Tobacco shop will fight charges

Tobacco Haven isn’t a cigarette manufacturer despite claims by the state, says the attorney for the small tobacco shop in Brookline facing an unusual legal action against its use of roll-your-own cigarette machines.
Acting Attorney General Orville “Bud” Fitch filed a lawsuit Tuesday against the tobacco shop in Merrimack County Superior Court, alleging that the operation sidesteps the federal settlement between tobacco manufacturers and the state.
The company has a pair of 4-foot tall “roll your own” machines in its store. Customers buy one of three types of loose tobacco and paper tubes with filters, then use the machines to turn them into cigarettes at about half the cost of name-brand cigarettes.
Jeffrey Burd, of Cincinnati, one of several lawyers who will represent Tobacco Haven in court, said this business doesn’t make Tobacco Haven a manufacturer.
“Tobacco Haven rents its machine to customers. They can buy or rent,” said Burd. He contrasted the shop’s operation with a hypothetical cigarette manufacturer in North Carolina that can produce several hundred cigarettes in seconds, while it takes minutes to roll the same number at a tobacco shop.
Burd will make his case in Merrimack County Superior Court at 11 a.m. Oct. 13, when the state brings its case against the tobacco shop.
The state filed the suit this week, about three weeks after contacting the tobacco shop’s owner, Joseph Correia Jr., asking if the business was manufacturing cigarettes.
Burd said he responded with a four-page letter that explained why Tobacco Haven is not a cigarette manufacturer.
Under two state laws, the Non-Participating Manufacturers Act and the Directory Act, tobacco manufacturers must make payments to the state based on the number of cigarettes they sell.
Burd argues that stores all over the country are operating similar machines that allow customers to make their own cigarettes at a significant savings, without paying the federal tobacco settlement taxes levied on manufacturers.
The in-store rolling machines are larger and faster than the ones consumers buy for home use, Burd said.
And local residents as well as ones from neighbor Massachusetts are flocking to the store.
“Roll-your-own cigarettes has gone through the roof,” said Keith Spano, manager at Castro’s Backroom in Nashua. “It’s an extremely cheap way to do it. I heard there’s a line out the door at (Tobacco Haven) with people that just wait from Massachusetts, New Hampshire, everywhere.”
Tobacco Haven’s big draw appears to be the price. A carton-worth, or 200 machine-rolled cigarettes cost $25.99. Cartons of many name-brand cigarettes cost more than $40.
Peter Labrecque drove from Nashua for exactly that reason. He said a carton of his old brand of cigarettes cost about $42.
“It’s more a matter of what I can afford right now,” he said. He said there’s not much of a difference between the store’s machines and rolling his own cigarettes at home, except convenience.
“Would it be different if I rolled them in my own home? Why would that be any different?” he said.
Mary Kavanaugh drove about 20 minutes from Lunenburg, Mass., because her old brand of cigarettes cost more than $60 per carton.
“I think it’s a great thing to help out the people. We just can’t afford all these new taxes on everything,” she said.
At Smokin’ Deals in Nashua, customers have a choice among five different tabletop models of take-home cigarette machines and eight handheld versions ranging from $25 to $63, according to manager Cindy Demanche.
“We’re overselling machines, tobacco, tubes and rolling papers,” Demanche said. “Every time the taxes go up, more and more people are looking for them. They’re fed up with all these tax increases.”
Depending on the model, it can take five to 15 minutes to roll out a pack of 20 cigarettes at home, she said.
“I’ve heard about (Tobacco Haven) from some of my customers, Demanche said. “They think it’s the coolest thing ever that they can do it in a store and not take it home.”
But others don’t seem to think so and the state wants Correia to halt his make-your-own cigarettes procedure until the apparently unprecedented matter is cleared up.
Burd and New Hampshire officials both say they believe the Brookline case is the first of its kind in the nation.
Sales of personal cigarette-rolling machines in the U.S. skyrocketed about 10 years ago, following the national tobacco settlement that required manufacturers to pay millions of dollars to states for healthcare for Medicaid patients suffering from tobacco-related illnesses.
Americans have been rolling their own cigarettes for decades, although the rise in sales of the machines 10 years ago was the first since the Great Depression, according to The Wall Street Journal.
Federal and state taxes on cigarettes have continued to climb over the past decade.
New Hampshire has collected roughly $50 million in tobacco-settlement money. Little of it has gone for health care. Instead, it has been placed in the general fund.
The future of this fund was a major concern of the state in filing the lawsuit, Assistant Attorney General David Rienzo said Tuesday.
Failing to take action against small cigarette manufacturers, he said, could lead to complaints and legal action against New Hampshire from the large companies that pay the bulk of the settlement money.