Ramifications of Using the Permitted Area for Another Purpose

On occasion, a manufacturer of tobacco products may decide to use its permitted facility for another purpose, one that may exceed the permit or be altogether unrelated to the permitted use. For example, a manufacturer of tobacco products may decide to manufacture cigarette papers and tubes, or to process tobacco for third parties, or even to make a product similar to a cigarette that has no tobacco in the product. Some manufacturers have assumed that a tobacco producer permit will automatically cover its activity to also make these products, but it does not.

It is important to note that the Alcohol Tobacco Tax and Trade Bureau (“TTB”) considers these to be separate businesses. The manufacturer must qualify in advance of beginning these dual uses. The process starts with making the request in writing, providing an additional bond to TTB (in the case of papers and tubes), and completing several forms, and updating the diagram of the facility. Once qualified, the manufacturer will receive a letter from TTB that indicates the terms of its approval. In the case of cigarette papers and tubes, TTB assigns a unique identifier number to be used with reporting. In the case of a non-tobacco product, TTB will describe the requirements in the letter for cleaning the equipment and retaining records for inspection. In all cases, if the dual use will jeopardize the revenue, then TTB will reverse its approval.

Anyone who fails to comply with the requirements becomes liable for civil and criminal penalties and forfeiture.