State seizes Leech Lake Band's cigarettes
LEECH LAKE — A debate has been sparked over the legality of selling tribally stamped cigarettes on the Leech Lake reservation.
The Minnesota Department of Revenue seized a shipment of 2,810 packs of “unstamped” cigarettes April 18 because they were not stamped by the state.
The Leech Lake Band of Ojibwe responded to what is being called the Good Friday Seizure in a news release issued Friday.
“Since 2009, the Leech Lake Band has engaged in tribe-to-tribe commerce with the Winnebago Tribe of Nebraska on the sale of tribally regulated and tribally taxed cigarettes,” the release explained.
Minnesota law requires businesses to purchase cigarettes from a licensed Minnesota cigarette and tobacco distributor. The state Department of Revenue reported that by not paying the Minnesota cigarette tax, the Leech Lake Band is able to sell the cigarettes for $3.50 per pack, whereas other retailers that pay the tax sell for $6 to $9 per pack.
“The transportation and sale of unstamped cigarettes is illegal and unfair to distributors and businesses who comply with the state’s cigarette and tobacco laws,” Revenue Commissioner Myron Frans said in a release. The department reported that sale of unstamped cigarettes has been an ongoing problem.
“Every time the Minnesota Department of Revenue requested a meeting on this issue, we came to the table to meet in good faith to offer innovative and creative solutions which were consistently turned down by the State,” Leech Lake Chairwoman Carri Jones said in a release. “We were hoping that by engaging in good faith negotiations we would avoid the drastic measure that Governor (Mark) Dayton’s administration took on Easter weekend.”
Since July 1, when a tax increase on cigarettes and tobacco products was implemented, the Department of Revenue has completed more than 1,000 inspections of retailers to confirm that only state-stamped cigarettes are being sold. The department reported working with law enforcement agencies to seize unstamped cigarettes, which are proof the seller has not paid Minnesota’s cigarette taxes.
The state-imposed cigarette tax increase will help cover the long-term public health costs associated with tobacco use, according to a release issued by the Revenue Department. The Leech Lake Band of Ojibwe’s release stated that revenue generated through tribal taxation is used to fund tribal health and wellness and small business lending programs.
In 2013, the cigarette excise tax and health impact fee was $1.23 per pack of cigarettes. The health impact fee was eliminated and the excise tax was raised to $2.83 per pack effective Jan. 1, 2014. The band’s release said the original tax agreement between the state and the band included shared cigarette taxes collected by and on the reservation. The band said the state violated that agreement by not sharing any state excise taxes consisting of the health impact fee and fee in lieu of settlement imposed on tobacco products.
Under the Minnesota License Requirements for Retailers, retailers face revocation of their sales and use tax permits and criminal penalties for violating possession and purchase requirements.
A total of 56,200 cigarettes were seized on the reservation lands April 18. Possessing more than 20,000 unstamped cigarettes and purchasing more than 20,000 cigarettes from an unlicensed seller are felony offenses. However, the department did not indicate whether all cigarettes were seized from one retailer in Leech Lake. The band indicated the seizure was “a shipment.”
The actions directed by the Dayton administration forced the relationship between the Department of Revenue and the Leech Lake Band of Ojibwe to a new low, the band’s release said.
The band stated that the U.S. Constitution, treaties and federal case law prove the state is without authority to regulate the on-reservation activities of the Leech Lake Band without congressional authorization and that the Department of Revenue will settle for nothing less than complete control in spite of tribal sovereignty.
“The Good Friday Seizure is viewed as yet another attack on Native American rights,” the release said.