Owner of tobacco shop may sue over tax change

EVERETT — Joe Baba doesn’t know what his customers will do when the price surges for cigarettes they roll and purchase at his Everett Mall Way store.

But the owner of Tobacco Joes knows how he’s going to respond to the freshly minted state law forcing the hike: sue.

“It will happen in the very near future,” Baba said last week when asked when and where he plans to launch his legal fight.

Baba is an emerging face of a niche industry offering smokers a way to save money on cigarettes by buying tobacco and using an automated machine to roll their own.

Right now, customers of his store in Everett and similar establishments around the state avoid paying hefty cigarette taxes by making smokes with brands of pipe tobacco, which are taxed at lower rates.

The law signed Wednesday by Gov. Chris Gregoire will tax all varieties of loose tobacco offered in the stores at the same rate as that used in packaged cigarettes. The change takes effect July 1.

Baba estimates the law will effectively eliminate the price difference between those rolled by hand and those sold in stores.

Today you can buy the equivalent of a carton of cigarettes at his store for about $39, but after July 1 those smokes will cost around $20 more, he said.

State revenue officials estimate the average price of a carton of roll-your-own smokes in Washington will be $67.60 — only three dollars less than the average paid for a conventional carton of state-taxed cigarettes.

“This will create far less customers to some of the stores, maybe most of the stores, maybe all of the stores,” Baba said. “It depends on customer loyalty. Will it be strong enough to stay in business? That’s the question.”

Baba also owns Roll Your Own Northwest, the company which sells and services cigarette-making machines used in his Everett store and roughly 65 other establishments around the state.

He’s been fighting the tax change legislation since its introduction in the Legislature. He wrote Gregoire and urged her to veto the bill, arguing in part the lower prices aid smokers living on little income.

“We are HELPING these customers by saving them much needed finances during one of the most depressing economies of our lifetime,” he wrote. “These customers are already addicted to smoking and will continue to smoke whether our stores are open or not. We are simply providing them the opportunity to save some money by making their own smokes.”

Gregoire said Wednesday she never seriously considered vetoing the bill.

“What’s fair is fair. If you’re going to tax cigarettes, you tax them and you tax them the same, whether they are in a package or out of a package, whether they are roll your own or they’re pre-rolled,” she said.

“Let me be clear, who pays for the health care costs associated with the addiction of this product and the resulting health care problems of people who use it? Taxpayers do,” she said. “If they want to roll their own they are free to roll their own but they will pay the same tax. That to me is fundamental fairness.”

The state Department of Revenue estimates Washington will collect roughly $13 million a year in new tax revenues as a result of the law — and that’s with a big predicted drop in sales in existing outlets.

Revenue analysts estimate 7.1 million packs of roll your own cigarettes are sold statewide each year. This is based on 20 cigarettes a pack.

In preparing a fiscal note for the new law, analysts assumed the price increase would cause a 45-percent drop in the number of cigarettes produced in existing outlets to 3.9 million packs.

If that comes true, many of the stores will close, Baba predicted.

“If my volume in my store goes down 50 percent because of the increase in price, I may not stay in business and if that happens at other stores, the Roll Your Own Northwest can’t stay in business,” he said.

But Baba remains confident the courts will undo the law.

He contends the change is at odds with terms of a settlement reached several years ago between major tobacco firms and states, including Washington. He says that at the least imposing this tax will put Washington at risk at losing some of its share of money its due from the agreement.

Gregoire, who led the negotiations that led to the national agreement, said that isn’t true and nothing in the law conflicts with the settlement.

“I don’t know what their lawyer is taking about,” she said.

Baba isn’t retreating.

“Round 1 went to the state,” he said. “We believe we will win Round 2 in the courts.”

Jerry Cornfield: 360-352-8623; jcornfield@heraldnet.com

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Local News

Olivia Vanni / The Herald 
The Mukilteo Lighthouse. Built in 1906, it’s one of the most iconic landmarks in Snohomish County.
The Mukilteo Lighthouse. Built in 1906, it’s one of the most iconic landmarks in Snohomish County. (Olivia Vanni / The Herald)
Mukilteo mayor vetoes council-approved sales tax

The tax would have helped pay for transportation infrastructure, but was also set to give Mukilteo the highest sales tax rate in the state.

Marysville Mayor Jon Nehring gives the state of the city address at the Marysville Civic Center on Wednesday, Jan. 31, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Marysville council approves interim middle housing law

The council passed the regulations to prevent a state model code from taking effect by default. It expects to approve final rules by October.

x
State audit takes issue with Edmonds COVID grant monitoring

The audit report covered 2023 and is the third since 2020 that found similar issues with COVID-19 recovery grant documentation.

Bothell
Bothell man pleads guilty to sexual abuse of Marysville middle schoolers

The man allegedly sexually assaulted three students in exchange for vapes and edibles in 2022. His sentencing is set for Aug. 29.

Larsen talks proposed Medicaid cuts during Compass Health stop in Everett

Compass Health plans to open its new behavioral health center in August. Nearly all of the nonprofit’s patients rely on Medicaid.

Snohomish County Health Department Director Dennis Worsham on Tuesday, June 11, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
Snohomish County Health Department director tapped as WA health secretary

Dennis Worsham became the first director of the county health department in January 2023. His last day will be July 3.

Logo for news use featuring the municipality of Mukilteo in Snohomish County, Washington. 220118
On second go, Mukilteo City Council votes against sales tax hike

A veto from Mayor Joe Marine forced the council to bring the potential 0.1% sales tax increase back for another vote Monday.

Community members gather for the dedication of the Oso Landslide Memorial following the ten-year remembrance of the slide on Friday, March 22, 2024, at the Oso Landslide Memorial in Oso, Washington. (Ryan Berry / The Herald)
The Daily Herald garners 6 awards from regional journalism competition

The awards recognize the best in journalism from media outlets across Alaska, Idaho, Montana, Oregon and Washington.

Two visitors comb the beach at Kayak Point Regional County Park on Friday, June 14, 2024, in Tulalip, Washington. (Ryan Berry / The Herald)
Nate Nehring and WSU Beach Watchers to host beach cleanup at Kayak Point

Children and families are especially encouraged to attend the event at Kayak Point Regional County Park.

One person dead in single-vehicle fatal crash near Stanwood

A 33-year-old male was found dead at the scene Monday evening with his vehicle partially wrapped around a tree.

Logo for news use featuring Snohomish County, Washington. 220118
Snohomish Regional firefighters respond to nearly 90 calls on the Fourth

While crews stayed busy on Independence Day, it was far more peaceful than other years.

Vehicles travel along Mukilteo Speedway on Sunday, April 21, 2024, in Mukilteo, Washington. (Ryan Berry / The Herald)
Mukilteo approves 84-acre annexation east of Speedway

The annexation of unincorporated land is expected to bring new revenue to the city as it faces budget challenges.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.