Yankton Smoke Shop Owner Upset With New Law

A Yankton business owner is fighting back against new legislation signed by Governor Dennis Daugaard. House Bill 1138 states any retail establishment that provides roll-your-own cigarette machines should be declared a cigarette manufacturer and pay higher taxes. But that could snuff out a niche market for tobacco users.
John Muilenburg's been operating Mullies Cigarette Shop since October. He got the idea from similar stores in Sioux Falls and Mitchell and says it's a unique way to interact with local smokers.

"The customers, they operate the machine. I teach them how," Muilenburg said. "They operate it, they do it all, they hit all the buttons on it. And these cigarettes are not packaged."

That's the main reason why Muilenburg's fighting the idea of being labeled a cigarette manufacturer. House Bill 1138 has been signed into law. Now Muilenburg's out to prove that customers merely put the tobacco products and cigarette tubes into the roll-your-own machines. In his eyes that means the transaction is in the customer's hands.

"We do not make the cigarettes," Muilenburg said. "We don't package them. If we were packaging the cigarettes and selling them ready to go out the door, yes, I would consider us a manufacturer."

Muilenburg has e-mailed Daugaard and other state representatives to reconsider his shop's label before the law goes into effect in July.

Muilenburg says if his store is still deemed a cigarette manufacturer, he may have to close up shop or move to a different state.

"The state of Wisconsin allows them," Muilenburg said. "The state of Iowa allows them. I will find a place to go."

But as a retiree, Muilenburg would like to stay in South Dakota. He says his customer base is loyal and appreciative of the cheaper option.

"I will try to operate, but I'm a little afraid it's going to automatically make us close our doors," Muilenburg said. "The price will be up so high, we won't be able to stay open."

And that could put out the last flicker of hope in the Rushmore State.

Muilenburg estimates the price for his products would double if he tried to operate as a manufacturer.