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Low-tax Cigarettes still here

Tuesday, June 24, 2008 (GST)

Creek smoke shops appear to sell cheaper packs, while Cherokee shops comply with law. Creek smoke shops appear to sell cheaper packs, while Cherokee shops comply with law. Cigarette purchases by the Tulsa World at several tribal smoke shops show that cheap Cigarettes appear to be available in the Tulsa area, even though the state has taken action to bar such sales. But Cherokee Nation retailers that had been selling low-tax, border-area Cigarettes appear to have stopped the practice. The purchases, made the past two weeks at six smoke shops licensed by the Cherokees and five smoke shops licensed by the Muscogee (Creek) Nation, show that while almost all of the Cherokee stores sell Cigarettes with the correct tax stamp, most of the Creek Nation stores sell Cigarettes bearing stamps reserved for border areas of the state. Some Oklahoma tribes and the state have been at odds for years regarding tobacco compacts, several of which were renegotiated just prior to a 2004 cigarette tax increase that voters approved. Under the new compacts, most tribes can sell Cigarettes with an 86-cent tax stamp, but tribal stores in certain border areas can sell Cigarettes bearing a 6-cent stamp. Nontribal retailers must sell Cigarettes bearing a $1.03 stamp. However, after the state moved from a sales and excise tax to a full excise tax, cheap border-area Cigarettes began to be funneled into tribal smoke shops in the Tulsa area by a few border-area retailers reselling the Cigarettes to retailers outside the border area. In the case of one store that sold Cigarettes to other retailers, allocations of Cigarettes went from about 35,000 cartons per year to around 1.2 million annually, a Tulsa World investigation found. The matter went to arbitration between the state and the Cherokee Nation. In March, the arbitration panel ruled mostly in favor of the state, saying that retail-to-retail sales to move cheap Cigarettes out of border areas violated the compact. Since that ruling, the Cherokee Nation's tax commission has inspected tribally licensed stores and prohibited any retail-to-retail sales. During last week's cigarette purchases, only one 6-cent stamp was found in Cherokee-licensed stores outside the border areas; two other packs of brand-name Cigarettes were stamped correctly. The tribe's tax commission verified that the low-tax pack, not a name brand, was part of old inventory and was bought by the smoke shop prior to the arbitration ruling, said Cherokee Nation spokesman Mike Miller. Meanwhile, the Creek Nation, which does not have a compact with the state, continues to sell Cigarettes with 6-cent stamps in the Tulsa area. Of 15 packs purchased, only two packs of Marlboros bore the correct 77-cent noncompact stamp; the rest had 6-cent border stamps. The tribe's Trade and Commerce Authority did not repond to Tulsa World questions about the situation. In March and April, tribal officials said they were having problems obtaining low-tax Marlboros because the manufacturer, Philip Morris USA, told wholesales their allocations could be cut if they sell to stores that resell to other retailers. World Staff Writer Omer Gillham contributed to this story.
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