Wednesday, September 21, 2011

Pocono Smoke Shops

The two cigarette-making machines incessantly click and clank as they crank out a nicotine addict's dream: A carton of smokes for $24.99 plus tax.

The operators of Tobacco King and Smokes 2 Go have two machines in each of the shops here, and are planning to open two more stores in the community by the end of the year, with as many as six more machines. The rapid expansion and investment — each machine costs $35,000 — have been fed by an inundation of customers eager to save a buck.

The machine debuted in Matamoras in late June, a year after the company installed one in Honesdale. The manufacturer, RYO Machine Rental LLC of Ohio, has distributed more than 1,000 machines in 35 states.

It's not unusual, said Derrick Gordon, sales manager, for customers to line up for waits of two hours on weekends. Two more machines are to be installed today at the Smokes 2 Go store in East Stroudsburg.

The reason for the popularity is dollars and cents.

The cheapest cartons in New York state can be $80. Cartons go for around $70 in Pennsylvania.

Pennsylvania does not tax loose tobacco, unlike packaged products. The only package that the machine-made cigs come in is a clear plastic freezer bag, into which the finished smokes shoot from the bottom of the contraption. Patrons can buy colorful plastic cigarette cases for $2.

"It's the price," Bill Gilmore of Middletown, N.Y., a retired MTA bus operator, said of what prompted his 20-mile Monday morning jaunt. "Even if they didn't have the machine, I'd come here. Taxes on gas, taxes on cigarettes, taxes on everything are less in Pennsylvania. I love Pennsylvania. I just happen to live in New York."

Rosalie Scioscio and Cynthia Everson, both of Milford and co-workers at a healthcare facility, were also stocking up.

"Maybe go on a vacation, or a better vacation," Everson said of her savings.

The machines are fed loose cigarettes online and paper through openings on top and at the front. Customers load them and click three buttons to start the process. Gordon, the sales manager, shows the customers what to do, and then stands back.

"Employees can't make the cigarettes, or else they'd be manufacturers," said Eddie Miles, the marketing director. "The customers make the cigarettes."

It's a distinction that has been disputed by federal authorities who want retailers to pay manufacturing taxes. The machine-maker and an Ohio retail store sued last year after the government sought to close stores hosting the machines. The case is ongoing.

New York has no problem with its citizens journeying to the Keystone State for tobacco. If they buy no more than two cartons, a use tax would not apply, said Ed Walsh, spokesman for the Department of Taxation and Finance.

States like Pennsylvania are waiting for the outcome of the federal lawsuit before making any decisions about the machines, said Elizabeth Brassell, spokeswoman for the Department of Revenue. She said there were more than 100 machines in the state as of January.

"In New York state, a carton sells for $100, and we can't afford to smoke cigarettes at those prices," Betty Wilchek of Chester, N.Y., said as she waited to make two cartons. "Me and my neighbors, we all come here. It's worth the 29 miles."

Wilchek said she enjoys smoking cigarettes, and that the machine "makes it harder to stop. We haven't seen these prices in eight years."

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