• Legal Threats Cause Roll Your Own Cig Store To Close, Second Sheepshead Bay Shop Now In City’s Sights


    by on Feb 7th, 2012

    After less than three months, City Smokes (2695 Coney Island Avenue) has closed for good, following a lawsuit filed yesterday by New York City that the roll your own cigarette business was skirting tax laws. A similar store in Sheepshead Bay has told Sheepshead Bites that he, too, is being threatened by the city.

    Lawyers for New York City filed suit against the operators of City Smokes, and a second roll your own cigarette shop in Staten Island yesterday, threatening to collect back taxes for the tobacco sold on premises.

    City Smokes is one of several new shops cropping up around the five boroughs that allow patrons to buy loose tobacco, paper and filters, and then use in-store machines to roll them. Since they claim they’re only selling loose tobacco, the industry exists in a legal grey zone, since loose tobacco is taxed at a lower rate. A standard pack at such a location could cost as little as $2.95.

    The city, however, doesn’t think it’s so grey. If customers are leaving the store with rolled cigarettes, they argue, then they’re purchasing rolled cigarettes, and patrons should be taxed at the full rate.

    “These legal actions are part of our ongoing efforts against businesses that think they can invent loopholes to skirt New York City’s tough cigarette laws,” Corporation Counsel Michael Cardozo told Daily News.

    The city also claims that these shops “cause a public nuisance” by selling cigarettes that have not been certified as “fire-safe” as required by New York State law.

    The city previously forced two similar shops – one in Manhattan, the other in Staten Island – to close down in December after threatening to take them to court for back taxes.

    A second Sheepshead Bay roll your own cigarette shop is also facing pressure from Bloomberg administration lawyers to close down. The operator of Green Leaf Smokes at 1326 Sheepshead Bay Road told Sheepshead Bites he received a cease and desist letter informing him the city will commence legal action against them in the event of non-compliance.

    He declined to be quoted on the matter, but noted that he received the letter two weeks ago and has given it to his lawyer to determine an appropriate response.

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    • Allanb

      Well, when is NYC going to go after Wall Street in regards to “businesses that think they can invent loopholes to skirt” ANY laws?

      That said, there’s an easy fix to all this. Stop rolling them in the shop. Sell rolling machines to customers, and let them do it themselves at home.

      • Crom

        or open a second shop next to it that rolls cigarettes for people

        • Allanb

          that might not fly as it would be the same owners. I can understand the logic, if someone walks into a store to purchase tobacco, but walks out with rolled cigarettes, it makes sense that they’re skirting the law. Just don’t roll them then.

          People can roll their own, or someone else can set up a shop that offers that service as an aside for cheap…

          • http://www.nedberke.com Ned Berke

            Almost every bodega sells tobacco, papers and rolling machines. The presumed convenience with these roll your own stores is that their machines are electronic and roll an entire pack in a minute or two, whereas rolling them (with a filter) by hand or on a cheap rolling machine can take upwards of 30 minutes.

            I feel for the owners a bit. They opened up a business that took advantage of a new market created by new regulations. They signed 10-year leases and purchased  all those rolling machines at around $500 a pop. 

            I think there’s a legal argument to be made and I think it should be made. Unfortunately, these small business owners tend to be self- of family-financed immigrants and don’t have the resources to fight the city over the course of years. 

            This seems like bullying to me. If the city thinks there’s a loophole, then get the City Council to amend the bill and close the loophole. Don’t be a bully and make examples out of individual owners.

            • Allanb

              That I can agree with Ned. Still, even with the city bullying, they were innovative enough to recognize an opportunity before, they can figure something out to beat the city at their own game if they have to I’m sure.

            • TITANIUMDX

              Totally agree, these business are being bullyed because they don’t have the resources to fight back the city; in a time where more businesses are needed for job growth. Boils down to unnecessary taxation and regulation. 

              Here is another example, charging livery drivers for new street hail permits, that require expensive equipment that is not necessary. STREET HAILS ARE OBSOLETE; a car service can be request through-out the 5 boroughs by phone, mobile apps, or through there respective websites. At the convenience of any location, be it home, job, lobby, club, etc; a car service can be requested without the need to be hailing a cab on the street in bad weather.  Now if the riding public can’t make a simple call or use a mobile app to request a car service, then we are all doomed.

            • http://www.flickr.com/photos/lisanne001 Lisanne!

              The people who set up these businesses must have known that they were on shaky legal ground. The Coney Island Avenue store after the city started harassing owners of these stores. While I sincerely doubt that the city legal construct would hold up in court the cost of defending the case could be high, especially with appeals.

              It’s really not a fair deal for anyone except the city, which is looking to get revenue without increasing income based taxation.

          • http://twitter.com/ologhaiofmordor Olog-Hai

            It’s trivial for one person to control several companies. The idea is that someone walks into a store to purchase tobacco and walks out with tobacco. Then he goes to the rolling shop next door, which has the same owner but behind a different LLC (or whatever) .

      • Anonymous

        haha, wall street gives city more money than some small cigarette shop, that is why no one ever will go after wall street.. it’s a form of a…bribe?? We give you money and intern you let us do what ever the fuck we want.

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    • Anonymous
    • Anonymous

      That was a flash in the pan business idea.The owners should have gotten some good legal advice before opening up.

    • Louise

      I never see any customers in this shop. Did the owners really think there was a large market for this product? Less adults are smoking today. It appears to me that the shop is marketing to young people who don’t have the money to buy a traditional pack of cigarettes. I don’t think Sheepshead Bay needs any more smoke shops.

    • TWrex

      Actually, these places dodge at least three taxes/fees.
      1. They don’t pay for the manufacturer’s license.  State Loses

      2. Cigarette tobacco is taxed at $24.78 per pound.  These places usually use a cig tobacco that’s falsely labeled as pipe tobacco.  Pipe tobacco is taxed at $2.83 per pound.  These are federal taxes lost to the tune of about $21.00 for every two or so cartons sold.  Hard to believe the Feds haven’t jumped on this…

      3. State tax stamps are dodged.  State loses twice.

      The solution is to outlaw relabeling cig tobacco as pipe tobacco.  Then, reduce the tax on real cigarette tobacco to a more reasonable level to remove the temptation to dodge the tax.

    • Patrick

      The Bloomberg administration is sucking every nickle out of the public. Notice the parking meters are now 25 cents for 15 minutes. You can’t park you car and go food shopping in 15 minuets, the city knows that so……………..you keep pumping your quarters in. Of course if you had a chauffeur like the public administration had it would not be a concern. Bloomberg will only accept 1 dollar a year to inflate his ego taking advantage of the poor and the getting poor middle class. Yet if you take the time to look up the facts he has made billions in the past years.

    • http://www.njluxurymotors.com Arthur Borko

      You know what, these bully tactics by the city are starting to piss me off. I wish someone would just stand up to the city and take them to court so we could have a resolution to the problem.

      If you’re gonna start a business based on what you feel is a loophole in the law then you should be ready to defend yourself legally so precedent can be set and the law changed in your favor.

    • Pingback: City: Snuff roll-your-own shop – New York Daily News « Abolish Pest Control Serving Sheepshead Bay, Brooklyn, New York

    • Anonymous

      It’s only a “loophole” when the city arbitrarily SAYS it’s a loophole.  The position they’ve taken in response to these stores that dare defy King Hater of Smoking Bloomberg is “tobacco is tobacco.”

      As I wrote in my Huffington Post piece at http://www.huffingtonpost.com/audrey-silk/cuomo-budget-tobacco_b_1220363.html

      Well then, cotton balls are cotton balls and chicken wings are chicken wings too, no? No. Calling the state sales tax law “hairsplittingly crazy,” the NY Daily News (in an article about inspections of supermarkets) points out that:

      “Cotton balls, for example, are tax-free if they’re sterilized for medical use, but taxable if they’re sold for removing makeup. And heated chicken wings are taxable, while unheated wings are not.”

      Take a look at “Food and Food Products Sold by Food Stores and Similar Establishments.” It’s a bulletin put out by the New York State Department of Taxation and Finance for use as a guide. It explains the “inconsistencies” — I’m sorry, distinctions — in different tax rates.

      Ask the deli counterman for a pound of loose sliced salami and it’s exempt from sales tax. But have him slap it in a bread wrapping? Bingo! Taxed. Hot dogs wrapped in a bun? Taxed. Hot dogs in a package? Exempt. Tobacco in a paper wrapper? Taxed. Tobacco in a bag? Exempt. Oops, no, it’s the same dontcha know so… Taxed.