Leech Lake Band, Minnesota spar over unstamped cigarette sales

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On April 18, the Minnesota Department of Revenue confiscated 2,810 packs of unstamped cigarettes on their way to the Leech Lake Reservation.

The packs did not have Minnesota's cigarette stamp, the department says – meaning the band did not pay taxes on the cigarettes, and were then able to sell them for a much cheaper price than proper state-stamped cigarettes. The department describes such sales as "an ongoing problem."

The band has since responded in a press release sent to BringMeTheNews, calling the seizure "another attack on Native American rights" and claiming the state doesn't have the authority to regulate such on-reservation activities.

Each side is calling the other uncooperative when it comes to finding a compromise.

So what happened?

The cigarettes were being delivered to the Leech Lake Reservation from a different state. The band says it was from another tribe in Nebraska, and the exchange of goods is nothing new.

"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 says.

The state has countered that notion, with Revenue Commissioner Myron Frans painting the practice as "illegal and unfair to distributors and businesses who comply with the state’s cigarette and tobacco laws."

Those law-abiding sellers have to sell packs for $6-9, the state says; by avoiding the stamp and the tax that comes with it, the Leech Lake packs can be sold for $3.50. In addition, 10 of the 11 federally recognized tribes in Minnesota sell cigarettes with the stamp; Leech Lake is the only one that does not.

The band fired back, saying the state reneged on an agreed-upon deal to share tobacco taxes.

"In the original tax agreement, the State and the Band agreed to share state cigarette taxes collected by and on the Reservation," the band says.

But in 2005, the state implemented a 75-cent "health impact fee" on packs of cigarettes, the Star Tribune explains. The state then argued, since it it was a fee and not a tax, it isn't required to give some of that revenue to the Leech Lake Band.The fee was replaced with an excise tax last year, Frans tells the paper.

So the band, it explains, keeps its own tribal taxes from the sale of cigarettes, and recirculates it "into funding tribal programs like health and wellness and small business lending."

The band says it worked for years to negotiate with the state.

“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,” stated Leech Lake Chairwoman Carri Jones.

Frans says in the department's release he spoke with Jones on the day of the seizure, and offered to meet with her and the Leech Lake Tribal Council to discuss cigarette sales.

Since July 1, 2013, when the new tobacco excise tax kicked in, the department has conducted more than 1,000 inspections to ensure only retailers are selling only state-stamped cigarettes.

"The seizure is just one example of the department’s ongoing efforts to uniformly enforce the state’s cigarette and tobacco tax laws by pursuing distributors, businesses, and individuals who transport and sell cigarettes without a state stamp," the release says.

The band says the seizure ended up "forcing the relationship between the Minnesota Department of Revenue and the Leech Band of Ojibwe to a new low."

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