While a lot of new small-business owners wouldn't say their first two months were easy, Port's Smoke Shack owner Corey Judson is facing some especially challenging obstacles merely two months after opening his shop.
Judson opened his roll-your-own cigarette (RYO) store in Port Washington on April 30 after taking inspiration from a friend and owner of the . Judson, who has lived in Port for "all of his married life," had been fired from his job after 27 years in the printing industry and was looking for a career change.
But things are coming to a screeching halt inside his shop after a new law is making it awfully hard for businesses to continue the RYO practice.
President Barack Obama on Friday signed a federal transportation bill that includes a provision redefining RYO cigarette stores as manufacturers of cigarettes. As a result, small RYO tobacco stores will be required to pay the same taxes and obtain the same permits as big-name tobacco manufacturers to continue allowing customers to use rolling machines on the premises.
Judson said he removed his RYO machine from his business on Friday to avoid any possibility of getting in trouble for still having it. He has joined forces with roughly 1,400 RYO cigarette shops nationwide, hiring Troutman Sanders law firm in hopes of reversing the legislature. Throughout Wisconsin, 110 rolling machines operate in 84 retail outlets, employing anywhere from 300 to 400 people.
"I believe that we will get an injunction, and that we will be re-opened," he said, adding that he would be part of a conference call later Monday afternoon where he would learn more.
Business as it were
Port's Smoke Shack offers quite the selection in tobacco products. It stocks about 15 different filters — from ultra lights to full flavors as well as menthol — and also gives customers a choice among several different flavors of tobacco: Turkish red, bold, Turkish yelo, mild and extra mild.
A pack of 200 cigarettes could be rolled in about eight minutes using the $32,000 machine that no longer sits inside the Smoke Shack. Each pack of 200 costs $33.50 including tax. Menthol flavors cost a little extra.
Judson said he's built up a customer base since opening in Port Washington, with a growing audience and several repeat customers.
Roll-your-own customers generally do so because it tastes better, has fewer chemicals and costs less, Judson said.
"They truly do not want to go back to smoking name brand," Judson said.
Judson's had to break the news that he can no longer sell RYO to several customers, including one that stopped in late Monday afternoon.
The first thing the customer noticed was the missing machine. His mouth dropped.
Judson then went about explaining the new legislation, telling the customer about a petition on petitions.whitehouse.gov, which says "We are retailers, not manufacturers," and needs 25,000 signatures by July 31; currently, it has 1,500.
Small business owners are framing the legislation as a battle between big tobacco and the proverbial "little guy." In fact, according to the Chicago Sun-Times, Altria-owned Phillip Morris USA has strongly supported the legislation.
And Judson blames the big tobacco industry's monetary influence over the government.
Not the first attack on RYO
Friday's legislative signing isn’t the first battle RYO retailers have fought in Wisconsin. In September 2011, the Wisconsin Department of Revenue put RYO businesses on notice to cease operating their rolling machines. Business owners could face fines or seizure of property for failing to cooperate.
However, the machines re-started a month later after a Dane County Circuit Court judge issued a temporary restraining order preventing the DOR from forcing roll-your-own tobacco business owners to comply with certain regulations. They have been rolling since then.
In October, the United States Alcohol and Tobacco Tax and Trade Bureau ruled that a business operating a cigarette-making machine at its premises is engaged in cigarette manufacturing, and must obtain proper permits.
However, a U.S. District Court in Ohio filed a temporary restraining order preventing the federal bureau from enforcing the provisions outlined in its decision. Local and state governments across the country have been working to craft legislation that would deem RYO businesses cigarette manufacturers.
While waiting with his fingers crossed for this legislation to change, Judson has a temporary means to helping his business survive.
He's selling RYO machines for $85 each that people can use in their homes; last week, Judson said, he had six machines — and sold out.
He expects more to come in with his Tuesday shipment.