Roll-Your-Own Shops Suing States

10/6/11 – As Governor Scott Walker defends Wisconsin’s double taxes on roll-your-own tobacco shops, his Justice Department is about to defend those taxes in court. Robert Petersen, who owns nine tobacco stores including one near Wausau, filed a lawsuit which tries to stop treating him as a manufacturer. Petersen is one of three plaintiffs asking a Dane County circuit judge to let stores keep operating the machines while their lawsuit is being considered. The other plaintiffs are a distributor from Bonduel, and a maker of the roll-your-own machines from Ohio. Last month, the Revenue Department told owners of up to 100 roll-your-own cigarette machines that they must pay state taxes both as manufacturers and distributors. Petersen says his customers buy loose tobacco – pay the taxes on it – and then technically rent the stores’ machines to make their own smokes. He says that puts him in the rental business, not the manufacturing business. Roll-your-own machines have become popular because a carton of those smokes typically costs less than half of the major manufactured brands. Some stores say they’ve had to close because of the order to pay the dual taxes. Republican Governor Walker defended the taxes yesterday (Wed), saying they treat everyone fairly – and he took issue that they go against his mantra that Wisconsin is “open for business.”