A.G. Schneiderman Sues Central New York “Roll-Your-Own” Cigarette Business For Evading Taxes

To Skirt The Law, Customers Can Purchase Cigarette Components, Assemble Them in the Store and Leave With Cartons Of Untaxed Cigarettes Ready To Be Smoked

Lawsuit Also Charges Business With Violating State Law For Selling Cigarettes Not Certified As “Fire-Safe”

SYRACUSE- Attorney General Eric T. Schneiderman today announced the filing of a federal lawsuit against Tobacco House C.C.W., Inc. located at 4465 E. Genesee Street in Dewitt, a business that evades cigarette taxes by providing customers with loose tobacco, tubes of cigarette paper and access to machinery that instantly produces assembled cigarettes for customers onsite. This "Roll Your Own" business sells cigarettes in violation of tax and other regulatory statutes applicable to cigarettes by selling the components of cigarettes and facilitating customers' production of untaxed and unsafe cigarettes.

The state's lawsuit against Tobacco House, filed in the Federal District Court for the Northern District, charges that this business, its owner, and its employees, are in violation of the Federal Contraband Cigarette Trafficking Act, the New York State Cigarette Marketing Standards Act, and New York State tax law, for selling cigarettes on which the required taxes have not been paid. The lawsuit also charges the defendants with violating New York’s Cigarette Fire Safety Act by selling cigarettes that have not been certified as “fire-safe” to extinguish more quickly than standard cigarettes, and which bear no health warnings, both of which are required by New York State law.

“Rather than playing by the rules, this store and others like it are cheating the state out of millions of dollars per year in legitimate tax revenue and endangering public health and safety while they’re doing it,” said Attorney General Schneiderman. “The illegally low prices this business is charging for their store-made machine-rolled cigarettes have been shown time and again to encourage people to take up smoking and to discourage smokers from quitting. Additionally, because cigarettes are the number one cause of deaths by fire in this country, New York State has long required that all cigarettes sold in the state be fire-safe; these cigarettes are not.”

As described by investigators with the New York State Department of Taxation and Finance, customers at Tobacco House purchase loose tobacco and packages of cigarette paper tubes with attached filters. Customers then make cigarettes, sometimes with the assistance of store employees, on machines located in and owned by the store. The machines fill the paper tubes with compacted tobacco to produce completed cigarettes, which the customers then pay for by the carton. Tobacco House advertised “All Cigarettes $28.99 per Carton,” and sometimes even advertised a $3.00-off-per-carton coupon, bringing the price down to $25.99 per carton, prices which fall well below the amount of the taxes alone on a carton of cigarettes.

Sales of non-taxed cigarettes deprive the state of millions of dollars in lost cigarette tax revenues, hurt law-abiding small businesses and undercut public health measures designed to discourage smoking. The state's lawsuit against Tobacco House seeks an injunction to stop the defendants from continuing their illegal sale, distribution, and advertisement of non-taxed cigarettes, as well as compensation for the tax revenue lost by the state as a result of defendants’ unlawful activities.

Today's announcement in Central New York comes on the heels of Tuesday's joint lawsuit with the City of New York against BB’s Corner in Brooklyn and Nitecap Entertainment on Staten Island.  Both businesses face similar charges in the Federal District Court for the Southern District of New York.

Consumers who would like to report businesses with "Roll Your Own" machines that are not charging applicable state taxes should call the Attorney General's Tobacco Compliance Bureau: (212) 416-6343.

The Attorney General thanked the Department of Taxation and Finance for their assistance with this investigation. 

The case is being handled by Assistant Attorney General Marc Konowitz, under the supervision of Tobacco Compliance Bureau Chief Dana Biberman and Executive Deputy Attorney General for Social Justice, Janet Sabel.

 

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