Tax avoidance involves more than just casual and commercial smuggling; it also includes “channeling” to other forms of tobacco, such as chewing tobacco and “roll your own” cigarettes. A study by Harvard University researchers published in the June 11, 2008, Journal of the American Medical Association found that from 2000 to 2007, 30 percent of the decline in legal sales of cigarettes in the United States was offset by the acquisition of other tobacco products.[40] These products were small cigars, moist snuff and loose tobacco, which can be used to “roll your own.” The Harvard researchers measured the increase in sales of such products and found that it was equivalent in nicotine to 1.1 billion packs of cigarettes, partly counterbalancing the approximately 3.7 billion-pack decline in legal cigarette sales during the period.[41]

Other tobacco products are a natural alternative for cigarette smokers, because the taxes are typically lower. Such products can also be smuggled, both casually and commercially. In our 2008 study, we noted that officials in the United Kingdom estimated in 2007 that 50 percent of hand-rolled tobacco used in the U.K. is smuggled.[42]

Moreover, entrepreneurs have begun providing access to “roll-your-own” machines to help customers avoid excise taxes by purchasing loose tobacco. A page on the U.S. Treasury Department’s website reports that such machines can turn out 200 cigarettes in as little as eight minutes.[43] The RYO (Roll Your Own) Machine Rental LLC out of Ohio reports on its website that RYO cigarettes can cost as little as one-third the price of “pre-manufactured” cigarettes.[44] Many smokers roll cigarettes using pipe tobacco, which faces a dramatically lower federal excise tax.[45]


[40] “Decline in Cigarette Smoking in U.S. Significantly Offset by Increase in Use of Cigars, Snuff, Roll-Your-Own and Other Tobacco Products” (Harvard School of Public Health, 2008), 2629, http://jama.ama-assn.org/content/299/22/2629.full .pdf+html (accessed Dec. 13, 2010).

[41] Ibid.

[42] “Departmental Report Integrating and Growing Stronger” (HM Revenue and Customs, 2007), 39, http://bit.ly/hVWdAE (accessed Sept. 20, 2008).

[43] “TTB Ruling 2010-4: Cigarette-Making Machines in Retail Establishments” (U.S. Alcohol and Tobacco Tax and Trade Bureau, 2010), http://www.ttb.gov/rulings/2010-4rule.pdf (accessed Oct. 21, 2010).

[44] “Filling a Need: Profiting with RYO” (RYO Machine Rental, LLC, 2010), http://www .ryofillingstation.com/about.php (accessed Nov. 4, 2010).

[45] “TTB Ruling 2010-4: Cigarette-Making Machines in Retail Establishments” (U.S. Alcohol and Tobacco Tax and Trade Bureau, 2010), 2, http://www.ttb.gov/rulings/2010-4rule.pdf (accessed Oct. 21, 2010).