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Question on legality of processing AFTER purchase of whole leaf

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Michibacy

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The fee for a booth is relatively little Don so I may try it 1 time to see how it goes (won't be too big of an investment). I'm trying to work with the lady at the market supplying her with legal documents and such explaining how whole leaf tobacco isn't a tobacco product.

As for the shredding Don, if I am shredding it for personal use, legally do I need a license for that as well (I think the answer is no but your comment is having me ask the question)
 

FmGrowit

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Jeremy,

Of course you know processing tobacco for your own use is perfectly legal, but that's not what you were arguing. Believe it or not, there can be a case made against you for GIVING away processed tobacco especially if you are the one doing the processing. There is obscure law about tobacco "changing hands" needs to be taxed. So technically, if you give someone a cigarette (processed tobacco) , you are supposed to collect the tax on it...or something like that.

You are much safer dealing in dope than fuccing with the government's tobacco. Trust me, you're tryig to create a loophole where one does not exist.

There is plenty of opportunity to sell unprocessed tobacco without violating any laws. I'd very strongly encourage you to work within the legalities of the law as they currently exist and make the necessary adjustments to keep within the confines of the law.
 

Seanz

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Its the same down here, you can grow it smoke what you grow but if you dare sell,trade or giveaway any processed tobacco they will be on you faster then a two dollar whore on pay day, which in a sense they are ;), The penalties down here are more harsh than getting busted for the ol Mjane
 

Michibacy

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Jeremy,

Of course you know processing tobacco for your own use is perfectly legal, but that's not what you were arguing. Believe it or not, there can be a case made against you for GIVING away processed tobacco especially if you are the one doing the processing. There is obscure law about tobacco "changing hands" needs to be taxed. So technically, if you give someone a cigarette (processed tobacco) , you are supposed to collect the tax on it...or something like that.

You are much safer dealing in dope than fuccing with the government's tobacco. Trust me, you're trying to create a loophole where one does not exist.

There is plenty of opportunity to sell unprocessed tobacco without violating any laws. I'd very strongly encourage you to work within the legalities of the law as they currently exist and make the necessary adjustments to keep within the confines of the law.

I was just clarifying Don (not trying to be prude) wanted to make sure I was reading what I was reading. I appreciate the warning on the subject. I see now how I was probably trying to make a loophole where it's been closed up long, long ago.

How do you feel about the farmers market selling (if they give me the A-ok to do so)
 

AmaxB

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Michibacy
Not sure of your state but am of mine, in mine you must have a license to sell tobacco, processed or not an excise tax is due on your purchase cost this requires an account with the state in addition to your license to sell. On the Fed level Don is right if you change it in anyway from leaf you must get a permit and post a bond with big brother.
For me I already had the license to sell so a simple call to the state took care of the excise tax situation (this varies from state to state - tax on leaf). I am looking into the permit because I would like to shred for my customer base. But until I get one, if I get one the buyer will have to shred or any other manipulation they may want. The way I under stand it with the Fed is as long as you buy it whole leaf and sell it as you bought it (no changes made to it) your OK. Should you process in any way than you must have a permit and pay the fed excise tax, on pipe it is 2.83 a pound, on RYO it is 24.83 a pond.
Do not know about growing it and selling.
 

Michibacy

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Just heard from the TTB, their response was as follows.

[FONT=&quot]I would like to apologize for the delay in replying to your email; however, I had to seek guidance from our Regulations and Rulings Division concerning your questions below. You indicate in your email that you are interested in processing or providing a machine to process whole leaf tobacco that customers will purchase from you or your company. The recent law signed on July 6, 2012, MAP-21, provides that any person who for commercial purposes makes available, for consumer use (including the consumer’s personal consumption or use), a machine capable of making tobacco products is considered a “manufacturer of tobacco products” for purposes of the Internal Revenue Code of 1986. Based on the limited information that you have provided below, it appears that the shredding of the whole leaf tobacco would constitute the processing of tobacco and the production of a tobacco product, that is, Roll-Your-Own (RYO) tobacco. Accordingly, you proposed shredding operations appear to involve making available a machine capable of making tobacco products, and as a result you would need to obtain a permit for tobacco products manufacturer and pay the Federal excise tax on resulting tobacco products. TTB Public Guidance published October 4, 2012, lays out the information that you should consider before engaging in the proposed business operations. As for your questions concerning Michigan’s laws and regulations, you will need to contact them directly. [/FONT]
 

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You'll come out better selling the shredders than offering the service. When they hit pipe tobacco with the same tax they hit RYO tobacco with, the market base for whole leaf is going through the roof and it has to be shredded. Sell them a shredder. That's just my $0.02.
 

smokesec

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[FONT=&amp]"Based on the limited information that you have provided below, it appears that the shredding of the whole leaf tobacco would constitute the processing of tobacco and the production of a tobacco product, that is, Roll-Your-Own (RYO) tobacco."


[/FONT]
Well that sucks dead bunnies. There aren't many viable home shredders on the market. My typical clientele are lower income folks looking to avoid the high cigarette tax. They cannot afford to purchase $300 shredders.

 

FmGrowit

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Just rent the shredder for $5 or better yet, give them the shredder for a day.

One of my customers shredded some leaf right in front of a TTB agent and told him she sells the shredded tobacco. The agent's reply was"Until they tell me you can't do it, you can do it"

The law is at best vague.

[FONT=&amp]"any person who for commercial purposes makes available, for consumer use (including the consumer’s personal consumption or use), a machine capable of making tobacco products is considered a “manufacturer of tobacco products”[/FONT].

So does this mean the manufacturer of the shredders and injectors are [FONT=&amp]“manufacturer of tobacco products”[/FONT]? I doubt it.

Does this mean the local rental shop can't rent shredders? Who is to say what the limitations of a any "machine" is?
 

FmGrowit

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Can paper shredders be used to shred tobacco? Of course they can. This law makes paper shredder manufacturers "[FONT=&amp]manufacturer of tobacco products[/FONT]".

Bunch of bull shit
 

johnlee1933

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[FONT=&amp]
[/FONT]
Well that sucks dead bunnies. There aren't many viable home shredders on the market. My typical clientele are lower income folks looking to avoid the high cigarette tax. They cannot afford to purchase $300 shredders.
Maybe they could do a group buy. Frought with problems I know but a way to get it done. You might be able to supervise at no risk. -- J
 

Knucklehead

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"Based on the limited information that you have provided below, it appears that the shredding of the whole leaf tobacco would constitute the processing of tobacco and the production of a tobacco product, that is, Roll-Your-Own (RYO) tobacco."


Well that sucks dead bunnies. There aren't many viable home shredders on the market. My typical clientele are lower income folks looking to avoid the high cigarette tax. They cannot afford to purchase $300 shredders.


If they are swapping from store bought cigarettes to either RYO or whole leaf, they're probably saving $300.00 per month or more. These folks can afford a shredder. Tell them to go to www.wholeleaftobacco.com. Best service on the internet.
 

wazzappenning

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here (and remember our laws and taxes on baccy are more stupid than yours) there is a store that sells shredded, supposedly organic tobacco. the thing is it costs double what you would buy commercial tobacco for, so i imagine they have all their licenses, taxes paid etc. you could go that route if you chose, and i doubt it would be anywhere near as expensive as here.

however, a thought occurred to me, if its illegal to provide or rent a shredder, then how about this.

add a percentage to your tobacco cost to cover the cost of shredders. then sell a shredder to your customer, but tell them they have 3 or 4 days max to bring it back for a refund. if they default on the time limit, they own it. you could even call it a pasta maker, and what the customer does with it is their business.

that way you are not renting, your customer is simply taking advantage of you by using an item and then returning it after they dont need it anymore. but you have already made due for that inconvenience.

like has been said laws can be interpreted in more than one way.
 

Knucklehead

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Regardless of which way you choose to dodge the laws these Powermatic shredders are not designed to be commercial units. Read the threads by people whose shredders are locking up trying to shred a few pounds at a time. These are people that paid good money for their shredders and need them to last and that try to take care of them, although I don't think shredding pounds at a time is the way to go about it. Talk to someone that rents anything and you'll find out what kind of shape their stuff is in when they get it back. We rent houses and six apartments. It is disgusting the way people will do you. Holes in the wall, water leaks that they don't tell you about so you have to replace a floor instead of a gasket, stinking trash piled everywhere. Expect your shredder to be treated the same way, and prepare yourself for alot of cleaning and maintenance and replacement. Don't delude yourself that your customers are different. And don't holler these are my friends, because they're the worst. And again, these shredders are not commercial units. They will not last if they are used as such. Give these guys a keyring and tell them where they can buy a shredder.

I know you would like to provide a service and that's a good, noble idea. I just think if you try to provide this service you are going to get burned over and over.
 

wazzappenning

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yeah but for ppl that cant afford a shredder, sell them(for return), a pasta maker. no need to go high tech for ppl who cant afford high tech. btw im still using a pasta maker (with roughing up from a dremel tool) its not the best, but it works. i will tinker with the idea of removing the cutter and using a zip disk to cut a square groove into it and see if that grabs a little more.
 

Michibacy

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I'm no longer interested in the concept, I thought I would just let you folks know what they said. Nothing illegal about showing people how to do it :)
 

FmGrowit

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There will be many remedies suggested in the near future. My guess is the shredding stations will be joined with the filling "clubs". You have to remember....Congress makes federal law. It's a lengthy process and I have my suspicions the "law" that was quoted in the earlier post is nothing more than a rule that has no legislative backbone.

I know a few people in the industry and I will get to the bottom of this.
 

Knucklehead

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yeah but for ppl that cant afford a shredder, sell them(for return), a pasta maker. no need to go high tech for ppl who cant afford high tech. btw im still using a pasta maker (with roughing up from a dremel tool) its not the best, but it works. i will tinker with the idea of removing the cutter and using a zip disk to cut a square groove into it and see if that grabs a little more.

I agree with you 100%. I wish I had put that in my rant. oh well. Sell pasta makers for the ones that can't afford shredders. There's more than one way to skin a cat. Or somebody. LOL 100% markup.
 

leverhead

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[FONT=&]"Based on the limited information that you have provided below, it appears that the shredding of the whole leaf tobacco would constitute the processing of tobacco and the production of a tobacco product, that is, Roll-Your-Own (RYO) tobacco."


[/FONT]
Well that sucks dead bunnies. There aren't many viable home shredders on the market. My typical clientele are lower income folks looking to avoid the high cigarette tax. They cannot afford to purchase $300 shredders.


What do you think is a realistic price that they can afford? A hundred bucks doesn't buy much anymore.
 

smokesec

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I'm afraid renting/leasing shredders won't work either. That is a "commercial purpose". Apparently they are interpreting this law to include any machine capable of making a tobacco product, not just a cigarette making machine like an RYO filling station. Once that leaf is shredded, it IS a tobacco product. The TTB released guidance on this back in October: http://ttb.gov/pdf/2012-3cig-making-machines.pdf

...but even I didn't think they would include shredders. And it's not going to work in a club setting either. I've been hearing of "private clubs" already being shut down, and a permit for one in my very own town was just denied YESTERDAY.

Relevant quote from the above link:

The tax liability and IRC obligations apply to any person who for commercial purposes makes the machine available for use by consumers of the tobacco products, regardless of whether the machine is used at a retail premises. Non-profit status of the “person” making the machine available is not relevant in evaluating “commercial purposes.” TTB is aware that “non-profit” organizations, “social clubs,” “cooperatives,” and other similar organizations are being established to make such machines available to members.

TTB is reviewing a number of scenarios in which the machines are being, or have been, made available to consumers and will address specific scenarios on a case-by-case basis. Based on TTB’s current understanding of these scenarios and the applicable law, it is extremely unlikely that TTB will conclude that these organizations are exempt from excise tax liability and associated IRC obligations. In addition, in general, a person who leases or rents a machine to consumers is not relieved of his or her tax liability and other IRC obligations.
 
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