Tobacco.org

LETTER: SMOKING IN AMERICAN INDIAN AND ALASKA NATIVE PEOPLE WITH DIABETES REVISITED ($$) 

Morton et al's article on smoking and diabetes in American Indians and Alaska Natives raises important concerns.1 Because of the longstanding organized emphasis on smoking ascertainment and cessation for individuals with diabetes, the findings likely reflect a serious ascertainment bias.

The Indian Health Service (IHS) Division of Diabetes has measured smoking status in American Indians and Alaska Natives with diabetes since 1986 with the Annual Diabetes Care and Outcomes Audit.2 The IHS Standards of Care for Diabetes emphasize smoking assessment. In 2007, 91.8% of patients with diabetes, systemwide, were assessed for tobacco use. Less than a quarter (23.4%) reported current . . . [Full Text]

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Tobacco Ban at MSU Effective Today  

Tobacco is now banned at Minot State University.

Chewing tobacco and cigarettes were banned with the beginning of the new year.

The new ban includes vehicles parked on university grounds.

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• Electronic Clearing House, Inc., Agrees to Stop Enabling Online Tobacco Sales 

An electronic payments processor has agreed to stop handling transactions for the illegal online sale of cigarettes and other tobacco products. Attorney General Lawrence Wasden and the attorneys general of New York and California reached the settlement with Electronic Clearing House, Inc. (ECHO), of Los Angeles, California.

"Online tobacco retailers are a major source for young people to buy cigarettes illegally," Attorney General Wasden said. "Stopping the illegal sale of cigarettes, especially to minors, is a major step in protecting public health. ECHO has acted responsibly in agreeing to stop processing payments for these illegal sales, and we hope other companies and banks involved in online tobacco sales will follow their lead."

The three states began an investigation of ECHO following a lawsuit Wasden brought against Scott Maybee, one of the highest volume Internet cigarette sellers. Maybee was ordered to pay Idaho more than $160,000 for illegal Internet sales of millions of cigarettes into Idaho.

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• L.A. company agrees to stop processing online tobacco sales in Idaho, elsewhere  

An electronic payments processor has agreed to stop handling transactions for the illegal online sale of cigarettes and other tobacco products, Attorney General Lawrence Wasden's said.

Wasden and the attorneys general of New York and California reached the settlement with Electronic Clearing House, Inc. of Los Angeles -- often called "ECHO.".

"Online tobacco retailers are a major source for young people to buy cigarettes illegally," Wasden said in a release. "Stopping the illegal sale of cigarettes, especially to minors, is a major step in protecting public health. ECHO has acted responsibly in agreeing to stop processing payments for these illegal sales, and we hope other companies and banks involved in online tobacco sales will follow their lead."

The three states began an investigation of ECHO following a lawsuit Wasden brought against Scott Maybee, one of the highest volume Internet cigarette sellers, Wasden's office said. Maybee was ordered to pay Idaho more than $160,000 for illegal Internet sales of millions of cigarettes into Idaho.

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• Tribes triumph tobacco tax 

Driving onto the Allegany Indian Reservation from the west, Ron's Smoke Shop makes an inviting first stop.

It's just one tax-free tobacco shop on Seneca Nation territory. And with state cigarette taxes on the rise, more Southern Tier smokers are making the trip to the reservation.

"Everyone I know goes down there," says Jill, a smoker from Olean. "A lot of people do."

Cars bustle in the shop's parking lot. A stream of people makes its way into the store, eager to pick up some Saturday morning smokes.

Stacks of cigarette cartons sit on several rows of shelves. Winstons. Unions. Markets. The works.

The cheapest brand? Seneca Cigarettes - $13.60 for 100 smokes.

Drive across the street. Next stop: M & M Smoke Shop.

Cigarette billboards plaster the store's exterior. Camels. Kools. Dorals also available.

Another vendor of Seneca Cigarettes. Big Flavor. Small Price. Huge Selection.

Piles of cigarette cartons add color to the store's pure white interior. . . .

Cigarettes off-territory have never been more expensive. June's cigarette tax increase bumped New York state's tax to the highest in the nation.

But not everyone is forking over the extra cash. Twenty percent of New York smokers buy tax-free cigarettes from Indian reservations on a regular basis.

"The incentive for them to do that has just gotten a lot bigger in the form of this tax increase," says Jim Calvin, president of the New York Association Convenience Stores.

And New York is left losing cash. New York City Mayor Michael Bloomberg says that the state's reluctance to enforce cigarette taxation laws is costing it more than $500 million a year.

"I think the governor should go to the reservations and say, 'As of tomorrow morning, stop this practice,'" Mayor Bloomberg said in the New York Times. "And if it requires law enforcement, that's what the governor has the State Police for �?" to enforce the law."

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Second native tobacco company searched 

ALBUQUERQUE (KRQE) - - Investigators are looking into another New Mexico cigarette distributor with Native American connections.

State agents searched the Hemi Group's warehouse in northeast Albuquerque on Aug. 20.

The Hemi Group is owned by members of the Jemez pueblo and sells tobacco online.

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• SMOKE2U 

There's something odd about PO Box 365, Irving, New York. Located on the Seneca Nation -- nestled just at the Empire State's southwestern tip -- the box is the mailing address for at least 10 online vendors registered in far-flung locations, from New York City to Ankara, Turkey. Boasting names like BigChiefCigarettes.com, Smoke2U.com, and EZTobacco.com, the sites bear no apparent affiliation to one another, except that they all sell one product: untaxed cigarettes. . . .

Over the past decade, as cigarette taxes have soared throughout the United States -- rising an average of nearly 90 percent between 1998 and 2002 alone -- websites catering to tax-dodging smokers have proliferated. In 2006, an estimated 772 sites were selling to U.S. consumers, up from just 88 in 2000. According to Jeff Cohen, associate chief counsel for the Bureau of Alcohol, Tobacco, Firearms and Explosives' (ATF) Northeast division, it's common for entrepreneurs to maintain five or six differently branded websites to drive traffic, "even though they're just shipping from one address."

Some sites are based in low-tax states such as the Carolinas; others sell duty-free packs from overseas. Increasingly, overseas cigarette vendors drive traffic: The number of sites based overseas jumped from at least 10 percent in 2003 to over 45 percent by 2006, according to Kurt Ribisl, an associate professor at the University of North Carolina's Gillings School of Global Public Health, who has extensively studied online sale patterns.

In the United States, the real action is taking place on Indian reservations. . . .

Thus, even with states' best diligence, cigarettes continue to slip through. "They [the Internet sellers] are resourceful," said California Deputy Attorney General Laura Kaplan. "They always seem to be one step ahead of us." In the latest development, she said, California secured an agreement with First Regional Bank to stop processing unlawful cigarette purchases -- to her knowledge, the first of its kind in the nation. But as Kaplan notes, there are thousands of other banks out there who have yet to sign on.

Online sites are also moving offshore, beyond the reach of effective U.S. law enforcement. In one high-profile 2004 case, the ATF raided a cargo plane that touched down at John F. Kennedy Airport bearing 60 million duty-free cigarettes from a Switzerland-based company, Otamedia. The company's original URL Yesmoke.com was shut down, but its operators simply packed up shop and today continue to do business from Italy. . . .

But given how one site can pop up as quickly as another is shuttered, suppressing the trade has become something of a global game of "whack-a-mole." "We see a lot of sites operating outside the country: Moldova, Israel, Russia, Ukraine," Kaplan said. Despite states' best efforts, she said, "We haven't noticed a real reduction in sales." . . .

To that end, advocates such as Representative Anthony Weiner, Democrat of New York, and the National Association of Attorneys General are actively pushing the optimistically titled Prevent All Cigarette Trafficking (PACT) Act

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• Big Tobacco’s New York Black Market 

New York's 70-year-old tobacco black market exploded after 2002, as cigarette tax hikes encouraged smuggling from out of state and through reservations. . . .

It remains unclear whether Paterson will be any different from his predecessors. . . .

And then there's the role of the big tobacco companies themselves, who in the past have shown a marked reluctance to ensure their products are not smuggled. "Cigarette manufacturers should not be expected to police the trade in untaxed cigarettes," Lorillard, a leading tobacco firm, said in a December 9 statement. . . .

Patrick Fleenor, who has studied the evolution of this underground economy as chief economist at the Tax Foundation, a nonpartisan tax research group, said New York's black market dates back to the city's first cigarette tax of one cent, in 1938. While in the 1960s and '70s cigarette bootlegging in New York was controlled by a handful of organized crime groups, including the Mafia, today the trade is much more fragmented, with groups including Dominican tax-stamp counterfeiters, African-American smugglers, and Middle Eastern vendors from Jordan and Yemen competing for the profits. "The potential for volatility is much greater," Fleenor said. . . .

The problem is not exclusive to New York. Officials across the country are wrestling with cigarette smuggling from Indian reservations . . .

A group of seven cigarette wholesalers, all but one in New York state, is responsible for supplying more than 90 percent of all cigarettes sold on Indian land . . .

"R.J. Reynolds, Lorillard, and Philip Morris come in monthly and change signs, check that no product is out of date, that kind of thing," said Doogie's owner Sally Snow, who heads an organization comprised of the Seneca Nation's 234 smoke shops, gas stations, and mail-order cigarette outlets . . .

Proshansky, the attorney for New York City, said the big tobacco companies are keeping a close eye on all the legal maneuvering, watching to see if they are implicated. "It's a delicate game," he said.

In fact, for years, America's three largest tobacco companies -- Lorillard, Philip Morris, and R.J. Reynolds -- have flooded New York Indian reservations with their untaxed cigarettes, despite ample evidence that those sales fueled a billion-dollar black market, an investigation by the International Consortium of Investigative Journalists (ICIJ) has found.

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Cigarette manufacturers should not be expected to police the trade in untaxed cigarettes.
Dec. 9, 2008 Lorillard statement.

R.J. Reynolds, Lorillard, and Philip Morris come in monthly and change signs, check that no product is out of date, that kind of thing.
Sally Snow, owner of Doogies, one of many smoke shops on the Seneca's western New York reservations.

New York should respect Senecas’ treaty-based rights 

I object to a News editorial about New York's efforts to impose taxes on commerce within Seneca Nation territory. It had no basis for labeling a sovereign nation unethical for exercising our inherent right to sustain an economy selling lawful products. For the Seneca Nation -- which more than two-thirds of Western New Yorkers polled consistently support on this issue -- this is not about tobacco, or gasoline, or prices, or taxes; it's about our sovereign, treaty-based rights. . . .

The question is: Will state officials comply with their oaths of office to respect our 1794 treaty with the United States that protects the Seneca Nation's "free use and enjoyment" of our land?

Our Nation already paid dramatically for the free use of our lands and immunity from state taxes through the loss to this state of nearly all of our aboriginal territory. We refuse to be used as some kind of tribal ATM machine for state leaders to tap every time New York's economic condition deteriorates.

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• Tobacco wholesale company sued for failure to pay $18.4 million  

Federal attorneys have filed suit against a tobacco wholesale company owned by Arthur "Sugar" Montour, a former Seneca tribal councillor, for failing to pay $18.4 million in federal tobacco settlement assessments.

Montour's company, Native Wholesale Supply Co., located on the Cattaraugus Reservation, is the exclusive American distributor for Seneca and Opal brand cigarettes manufactured in Canada by Grand River Enterprises, a Native American company.

Justice Department attorneys representing the U. S. Department of Agriculture allege that Native Wholesale Supply has failed to pay federal assessments for 2006 through 2008, as required under the tobacco master settlement agreement. . . .

Seneca brand cigarettes are one of the best-selling Native American brands, and Grand River Enterprises has faced legal action by 30 state attorneys general, alleging the company has skirted requirements to comply with the agreement reached with the major U. S. tobacco companies.

Grand River, in turn, has filed a lawsuit against the state attorneys general in U. S. District Court in the Southern District of New York, as well as an action against the United States in an international tribunal, claiming damages under the North American Free Trade Agreement.

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• Indian merchants reap huge profits on untaxed tobacco sales  

And Tara Sundown, a tobacco merchant who sells cigarettes without state taxes on the Tonawanda Band of Senecas Reservation in Basom, made $16.8 million during that same three-year period.

Those figures come from monthly sales reports that tobacco wholesalers file with New York's Department of Taxation and Finance, released for the first time in a federal lawsuit in New York City.

The Buffalo News took those figures, used as a profit margin the $7 price difference between what the Senecas pay for most cigarettes and what they charge, and came up with what the cigarettes sellers may have grossed. Salaries, utility costs and other overhead expenses come out of those revenues.

Actual profit figures are known only by the individual merchants, and they do not disclose those. A congressional report last year put the figure at $3 a carton, but several non-native cigarette distributors told The News that profit margin was too low. . . .

Maybee, a Canisius College graduate, sells more native brand cigarettes than most Seneca merchants. Maybee, through his attorney, refused to confirm his purchases, as reported to the New York State Department of Taxation and Finance.

The millions of dollars in profits show the high stakes involved in the state's attempts at levying taxes on Indian cigarette sales to non-natives. . . .

Tobacco wholesalers, including Milhelm Attea & Bros. of Buffalo, the biggest seller of tax-free cigarettes in the state, and their Indian retailer customers "have parlayed that limited exemption into a multibillion dollar loophole," argued New York assistant corporation counsel Eric Proshansky.

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Court ruling could stop reservation tax collections  

A temporary restraining order issued Christmas Eve is being considered ''the first round in an anticipated legal battle challenging the legality of a law that could allow for state tax collections on cigarettes sold to non-Indians on reservations.

''The first round goes to us; we'll see what the second round shows,'' said Margaret Murphy, attorney for Day Wholesale and Scott Maybee, Native American retailer, who is asking just what obligations they have under a law recently signed by state Gov. David Paterson.

The law, signed Dec. 15, states wholesalers have to certify they have sold cigarettes to retailers, who will not resell them if untaxed unless to Native Americans. Ms. Murphy has questioned the law, however. She said if consumers purchase more than two cartons on reservations, the purchasers are already supposed to pay taxes.

''There is no change in the law,'' she said, adding that is what was argued before Judge Rose Sconiers on Dec. 24 when a temporary restraining order barring the law's implementation was put in place by Sconiers until a hearing for a preliminary injunction that could stop the state's efforts is heard Jan. 27.

The law was not to go into effect until mid-February, 60 days after it was signed by Paterson. . . .

Ms. Murphy said the law requiring non-Native American consumers to pay for more than two cartons of cigarettes bought on reservations has been on the books for more than 70 years. Therefore, she said, there are no burdens on wholesalers or reservation sellers, who, she said, are already complying with state taxation law, as it is the burden of the consumer to report tax-free sales.

''It's a misinterpretation of who has what obligation,'' she said, adding Judge Sconiers has been asked to clarify who needs to do what under the new law and whether it is necessary or redundant. ''Taxes should be collected but not by the retailer or wholesaler.''

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• DAY WHOLESALE, INC. and SCOTT B. MAYBEE v. NY STATE (PDF) 

ORDERED, upon sufficient cause having been shown, Defendants are hereby restrained from enforcing the provisions of New York Tax Law § 471 and 473. in a manner that would restrict the sale of unstamped cigarettes from being sold at wholesale to reservation cigarette sellers, or being sold at retail by reservation cigarette seller prior to the effective date of the New York Tax Law § 471-c, as amended by L. 2005, c. 61, pt. K, as amended by L. 2005, c. 63, pt. A, and pending the hearing and determination of this motion; and it is further

ORDERED, that service of this Order to Show Cause with supporting papers be made by personal delivery upon the Office of the Attorney General at their office at the Statler Towers, 107 Delaware Avenue, Buffalo, New York, on or before December 26, 2008 by 5:00 PM shall be deemed sufficient; and it is further

ORDERED that answering papers, if any, shall be filed and served upon Plaintiffs by personal delivery or email to their counsel, Margaret A. Murphy, no later than 14 days before the return date hereof, and any reply papers shall he filed and served no later than 7 days before the return date hereof.

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• New cigarette tax law: ‘It’s never going to happen,’ attorney says  

"In fashioning a new direction on this issue, I start with the recognition that it is essential that tribal sovereignty be respected. That means, among other things, recognizing that the state of New York lacks authority to tax products sold on native land for tribal use or for consumption by tribal members," Paterson said in a signing statement that accompanied the bill.

The bill requires stamping agents in New York to sign an affidavit under penalty of perjury saying they will not resell unstamped cigarettes in violation of Article 20 of the state's tax law - the section that deals with cigarette taxes. The stamping agents will have to send copies of the affidavit to the manufacturers and the state.

Legal experts representing some of the nations say they doubt that the bill will not be implemented.

"My personal opinion is it will not and probably the governor doesn't think it's going to go anywhere either. I think he signed the bill merely to appease the legislators," said Thomas Moll, an attorney who represents the Seneca Free Trade Association, a nonprofit cooperative of more than 200 businesses licensed by the Seneca Nation of Indians. . . .

Paterson's spokesman shares insight

Gov. David Paterson is in Iraq for the holidays, but Morgan Hook, one of his spokesman, agreed to answer the following questions submitted by Indian Country Today:

Indian Country Today: Isn't this legislation an insult to New York voters (who according to a 2006 Zogby Intl. survey support the sovereignty of Indian nations by a 2-1 margin) and the Indian nations who have come to the table to negotiate?

Morgan Hook: The Nozzolio-Magee (Sen. Michale Nozzolio and Assemblyman William Magee who co-sponsored the bill) only applies to manufacturers and stamping agents in New York state, and does not infringe on the sovereignty of any Indian nation. Gov. Paterson strongly supports the sovereign rights of all of New York's Indian nations, and is hopeful that a negotiated global settlement can be reached that is fair and equitable to both the state and nations.

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Ruling bars cigarette tax on sales by Indians 

The state is facing a new legal hurdle in its effort to collect taxes on cigarettes sold on Indian reservations.

A judge has issued a ruling that would temporarily block the state from enforcing a new tax policy.

An attorney for a Seneca tobacco retailer and a northern New York tobacco wholesaler said State Supreme Court Justice Rose H. Sconiers issued a temporary restraining order Wednesday. The ruling directs state officials to appear in court again Jan. 27 to explain why the judge shouldn't issue an injunction barring the tax collection.

Margaret A. Murphy, a former Buffalo city judge who is representing Seneca tobacco merchant Scott Maybee and Day Wholesale of Tupper Lake, said she is not surprised by the ruling. Murphy played a key role last year in derailing New York's last attempt to collect taxes on tobacco sold on Indian reservations.

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