Business Management

The Little Orange Box that Brought Tax Parity to Vending Operators

July 14, 2017 | By Elyssa Steiner

The Little Orange Box that Brought Tax Parity to Vending Operators

Steve Marx, CEO of Royal Vending, shares his story about leveraging a little orange box (Seed Device) that “became the eye opening piece” to getting the recent tax parity for vending operators bill passed in Minnesota.  The new law remedies an inequality in Minnesota tax laws regarding the taxation of items sold through vending machines, and now extends the same tax exemptions for food products commonly sold at convenience and grocery stores, to vending machines.

According to Steve, who is also the President of the Minnesota Automatic Merchandising Council (MAMC), the issue of improper and unfair taxes on vending operators had been raised 13 – 14 years ago with the State. Unfortunately, it went through legislation just to end up dormant for a number of years until Steve stepped in to champion this initiative again in 2016.  

Fast forward to 2017, and Steve is sitting in hearings with the Senate, House and Department of Revenue for the state of Minnesota, talking about what he knows best, vending.  “I kept wondering, why are we being treated like the red headed step child compared to convenience and grocery stores,” said Steve.  The issue at hand was that the state of Minnesota was taxing vending operators for the same food items that were not being taxed at convenience and grocery stores. – common items including water, potato chips, coffee, etc.

As Steve was sitting with the Department of Revenue he learned that their reasoning for not taxing those same items was that convenience and grocery could distinguish and report on exactly what was being sold.  Enter the Little Orange Box…well, Steve happened to have a Seed Device with him and proceeded to pull it out to show them how vending operators can, in fact, provide the same reporting.  “I raised it up and explained to them that we partner with a company called Cantaloupe Systems, and their solution has enabled us to install telemetry onto all of our vending machines,” said Steve. “You know what that means? I know exactly what sold and when.”  

“Wait, so you know I just bought a Snickers bar?” said one of the Department of Revenue representatives.  “Yes I do, and there are probably about 75 – 85% of the operators in the state of Minnesota that are using telemetry on their machines as well” said Steve.  This became the AHA-moment for the Department of Revenue.   

There was a roller coaster of events leading up to the eleventh hour of the bill getting signed by the Governor of Minnesota.  But then it happened… the Governor signed the bill and on July 1, 2017 all vending operators in the state of Minnesota will now be exempt from sales tax on the related food items found outlined in the bill.  “The politicians were shocked that we, as vending operators, have live data to go back and see individual sales occurring in our vending machines,” said Steve.  

What will Steve and other Minnesota operators do next?  Steve says he will reinvest into his business with the savings.  “This bill has been something I have wanted to see get passed for the last 14 years, and thanks to my partners at Cantaloupe we were able to articulate the power of a Seed Device in all of my vending machines and provide the transparency that the state of Minnesota wanted all along,” said Steve.  

“We were thrilled to hear that our Seed Device played a major part in helping Steve and other Minnesota operators receive tax parity for vending items,” said Anant Agrawal, President of Cantaloupe Systems.  “When our customers leverage technology they not only can become more transparent with their customers, but operate in the most efficient manner, allowing them to do what Steve plans to do, reinvest in their business.”

About Steve Marx & Royal Vending:

Steve Marx, CEO of Royal Vending located in Maple Grove, Minnesota, started his vending company in 1992.  Since then, Royal Vending has become the largest independent vending company in the Minneapolis area.  For over 20 years, they have prided themselves on providing outstanding performance that exceeds their customers’ expectations.  Their customers include Fortune 1000 companies, startups, software companies, schools, factories, and more.  Royal Vending’s state-of-the-art facility and organization, built on technology, equip them with the resources to effectively monitor the needs of their customers, resulting in consistently stocked and serviced machines for all their customers.

Want to leverage the benefits of Seed Devices just like Steve Marx did? Contact USAT today!

Author

Elyssa Steiner

VP of Marketing

Elyssa has over 9 years in the unattended retail industry and was among the first to be a part of launching the micro market concept into the vending channel. She is passionate about sharing both her knowledge in unattended retail and marketing with industry associations such as NAMA and Frost and Sullivan’s Marketing professionals.

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