Update| PJ's Smoke Shack in Maple Valley forced to close due to new federal legislation
By TJ MARTINELL
Covington Reporter Reporter
July 25, 2012 · Updated 2:58 PM
PJ’s Smoke Shack in Maple Valley has been forced to close due to an unusual provision within the new federal highway bill that threatens so-called roll your own (RYO) tobacco businesses.
PJ’s Smoke Shack, located at 23714 222nd Pl. S.E, is one of several thousand businesses in the country that operate RYO machines, which customers use to roll tobacco into empty paper shells. The machines are roughly the size of an ATM.
As part of the highway bill that was signed into law July 6, an unrelated provision, Section 100122, broadened the definition of a tobacco manufacturer to include RYO businesses, which makes them subject to the same federal excise taxes and regulations.
Karen Byrd, who runs PJ’s Smoke Shack along with Phllip Abbott, said the provision was “attached like a safety pin” to the bill that otherwise had nothing to do with tobacco.
“It was buried deep,” Byrd said. “It was a bill that had to pass.”
According to Abbott, a 1998 Tahoma High graduate, the store had been open since February before it was forced to close.
“I hate to see a lot of people getting shut down,” Abbott said. “There was no warning whatsoever. I was pretty devastated.”
Byrd stated the shop was forced to close down because it’s impossible for them to meet the requirements the new law demands. Unless they find a way to comply with the law, or convince lawmakers to change it, the store will remain closed.
“Right now if we operate our store it’s a federal offense subject to five years in federal prison if we get caught operating it,” Byrd said. “Some stores are staying open, but I’m a single mom working three jobs with a baby I need to feed, so I can’t spend five years in federal prison.”
Byrd said she refers to their business as a “smoke shop” because of numbers differences between cigarettes and the tobacco they sell.
“We use virgin tobacco,” she said. “We get our tobacco from an organic co-op of small farmers in Kentucky. Everything in our process is American made with American jobs, small farmers, American machinists making the machines in Ohio. Nothing is outsourced.”
The tobacco is also taxed differently at a federal level. In 2009, Congress raised the tax on RYO tobacco from $1.10 a pound to $24.78 a pound, but it raised the tax on pipe tobacco from $1.10 to $2.83 a pound.
Before the bill was passed, Byrd and Abbott said they received a letter from RYO Machine, LLC, which manufactures the machines. In the letter, President Phil Accordino stated that due to the impending legislation the company would not accept any requests for reloads of the machines unless the businesses were able to provide written proof they had obtained a tobacco products manufacturing permit from the Alcohol Tobacco Tax and Trade Bureau (TTTB), or that they have entered non-profit status and use it for non-commercial purposes. He also stated they would not buy back any machines or accept return parts.
David Sutton, a spokesman for Altria, the parent company of Phillip Morris USA told The Plain Dealer, a daily newspaper in Cleveland, Ohio, that RYO businesses are manufacturers that should pay the same taxes and comply with regulations. Sutton also stated that the RYO businesses evade federal and state cigarette taxes, a claim Bryd called ridiculous.
“Our response is we paid a 95 percent tobacco tax,” she said. “They’re taxed almost 100 percent before we even get it. I pay eight taxes on every dollar I make, so give me a freaking break.”
Rather than level the playing field, Byrd said, the new provision is simply forcing small independent businesses like her shop to close.
“All these ma and pa shops are subject to rules and regulations that are impossible for us to meet,” she said. “We don’t have a tobacco washing station. But in order for us to get this manufacturing permit we have to have equipment that doesn’t even apply to our industry. They don’t have a format for us to even apply for this license. We fail the test because it doesn’t apply. It’s not equivalent….It was a dirty move. I’ve got six people out of jobs now. I was unemployed for a year and a half. My business partner has been unemployed for a year before we opened this business.”
Byrd said there is an online petition to have President Obama look over the provision of the highway bill, which needs 25,00 signatures.
In Washington State, RYO smoke businesses have been fighting a separate legal battle against new legislation that would have required them to put cigarette tax stamps on RYO products beginning July 1. A Franklin County Superior Court judge issued the preliminary injunction in June barring the state from collecting the tax, but a Washington State Supreme Court ruling blocked the temporary injunction. Opponents of the law, such as Byrd have argued that the law violates Initiative 1053, which requires a two-thirds majority in order to pass new taxes. The bill did not have two-thirds approval when it passed the state Senate.
Contact Covington Reporter Reporter TJ Martinell at email@example.com or 425-432-1209 ext. 5052.