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Wisconsin Notifies Roll Your Own Cigarette Retailers of Compliance Requirements

Posted by Suzi Posted on Oct 02 2013

Wisconsin Notifies Roll Your Own Cigarette Retailers of Compliance Requirements

by Robert J. Ziegler, Esq. (RIA)

The Wisconsin Department of Revenue has issued a notice to retailers operating a roll your own (RYO) machine reminding them to comply with their legal obligations. Revenue agents will also be going on-site to the RYO retailers to ensure compliance with the cigarette tax law and regulations. ( Revenue Issues Notice to Roll Your Own (RYO) Retailers to Follow the Law, Wis. Dept. Rev., 09/23/2011 .)

Compliance requirements. The Department estimates there are approximately 50 to 100 RYO machines in Wisconsin. Under Wisconsin law, if a retailer or the retailer's customer operates a RYO machine on the retailer's premises to make cigarettes with loose tobacco, the retailer is both a cigarette manufacturer and distributor. As a consequence, the retailer is required to:

(1) Obtain both manufacturer and distributor permits from the Department of Revenue. A retailer needs the cigarette manufacturer permit because its business involves producing cigarettes with loose tobacco. A distributor permit is required so that the appropriate Wisconsin cigarette tax stamps are affixed to all cigarette packages customers take with them when they leave the retail premises.
(2) Sell more than 50% of the RYO cigarettes wholesale to other retailers or vending machine operators, if retailers wish to continue selling RYO cigarettes directly to customers. Retailers cannot own, control, or operate these other entities.
(3) Obtain certification from the Wisconsin Department of Justice to be placed on its approved directory of cigarettes for sale in Wisconsin to be in compliance with state law and regulations.
(4) Obtain certification from the Wisconsin Department of Safety and Professional Services that these cigarettes meet the fire safety performance standards.

The Department encourages RYO retailers to voluntarily comply with the law. Retailers who fail to comply with state law and regulations can be subjected to fines, penalties, permit revocation, imprisonment, and/or seizure of the tobacco and other personal property used in RYO activity.