S.D. Roll-Your-Own Shop Closes

Owner cites new law that classifies RYO businesses as cigarette manufacturers

YANKTON, S.D. -- A Yankton, S.D., businessman blames a new law that went into effect Sunday for forcing him to close the doors of his roll-your-own (RYO) cigarette shop, reported KELOLAND-TV. "John Muilenburg's dream of owning his own roll-your-own cigarette shop has gone up in smoke in less than nine months," it said.

"I'm devastated, you know? It's our last day. We don't know what to do. We're done. They just took our livelihood away," Muilenburg told the news outlet.

He is closing Mullies Cigarette Shop one day before a new state law, House Bill 1138, classifies the business as a cigarette manufacturer, taxing customers more than $15 per box, said the report.

RYO stores let customers use a machine that rolls loose-leaf tobacco into cartons of cigarettes for about half the cost of retail smokes. But the new tax makes the cost of retail cigarettes and RYO smokes about the same, ending Mullies price advantage.

"That would put our cigarettes up to $47. Customers aren't going to buy them. They'll go back across the state line," Muilenburg said.

Loyal customers stocked up on the inexpensive smokes before the store closed.

Muilenburg said that he still owes money on the $35,000 RYO machine.

Muilenburg's argued that customers merely put the tobacco products and cigarette tubes into the RYO machines. In his eyes, that means the transaction is in the customer's hands.

"We do not make the cigarettes," Muilenburg told the news outlet in April. "We don't package them. If we were packaging the cigarettes and selling them ready to go out the door, yes, I would consider us a manufacturer."

At that time, he said if his store was still deemed a cigarette manufacturer, he might have to close up shop or move to a different state. "I will try to operate, but I'm a little afraid it's going to automatically make us close our doors," Muilenburg said. "The price will be up so high, we won't be able to stay open."

Muilenburg estimated that the price for his products would double if he tried to operate as a manufacturer.

On a federal level, an amendment to the transportation bill passed by Congress on Friday also expands the definition of a tobacco manufacturer to include businesses that operate roll-your-own cigarette machines (see Related Content below for previous CSP Daily News coverage).

President Obama has yet to sign it into law, but it requires the business to get manufacturing permits, place health warnings on packs and pay excise taxes on the cigarettes their machines make.