The tax discrepancy between RYO and pipe tobacco offered an opportunity for tobacco manufacturers to lower the price consumers pay for loose tobacco used for making RYO cigarettes. Our analysis indicates that this approach led to a substantial increase in the sale of loose tobacco sold for RYO purposes, and in overall loose tobacco sales.
While rates of make-your-own cigarette use in the United States were increasing slowly before the tax change 
, the dramatic shift in sales after April 2009 can be partially explained by manufacturers labeling loose tobacco as pipe tobacco, allowing retailers to offer these products to RYO consumers at a lower price 
. One factor that may have contributed to the sudden increase in RYO sales was the emergence of automated cigarette-rolling machines in retail stores.
Federal government and state government agencies have taken actions to attempt to curtail these tax revenue losses. For example, TTB, in its authority as the agency responsible for collecting Federal excise taxes, issued a ruling in September 2010 that found that retailers offering cigarette rolling machines are manufacturers of tobacco products, and are thus required to pay the Federal tax on all cigarettes that are produced 
. Retailers sued TTB and a preliminary injunction was issued by the United States District Court for the Northern District of Ohio on December 14, 2010, preventing TTB from enforcing its ruling while the case remains pending 
. As of March 2012 this court case was still pending. At the state level, New Hampshire's State Supreme Court ruled that by offering cigarette rolling machines, retailers would be classified as cigarette manufacturers and as a result would be subject to the Master Settlement Agreement, and be required to submit payments to the state for each cigarette that is produced 
. Additionally, in March 2011, Arkansas enacted a law to prohibit licensed tobacco retailers from possessing or otherwise utilizing a cigarette rolling machine 
. Also, the Wisconsin Department of Revenue issued a notice in September 2011 that ruled that retailers that offer cigarette rolling machines are classified as manufactures, and considers the final product to be a manufactured cigarette subject to cigarette excise taxes 
Selling pipe tobacco for RYO use avoids other laws and regulations as well. For example, the Prevent All Cigarette Trafficking (PACT) Act of 2009 prohibits the U.S. Postal Service from shipping cigarettes, RYO, and smokeless tobacco, but does not prohibit shipping pipe tobacco 
. This allows internet sites to continue to sell and ship pipe tobacco marketed for RYO use. Further, the PACT Act requires sellers to report on quantities of cigarettes, RYO, and smokeless tobacco shipped to each state and tax administrators use this information to ensure all state taxes have been paid. There is no such reporting requirement on sales of pipe tobacco.
Additionally, the Family Smoking Prevention and Tobacco Control Act (Tobacco Control Act) prohibits candy-flavored cigarettes and RYO, but does not prohibit flavorings in pipe tobacco 
. Brands of pipe tobacco sold for RYO use come in blackberry, black cherry, and vanilla flavors 
. The Tobacco Control Act also prohibits the use of the descriptors “light," “mild," or “low," or similar descriptors in tobacco product labeling or advertising 
. However, some pipe tobacco brands sold for RYO use still carry these descriptors 
This study has at least five limitations. First, we assumed that all pipe tobacco sales that exceeded the April 2009 baseline represented sales of pipe tobacco marketed for RYO use. This appears to be a reasonable assumption, given trends in pipe tobacco sales prior to the April 2009 tax increase. Second, for this study, the proportion of national cigarette sales that occur in each state is used as a proxy for the proportion of RYO tobacco sales in each state, causing actual RYO and pipe tobacco sales to vary from the estimates presented. This calculation also does not take into account different excise tax rates on non-cigarette tobacco products, which could further explain state-to-state variation in RYO tobacco use. Third, estimates do not factor in distributor or retailer markups. State excise and sales taxes are levied on products after these markups. Fourth, revenue lost estimates do not account for background trends in pipe tobacco sales prior to April 2009, although pipe tobacco sales were relatively flat during this period 
. Finally, this study did not attempt to quantify changes in the number of taxed packs of cigarettes sold due to smokers switching from manufactured cigarettes to make-your-own cigarettes. Overall, these limitations mean our revenue loss estimates are likely conservative.
Increasing excise taxes is one of the most effective evidence-based strategies for reducing tobacco use 
. However, tax structures that provide tobacco users with an opportunity to switch to other low-cost tobacco products not only result in lower Federal and state revenue from these products, but also blunt the public health impact that excise tax increases would otherwise have on preventing youth initiation, reducing cigarette consumption and prompting quit attempts. In this instance, RYO and traditional cigarette smokers who may otherwise quit can instead maintain their addiction with lower priced products.