State sues tobacco shop over cigarette-making machines

CONCORD – The state of New Hampshire is suing a Brookline businessman who is charging customers $20 for a carton of cigarettes they roll themselves.

According to Assistant Attorney General David Rienzo, Joseph Correia Jr. of Tobacco Haven in Brookline has two machines customers use to make their own cigarettes. Customers buy tobacco and other cigarette components and then are directed to the machines and taught how to operate them, according to Rienzo.

Each machine can churn out about 200 cigarettes — a carton — in about 10 minutes. Customers pay $26 a carton, about $30 less than the going price of a pre-packaged carton.

Atty. Jeffrey Burd of Cincinnati, Ohio, who represents Correia, said Tobacco Haven disputes it is a manufacturer.

“We have communicated that to the Attorney General’s Office prior to the filing of this lawsuit,” he said. “They disagreed.”

Burd said he will be filing paperwork with the court outlining Tobacco Haven’s position prior to an Oct. 13 hearing in Merrimack County Superior Court.

Rienzo said the state is owed about 2 cents per cigarette under the state’s Non-Participating Manufacturers and the Directory Act. Additionally, taxes of $1.33 per pack have gone uncollected, according to Rienzo.

“There’s a big issue on taxes,” he said.

While the state Department of Revenues is aware of the situation, Rienzo said the tax issue is not part of the lawsuit filed in Merrimack County Superior Court.

Eleven years ago, state laws were enacted as part of the tobacco Master Settlement Agreement (MSA) of 1998.The MSA holds tobacco manufacturers responsible for the costs paid by the state for Medicaid patients suffering from tobacco-related illnesses. As a result, the state receives $50 million annually.

Those manufacturers who are part of the settlement increased their prices to cover the annual $7 billion payment to all 50 states, Rienzo said.

Under state law, cigarette manufacturers have to join the MSA but those who do not must pay into an escrow account which is maintained in the event the states decide to sue them as well. The amount paid is based on the number of cigarettes made – about two-cents per butt, according to Rienzo.

The state is asking a judge to declare Tobacco Haven a tobacco products manufacturer, making it subject to state laws.Part of the MSA agreement, Rienzo explained, obligates the state to go after those manufacturers who do not pay into the escrow account. He said it would be costly for the state not to enforce those laws because if it doesn’t, the penalty is the loss of that annual $50 million payment.

Rienzo did not know how many cigarettes were manufactured at Tobacco Haven or how much money is due the state.

source: http://www.unionleader.com/

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