WOOD DALE, Ill.—Scores of tobacco retailers in the U.S. are taking advantage of a federal tax loophole to offer deep discounts on roll-your-own cigarettes. But the practice is attracting scrutiny from regulators and cigarette manufacturers. At Smoke Zone, a store in this Chicago suburb, customers one recent afternoon flocked to two high-speed rolling machines that produce a carton of cigarettes in eight minutes. The price: $21—less than half the cost of a carton of Marlboro cigarettes.

“People have waited an hour for these some days,” said Taren DeNicolo, the store’s manager.

About 150 tobacco outlets in some 20 states are deploying the novel roll-your-own machines to tempt recession-weary smokers, according to an estimate by one maker of the devices. But some regulators say the stores may be violating U.S. and state laws that govern cigarette manufacturing.

“These machines raise a number of questions,” said David Rienzo, an assistant attorney general in New Hampshire, which has sued several retailers alleging they are acting as cigarette manufacturers and should pay applicable fees.

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David Kesmodel/The Wall Street Journal
Zone in Wood Dale, Ill. The machine produces a carton in about eight minutes priced at less than half that of some commercial brands.

Here’s where the tax loophole comes into play: At Smoke Zone and other retailers, The Wall Street Journal found, store employees or customers insert into the machines tobacco labeled “pipe tobacco.” This substantially reduces the stores’ and smokers’ costs because the federal excise tax on pipe tobacco is $2.83 a pound—compared with $24.78 a pound for the rolling tobacco traditionally used to make hand-rolled cigarettes.

Congress in 2009 sharply raised the federal excise tax on rolling tobacco to help finance the expansion of a children’s health-insurance program backed by President Barack Obama.

New Hampshire’s Mr. Rienzo said that after the tax increase took effect, “numerous manufacturers that sold roll-your-own [tobacco] said, ‘Why not just put a pipe-tobacco label on it, and you won’t have to pay the increased federal excise tax?’”

Other companies created new brands they call pipe tobacco but essentially contain the same tobacco as in their roll-your-own products, said Kevin Altman, an independent tobacco-industry consultant in Richmond, Va.

Shargio Patel, president of Inter-Continental Trading USA Inc. in Mount Prospect, Ill., confirmed his company began offering pipe tobacco under its OHM brand that is similar to its rolling tobacco due to the tax increase. “We’re just following what other companies are doing,” he said.

Some cigarette makers decry the loophole that has created new low-priced competition. “We are complying with the law, but some companies are not doing so in order to gain an unfair advantage,” said Ron Bernstein, chief executive of Liggett Vector Brands Inc., a unit of Vector Group Ltd. that is the fifth-largest U.S. cigarette maker by sales.

In the 14 months since the tax increase, the volume of pipe tobacco sold in the U.S. more than tripled to about 21 million pounds, according to data from the U.S. Treasury’s Alcohol and Tobacco Tax and Trade Bureau. Rolling-tobacco sales volumes, in contrast, fell about 60%.

The tax loophole cost the U.S. government more than $345 million in the first 15 months since the tax increase, estimated Daniel Morris, who tracks tobacco production data for the Oregon Public Health Division.

Under U.S. Food and Drug Administration regulations, cigarette makers must place health-warning labels on packaging and can’t use terms such as “light” in describing cigarettes—a term being used by some retailers selling the roll-your-own cartons, the Journal found. The FDA “is gathering more information about practices related to these machines to determine the appropriate regulatory response,” an agency spokeswoman said.

Meanwhile, the Treasury’s tobacco-tax bureau is soliciting industry input to help write new rules to clearly differentiate pipe tobacco from rolling tobacco. The process could take months, said an agency spokesman.

Some loose-tobacco makers and retailers say they are doing nothing wrong and that Congress created the problem by raising the excise tax on rolling tobacco—typically used by smokers with lower incomes—by more than 2,000%. “I don’t think the founding fathers of this country meant for taxes that could put companies out of business,” said Jeff Martin, general manager of Rouseco Inc., a pipe and rolling tobacco maker in Kinston, N.C.

Phil Accordino, co-owner of RYO Machine Rental LLC of Girard, Ohio, says his company has sold or leased about 200 of the rolling machines. He said his company, which is about two years old, simply has improved on gadgets some consumers use to roll their own cigarettes.

Jerry Kunz, 39 years old, left a store in Addison, Ill., recently with five cartons of cigarettes made by the machines. “They’re not as good as Marlboro,” he said, but “it’s saving you money.”

With Bloomberg already besieged by protests and angry letters calling for an apology over his offensive “cowboys and Indians” statement, Governor Paterson says he is worried about possible “violence and death” over the state’s plan to collect taxes on cigarettes sold on Indian reservations. Paterson said, “There will be quite an uprising and protest to this, but I am going to maintain this policy…The state police tell us over and over again that there could be violence and death as a result of some of the measures we’re taking.”

Meanwhile, U.S. District Court Judge Richard Arcara has reserved his decision on whether to grant the Seneca Nation of Indians a temporary restraining order against New York State’s enforcement of the new tax laws. But whether or not the order is granted, the Seneca seem ready for a fight. One post on the Seneca Voice blog reads, “Lets start setting up some fires here and there just to let the public know that we are serious and we are ready to battle if this is what it is going to come to.”

Because of the impending tax collection, the Onondaga Nation says they will most likely stop selling national brand cigarettes at the beginning of September. Lawyer Joe Heath told Syracuse.com, “Unless something changes, as of Sept. 1 we won’t be able to sell major brands that are untaxed. It doesn’t make that much sense to sell them at the same price as people can get them at the convenience store across the street.” Instead, they will sell only Indian-made brands, and Paterson seems fine with that plan. “They can make their own cigarettes and they can sell the cigarettes on the reservation as they are entitled to by federal law. Once they come off, or anyone else comes off, of their sacred land with cigarettes that are not being taxed by New York state, we are going to address that issue.”

Smoking has been banned in most public places, and die-hard smokers are looking for new ways to feed their nicotine habit. One product, growing in popularity, is raising concerns with the FDA, but those looking to kick the habit say it has helped them. (more…)

Cuba is phasing out its longstanding monthly allotments of subsidized cigarettes as President Raul Castro works to jump-start the island’s sputtering economy. Beginning next month, some 2.5 million Cubans over the age of 54 no longer will get their four packs of cigarettes as part of the country’s ration program, the government announced on Wednesday.

“The Council of Ministers has resolved to eliminate cigarettes from the rationed family basket as of September as part of the measures gradually being adopted to limit state subsidies,” an official statement said.

The cigarettes “are not a primary necessity,” it said.

Castro has said that communist-ruled Cuba’s ration system eventually will be eliminated as he moves to modernize the economy.

Monthly allotments of chickpeas, potatoes and a pound (0.45 kg) of sugar were removed from the system this year.

Many subsidized items were cut in the 1990s after the collapse of former benefactor the Soviet Union plunged the island into a deep recession.

But allotments of inexpensive cigarettes for Cubans born before 1956 were kept in place.

TRIMMING STATE PAYROLL

Local economists estimate the ration of rice, beans and other staples provides enough food for less than two weeks, leaving many Cubans to turn to state-run stores and markets.

Castro, since taking over from his ailing elder brother Fidel Castro in 2008, has pushed to restructure the centralized economy, which has been battered by hurricanes, the global financial crisis and chronic inefficiencies.

He has called for the elimination of all subsidies, and such things as state-sponsored honeymoons and vacations already have been cut. But Cubans would still enjoy free health care, education and social security.

Castro recently announced plans to lay off 1 million workers over five years, or a fifth of the labor force, and has called for more family farming, self-employment and small business creation to make up for cuts in the state’s payroll.

Cuba is an important tobacco and cigar producer and boasts one of the world’s highest per-capita rates of smokers.

Unlike many countries where cigarettes are heavily taxed, Cuba sells unfiltered black tobacco cigarettes for as little as 7 pesos a pack at state stores, or around 40 cents, while the allotted packs cost just 2 to 3 pesos.

Retirees can often be seen on Havana’s streets selling their subsidized cigarettes for 5 pesos a pack.

“This is a blow for the elderly like me,” 82-year-old Esperanza Rodriguez said. “It was like a little bit of money they gave us each month.”

By reuters.com, August 26, 2010

As states make it tougher to light up in public, tobacco manufacturers are rolling out new smokeless tobacco lines — some flavored, some spitless, prompting worries from public health officials about potentially unknown risks of these new products and their appeal to underage users. Among the new offerings in Michigan is Snus — tiny tea-bag-like pouches of tobacco that don’t require spitting.

Other products, such as tablets that look like small breath mints or dissolvable strips and sticks made of finely milled tobacco, are being test-marketed elsewhere, and, if profitable, also could arrive in Michigan.
The Michigan Department of Community Health has asked tobacco advocates to begin collecting information on who is selling the items.
“The more you can make a drug easier and cheaper to get, the more kids will use it,” said Jeanne Knopf DeRoche, whose Plymouth-based company receives state funding to do prevention campaigns and help monitor retail outlets in much of Wayne and Monroe counties.
“It’s not just about cigarettes,” said David Howard, spokesman for R.J. Reynolds Tobacco Company. “It’s about offering adult tobacco consumers options.”
Where There’s No Smokes, There Could Be New Danger
Nahla Khobeir stands in front of rows of new smokeless tobacco products — and smack dab in the middle of another public health debate.
An old lollipop container holds hundreds of coupons that customers have brought to her for their free packets of Snus, small tea-bag-like packets of spitless tobacco that come in flavors like spearmint and peppermint.
“Honest to God, when you open these” — Khobeir, a nonsmoker, said as she peeled back the packaging of some loose tobacco and took a deep whiff — “you want to eat it.”
That’s just one of the reasons public health officials worry youths would be intrigued by the new products. Others worry that a battered economy has made it even tougher to keep the products away from underage consumers.
On The Lookout
Even with new federal laws on how products can be labeled and displayed, retailers may be more willing to take risks in order to make a sale, and police departments have a tougher time finding the manpower to enforce the law, said Knopf, whose Plymouth-based company receives state funding for prevention campaigns and monitoring retail outlets in Wayne and Monroe counties.

Material by: freep.com

New laws banning shop tobacco displays in Scotland will increase black market trade, an industry survey has claimed. The Tobacco Retailers Alliance study said 56% of shopkeepers believed the move would increase contraband sales. The study by the alliance, which has 26,000 UK members, came after MSPs passed the law in January.

Ministers said the move would break the link between youth smoking and related long-term problems by making tobacco less attractive.

The measure is part of the Tobacco and Primary Medical Services Act, which also bans cigarette vending machines and introduces a registration scheme for retailers.

The survey by the Tobacco Retailers Alliance, which strongly opposed the display ban, also claimed 49% of shopkeepers said they are aware of smuggled tobacco being sold in their area, while 38% knew of smugglers supplying under-age smokers.

Continue reading the main story
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Tobacco ban laws passed by MSPs
The group’s Scottish spokeswoman, Fiona Barrett, said: “It’s through friends or family that the majority of under-age smokers get their tobacco, so if the government made it a crime for people over 18 to buy tobacco to give to those under 18, while at the same time putting more focus on tackling tobacco smuggling, youth smoking rates would be reduced.”

But Sheila Duffy, of anti-smoking group Ash Scotland, said “The tobacco industry has tried to divert attention away from the important health issues at stake by exaggerating fears based on unfounded claims.

“There is no reason to think that adult smokers who currently buy their product legally from responsible retailers will suddenly switch to illegal sources because the product is no longer on display.”

The display ban comes into force next year for large retailers and in 2013 for small shops.

Specialist tobacconists are exempt from the ban, while displays will be permitted in cash and carry and duty-free stores if they are confined to a secluded area.

MSPs have already banned smoking in public places and raised the age for buying cigarettes to 18.

News from: bbc.co.uk

This phrase from the popular Phil Harris song back in the 50′s and 60′s lamented cigarettes and the health problem they caused. The second line to that song is “Puff, puff, puff and if you puff yourself to death, tell St. Peter at the Golden Gate that you just hated to make him wait!”

Smoking continues to be a health threat today and also translates into a significant litter and environmental problem for not only Iowa, but the nation.

Iowans have a strong sense of pride in their State. They get highly irritated when they pull up behind a vehicle and see the driver or a passenger throw a cigarette butt out the window. The same is true when running the gauntlet of smokers outside a business building and having to look at the hundreds of cigarette butts on the ground (even with smoking receptacles nearby).

There are an estimated 400,000 smokers in Iowa, according to the Iowa Department of Public Health. Assuming an average of one pack smoked a day, smokers produce an estimated:

*7,300 cigarette butts per year per smoker.

*31,390,000 butts (the majority of those are with a filter) per year, with each weighing 0.10 of an ounce or 2.0 ounces per pack.

*2,341,750 pounds (approximately 142 tons) of cigarette butts per year.

*That represents 7,847,500 or 35.5 tons of cigarette butts that end up on our landscape (assuming a figure of 25% of the cigarette butts), negatively impacting our natural and cultural environment each year. Remember that a filter can last from three to seven years so the cumulative effect can be even more significant.

Impacts on society are equally important and include:

*An unsightly cultural blemish on the landscape.

*Debris and chemical pollution in our State’s waters.

*Fires resulting from those thrown cigarette butts that cause thousands of dollars of expense.

*A habit that encourages forms of civil disobedience such as littering.

For those of you who are still smoking, please be considerate of others and our environment – smoke in designated places and dispose of your cigarette and tobacco litter properly.

Let’s keep Iowa “Clean, Green and Tobacco Free,” as well as beautiful.

The US Centers for Disease Control and Prevention, a government agency, has listed cigarettes in movies as a key factor in teen smoking. The Institute of Medicine of the National Academy of Sciences has said that studies show a clear link showing that kids who watch movies with smoking are more likely to smoke.

So, it is a small step forward that the CDCP announced last Thursday that scenes of smoking in high-grossing films fell to 1,935 incidents last year, down 49% from the recent peak of 3,967 in 2005.
This may in part be the result of a change in 2007 that includes smoking incidence in MPAA ratings, following four years of requests from state attorneys general and other groups. The MPAA has refused, however, to make smoking an automatic R-rating, even with an exclusion for historical accuracy in films like “Good Night and Good Luck.” “On April 22, 2009, the MPAA interrupted North Carolina Senate debate on landmark smokefree workplace legislation to demand a loophole for smoking in film productions. ‘The motion picture industry worries the bill would prevent actors from smoking on screen,’ reported the Associated Press,” according to Smoke Free Movies. They were successful in getting an exemption written into the law.
A significant factor in reduced smoking onscreen may also be pressure from websites that specifically review smoking in movies. Smoke Free Movies, a project of Stanton A. Glantz, PhD, professor of medicine at the University of California, San Francisco, has a directory of actors with more than three smoking roles. Scene Smoking from Breathe California of Sacramento-Emigrant Trails, shows how smoking is shown in films, classifying it by whether it is the lead actor, a credited non-star, or an extra, whether the brand is shown, and whether the smoker is a good guy or a bad guy.

From blog.beliefnet.com, August 23, 2010

Bono has admitted that while out of action thanks to a bad back, he turned to an old friend for comfort – the cigarette. The U2 frontman, who has smoked on and off over the years, underwent emergency surgery for a back injury in May, and was forced to put his feet up for two months.

The band had to cancel US gigs and an appearance at Glastonbury because of his injury and Bono – real name Paul Hewson – whiled the hours away with a spot of songwriting and smoking.
“One of the things you can do when you’re lying down like that is to write, so I wrote,” the 50-year-old told the News of the World.
“Lying motionless I also had time to think about the future, because I never think about the past.
‘The other thing I did was to eat ice cream and I also started smoking again.’