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Small Tobacco in New York

New York's strict regulations on taxing tobacco products is infringing on the rights of Native American manufacturers and retailers.

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A state judge has ruled that the seizure of over 26,000 cartons of Native American-made tobacco products in late January was unlawful.  The products were en route to Nebraska, where they were destined to be sold by Ho-Chunk Inc, operated by the Winnebego Tribe.  The office of New York State Attorney General Eric Schneiderman and the Department of Taxation and Finance, who ordered the seizure, were attempting to enforce stricter regulations on taxing tobacco products.
St. Lawrence Supreme Court Judge David Demarest called for the immediate release of nearly $2 million worth of Signal brand cigarettes made by Oherase Manufacturing, operated by the St. Regis Mohawk Tribe on the Akwesasne Reservation.  According to the judge, since the cigarettes were intended for out-of-state sales, they did not require taxation.
Native American cigarettes are sold tax free, one of the few perks of the reservation system.  However, experiencing a budget crunch throughout the 1990’s up until today, every successive New York state governor from Mario Cuomo on, has attempted to bypass the federal and state mandates dealing with reservations, to impose some level of taxation on cigarettes sold off of reservations.  
The current state policy requires state-licensed tax agents to stamp cigarettes and remit excise taxes of $4.35 per pack.  Since Native American companies do not use stamping agents, their retailers have cut back on sales of national brands in favor of untaxed Native American-made tobacco products.  
Ho-Chunk Inc. has filed lawsuits against the St. Lawrence District Attorney Nicole Duve, and the company’s lawyer, Joseph Messineo, has threatened to sue the state for damages if the products are spoiled while in the state’s possession.  Currently, the 25,920 cartons of cigarettes, 240 cartons of cigars and 72 bags of pipe tobacco are being held in a Department of Taxation and Finance warehouse in Rotterdam.
Long Island is home to two Native American tribes, the Shinnecock and the Poospatuck.  Both of these reservations were popular destinations to pick up cheap tobacco products until the current state regulations came into effect.  New regulations have also targeted mail-order cigarette sales, which has had devastating consequences for New York tribal retailers.  Until last year, the Seneca Nation was the country’s largest retailer of mail-order cigarettes.  
The Shinnecock Tribe has also made efforts to develop casino gambling on Long Island’s east end, to no avail as of yet.
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