The GOP Takes Another Hostage

Setting the Stage

This posting is not about smoking.  Plenty has already been written, read and dramatized about smoking.  There's no good reason for MeanMesa to jump on that band wagon, but standing on the sidewalk while that band wagon passes, let's just say that MeanMesa has been a smoker for decades.

How many decades?  If this posting were about smoking, which it isn't, this would be a good spot to interject an historical anecdote about the "old days," about  sitting in a doctor's office, listening to him explain of my leg cramp, smoking a cigarette with the good doctor as he plied his professional "bed side manner."

So, if this post is not about smoking, what is it all about?

It's about corporate lobbying and Republicans.  Even more disturbing, at least one of those "Republicans" in the Senate is a Democrat.

In a sleepy little shop at the Northern edge of Southwest Albuquerque's "war zone," we find MeanMesa paying a visit a couple of times per month to buy cigarettes.  The notable side of this routine is what happens in the shop when these purchases are made.

Rather than forking over $40 to $50 dollars a carton for heavily advertised  "machine made" commercial cigarettes, this shop sells 200 cigarettes -- the count in a commercial carton -- for just over $20.  The process is straightforward.  A bag of pipe tobacco is purchased along with a box of the paper tubes which will make up the smokes once they are filled.

After this, MeanMesa empties the bag of tobacco into the top of a fascinating machine and slides the box of paper tubes into a holder from which they can be extracted as the cigarettes are being made.  After a couple of menu buttons are selected on a touch screen control panel, the lumbering old thing begins making cigarettes.  For the next ten minutes or so, the finished product drops out of a chute at the bottom of the machine, and MeanMesa places them in one of the boxes which used to hold the paper tubes.

The cigarettes are great.  They have a good flavor because they are made from pipe tobacco which, by the way, is free of the nasty "extra ingredients" commercial cigarette companies put into their product.  Commercial cigarettes use tobacco saturated with formaldehyde and fire retardant along with an estimated 400 or so other things.

The Republicans

For this part of the post we must travel to Washington to visit the now infamous tea bag Congress.  Of course we're already quite accustomed to the GOP's "Government by Hostage Taking" routines.  [MeanMesa has posted about this before.  Visit http://www.meanmesa.com/2011/12/gopcons-governing-by-hostage-taking.html if you'd like to take a look.]

One common part of the tea bag scheme is to do everything possible to maintain the high unemployment numbers in hopes of defeating Obama in November.  For this posting, we can look specifically at the tea bag sabotage of all infrastructure spending proposed by the President.  

After already rejecting the President's "jobs" bill which would have employed a million American workers repairing roads, bridges, dams and schools, the tea bags were finally frightened enough to allow a tiny, already heavily corrupted Transportation Bill.  Naturally, this Transportation Bill is a cheaply crafted hand off to their Republican cronies, but more importantly, the stinking thing has plenty of amendments.

You guessed it.  One of those amendments is designed to eliminate MeanMesa's little shop's "competition" with Big Tobacco.  As Mullah Nassr Edin would have said, "If there is one crumb left on the kitchen floor, well, in come the cock roaches just as surely as the sun rising in the morn."

Let's take a break right here to read some real reporting on what's going on with this.  Here are two articles.

From CSPnet.com

Visit the original article here.

Point: RYO Cigarette Shops on a Roll

Shops say tobacco companies, c-stores, others trying to extinguish competition

CSP Daily News | March 21, 2012 

 

GIRARD, Ohio -- A new generation of roll-your-own (RYO) cigarette machines has been spreading across the country at tobacco shops capitalizing on tax loopholes to deliver low-priced products, reported the Wall Street Journal.

Now lawmakers, backed by tobacco companies and convenience store chains, want to declare such shops to be manufacturers, said the report. That would subject them to the same taxes and regulations as the broader cigarette industry, which the newspaper said would be likely to put them out of business.

Instead of buying ready-made cigarettes, the shops' customers purchase loose tobacco and pour it into an ATM-sized machine that rolls 200 cigarettes in less than 10 minutes.

The cigarettes typically are made with leaves labeled "pipe tobacco'' and can sell for half what major brands cost, depending on state taxes, the report said.

Hundreds of such shops--mostly or entirely focused on the RYO machines--have opened since 2009, when Congress increased the federal excise tax on a carton of 200 cigarettes to $10.066 from $3.90 and hiked the tax on a pound of RYO cigarette tobacco to $24.78 from $1.0969. The tax for a pound of pipe tobacco rose only to $2.8311 from $1.0969.

Under a Senate bill passed Wednesday, any retailers making RYO machines available to customers would be treated like mainstream cigarette manufacturers. The provision was included in a rural school financing amendment tucked inside the federal surface transportation bill, which still needs House approval.

"[RYO] cigarette machines take advantage of an unintended tax loophole, and that isn't right,'' said Senator Max Baucus (D-Mont.), who chairs the Senate Finance Committee and sponsored the amendment. Representative Diane Black (R-Tenn.) introduced a separate bill earlier this month classifying the shops as manufacturers.

Richmond, Va.-based Altria Group Inc. and the National Association of Convenience Stores (NACS) have lobbied for such measures, which are finding support on both sides of the aisle. Governors in Virginia, South Dakota and Wyoming have signed similar bills this month, and legislatures in approximately 20 other states are weighing action.

In New York, state and city authorities filed lawsuits this week against a handful of RYO retailers for allegedly circumventing taxes and regulations. Ready-made cigarettes still have a market share of more than 95%, according to industry estimates cited by the Journal.

RYO Machines LLC, the largest maker of the machines, has hired its own lobbyists and lawyers to try and turn the tide. The company and affected tobacco shops say they have no way of complying with the regulatory requirements of being a cigarette manufacturer. They say they have not broken any laws and that large tobacco companies are trying to extinguish competition.

"I'm David fighting Goliath,'' Phil Accordino, part-owner of Girard, Ohio-based RYO Machines, told the newspaper. The company began manufacturing the machines in 2008. It has sold about 1,900 machines to tobacco shops in more than 40 states, including approximately 1,000 last year.

Stores pay a bit more than $30,000 for each machine, which takes two to three seconds to roll a cigarette. That is several times faster than smaller table-top versions, but still about 1,000 times slower than machines at big cigarette manufacturing plants.

The Alcohol & Tobacco Tax & Trade Bureau declared in 2010 that retailers with the machines are manufacturers, but RYO Machines secured a preliminary injunction in a federal court in Ohio. Oral arguments in that case are expected to begin next month. It also has won injunctions in a handful of states, including Connecticut and Wisconsin.

In the meantime, RYO shops continue to spread in places like Smyrna, Ga., where Tobacco Road opened its doors last November with four machines in a converted KFC fast-food restaurant. A steady stream of smokers filed in this week, drawn by signs touting cigarette cartons for $23.80, which includes the fee to use a machine, said the report.

Critics say such shops unfairly avoid hefty taxes and fees levied on cigarette manufacturers. They also say shops use cigarette tobacco that has been mislabeled as pipe tobacco to gain a further price advantage. Pipe tobacco traditionally is moister than cigarette tobacco with a wider cut.

"We want to see a level playing field,'' Ronald Bernstein, CEO of Mebane, N.C.-based Liggett Group LLC, part of Vector Group Ltd., a large U.S. cigarette company, told the Journal.

Sales of pipe tobacco that end up in pipes have been declining for decades, shrinking by about two-thirds between 1990 and 2008, according to industry estimates cited by the report.

And from The Wall Street Journal/BUSINESS

Read the original article here.

'Roll Your Own' Cigarette Shops Take Fire

Lawmakers, Big Tobacco Firms, Store Chains Say Upstarts Exploiting Loophole Should Be Taxed the Same as Manufacturers

By MIKE ESTERL

A new generation of roll-your-own cigarette machines has been spreading like wildfire across the U.S. at upstart tobacco shops capitalizing on tax loopholes to deliver low-priced smokes.

Now lawmakers, backed by Big Tobacco and convenience-store chains, want to declare such shops to be manufacturers. That would subject them to the same taxes and regulations as the broader cigarette industry, likely snuffing them out.

Customer Robert Robinson at a machine that rolls tobacco into cigarettes at Tobacco Road, a store in Smyrna, Ga., this week. Most machines roll 200 cigarettes in less than 10 minutes.

Instead of buying ready-made cigarettes like Marlboros or Camels, the shops' customers purchase loose tobacco and pour it into an ATM-sized machine that rolls 200 cigarettes in less than 10 minutes. 

The cigarettes typically are made with leaves labeled "pipe tobacco'' and can sell for half what major brands cost, depending on state taxes.

Hundreds of such shops—mostly or entirely focused on the roll-your-own machines— have opened since 2009, when Congress increased the federal excise tax on a carton of 200 cigarettes to $10.066 from $3.90 and hiked the tax on a pound of roll-your-own cigarette tobacco to $24.78 from $1.0969. The tax for a pound of pipe tobacco rose only to $2.8311 from $1.0969.

Under a Senate bill passed Wednesday, any retailers making roll-your-own machines available to customers would be treated like mainstream cigarette manufacturers. The provision was included in a rural school financing amendment tucked inside the federal surface transportation bill, which still needs House approval.

"Roll-your-own cigarette machines take advantage of an unintended tax loophole, and that isn't right,'' said Sen. Max Baucus (D., Mont.), who chairs the Senate Finance Committee and sponsored the amendment. Rep. Diane Black (R., Tenn.) introduced a separate bill earlier this month classifying the shops as manufacturers.

Major tobacco companies such as Altria Group Inc., MO +0.06% the country's largest, and the National Association of Convenience Stores have lobbied for such measures, which are finding support on both sides of the aisle. Governors in Virginia, South Dakota and Wyoming have signed similar bills this month, and legislatures in roughly 20 other states are weighing action. In New York, state and city authorities filed lawsuits this week against a handful of roll-your-own retailers for allegedly circumventing taxes and regulations. Ready-made cigarettes still have a market share of more than 95%, according to industry estimates.

RYO Machines LLC, the largest maker of the machines, has hired its own lobbyists and lawyers to try and turn the tide. The company and affected tobacco shops say they have no way of complying with the regulatory requirements of being a cigarette manufacturer. They say they haven't broken any laws and that large tobacco companies are trying to extinguish competition.

 

"I'm David fighting Goliath,'' said Phil Accordino, part-owner of Girard, Ohio-based RYO Machines, which began manufacturing the nearly five-feet-high machines in 2008. The company has sold about 1,900 machines to tobacco shops in more than 40 states, including roughly 1,000 last year. Stores pay a bit more than $30,000 for each machine, which takes two to three seconds to roll a cigarette. That is several times faster than smaller table-top versions, but still roughly a thousand times slower than machines at big cigarette manufacturing plants.

The Alcohol and Tobacco Tax and Trade Bureau declared in 2010 that retailers with roll-your-own machines are manufacturers, but RYO secured a preliminary injunction in a federal court in Ohio. Oral arguments in that case are expected to begin next month. RYO also has won injunctions in a handful of states, including Connecticut and Wisconsin.

In the meantime, roll-your-own shops continue to spread in places like Smyrna, Ga., where Tobacco Road opened its doors last November with four machines in a converted KFC fast-food restaurant. A steady stream of smokers filed in this week, drawn by signs touting cigarette cartons for $23.80, which includes the fee to use a machine.

Customer Charlotte Johnston poured 8 ounces of labeled "Kentucky Select pipe tobacco'' leaves into the top of a machine after inserting a cartridge with 200 empty cigarette tubes, pressed a few buttons on a computer screen, and sat back in a leather chair as the machine began spitting cigarettes into a bin. "It's not all that hard. It reminds me of sitting in front of a slot machine,'' said Ms. Johnston, a 65-year-old retiree. She said the cigarettes taste roughly the same as Marlboros, which she had smoked for years, but which sell for $40 or more per carton in area stores.

Critics say such shops unfairly avoid hefty taxes and fees levied on cigarette manufacturers. They also say shops use cigarette tobacco that's been mislabeled as pipe tobacco to gain a further price advantage. Pipe tobacco traditionally is moister than cigarette tobacco with a wider cut.

"We want to see a level playing field,'' said Ronald Bernstein, chief executive of Liggett Group LLC, part of Vector Group Ltd., VGR -0.24% a large U.S. cigarette company.

Sales of pipe tobacco that end up in pipes have been declining for decades, shrinking by about two-thirds between 1990 and 2008, according to industry estimates. `"When was the last time you saw someone smoking a pipe?'' said Craig Williamson, head of the Pipe Tobacco Council, an industry trade group.

The "Players"

A Tennessee Tea Bag Tobacco Trollop 

and Good Old Senator Max Baucus

Of course we've already heard plenty about Montana "Alleged Democrat," Senator Max Baucus.  He was the one who sold out single payer to the health insurance corporations during the Affordable Care Act debate.  Max "went down" on for the corporate health care scam for around $200,000 (reported).  Tea Bag House Member Diane Black (R-Tenn) was the sponsor of the amendment to the House Bill.

It might LOOK like a Republican, but it could be Max Baucus.

Now, Diane's rush to the aid of the giant tobacco corporations is somewhat understandable.  The Big Tobacco corporatists in Tenn would have eaten her alive if she even considered doing otherwise.  Those boys have taken pains to own every Tennessee House member that could be bought since the Jim Crow days, and MeanMesa's sure that Diane is no exception.

But Max Baucus?  MeanMesa is sure that Max would respond to any question about this stinky little corruption matter with a claim that it, uh, served his constituents.  But wait.  Does anyone think that he sponsored this amendment in the Senate because of pressure from Montana tobacco farmers?

Montana tobacco  farmers?

Whether in the GOPCon controlled House or in the smoky back rooms of corporate Democrats in the Senate, the tobacco lobby checks were flying like snow flakes in a Montana blizzard!  (The Speaker would have no problems with tobacco lobby cash slithering around on the House floor to gather votes for bills affecting Big Tobacco, either.  In 2009 he admitted that he handed out "pay to play" checks just before such a vote.  [Read an article about this here.])

This isn't about being for or against smoking.  This is all about being for or against serving as a corporate schill.

Happily, there's an election coming up this November.  Unhappily, the owners of the Republican Party, emboldened by Citizens United, are planning to spend $1 Bn dollars to convince voters to keep all this exactly the way it is -- or worse.