisiana, Massachusetts, Michigan, Minnesota, Missouri, New York, Oklahoma, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Washington, West Virginia and Wyoming.
If a newly enacted law or legislative bill classifies operators of RYO machines as cigarette manufacturers, then these operators will need to pay the federal cigarette tax of $1.01 per pack or $10.10 per carton, remit the applicable state cigarette excise tax, make non-participating manufacturer escrow payments under the Master Settlement Agreement or non-settlement cigarette fee/tax payments to states, register with the Food and Drug Administration as a cigarette manufacturer, comply with Surgeon General cigarette health warning label requirements, and adhere to fire safe cigarette requirements.
On Feb. 27, 2012, the Office of the Kansas State Fire Marshall issued a letter notifying any persons and businesses that possess or lease a commercial roll-your-own cigarette machine to comply with the Kansas Fire Safety Standard and Firefighter Protection Act. Under this state law, any person or business that possesses or leases a commercial RYO machine is a cigarette manufacturer.
As a manufacturer, the person or business is required to (1) become fire safe cigarette compliant and have cigarettes tested under the American Society for Testing and Materials (ASTM) testing methods, and (2) certify each cigarette brand as being fire safe compliant with the Kansas Fire Marshall's office and list each certified brand on the Kansas Attorney General's cigarette directory. The certification fee is $250 per cigarette brand variety listed with the attorney general's office.
The Kansas State Fire Marshall letter closes with an additional notice that the Kansas Department of Revenue or the State Fire Marshall's office will be inspecting wholesale and retail establishments within the next 30 days for compliance with fire safe cigarette standards.