Watch the tax on all loose tobacco rise tenfold. With Philip Morris' blessing.

[Bruce Watson]

These companies specialize in making tobacco for roll-your-own
cigarettes, whose sales had been growing because they are cheaper than
packaged cigarettes. But Congress and President Barack Obama this year
raised taxes on all tobacco products in order to expand a program that
subsidizes children's health insurance.

Hardest hit were the companies in the roll-your-own industry. The tax
on their tobacco went from $1.10 a pound to $24.78 a pound. Companies
in this niche market saw their revenue nosedive.

Many responded by turning to what the Associated Press is calling a
"marketing twist" -- instead of paying the enormous increase, they are
simply marketing their primary product as pipe tobacco, which is taxed
at $2.83 a pound.

Naturally, this new pipe tobacco came on the market under the same
brand names as the old roll-your-own tobacco. And of course, it was
subtly advertised as suitable for both pipes and roll-your-own
cigarettes. This marketing twist is legal because there are no
government rules on how pipe tobacco must be formulated.

http://www.lasvegassun.com/news/2009/nov/21/pipe-dream-posing-problems/