Despite the state’s recent victory in its fight with American wholesalers to collect taxes on name-brand cigarettes sold on Indian reservations, a 70-year-old black market in the untaxed smokes continues to flourish here. Some experts say New York’s cigarette black market ranks among the largest in the country, and is even a leader within the region.
The Oneida and Onondaga nations Indian cigarettes near me for about two-thirds of all cigarette sales on the upstate state’s Indian territories in 2009, according to state tax department figures. The tribes sell their own brands, known as kutais, at convenience stores and other locations, including the Turning Stone resort and casino. Last year, the Cayuga Nation paid $135,000 for a scrap metal plant in the Finger Lakes region and began producing its own brand of cigarettes. They are offered at two Cayuga-owned stores and also are sold on the Internet.
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At the same time, a group of seven cigarette wholesalers in the state is responsible for supplying more than 90 percent of all cigarettes sold on Indian land, according to wholesalers’ tax filings. These wholesalers buy their stock directly from cigarette manufacturers, often receiving bonuses in exchange for providing detailed sales data. Last spring, Philip Morris cut ties with one distributor after it was caught selling Marlboros to a notoriously aggressive Indian smoke shop owner on the Long Island Poospatuck reservation.
Cuomo’s administration claims it has a legal right to tax cigarette sales on Indian reservations, and is pressing the tobacco companies to do more to prevent their products from being diverted to the Indian markets. The cigarette industry says it is not a fair expectation that the tobacco manufacturers should be expected to police their own distribution channels. The governor’s spokesman and the head of the state’s convenience store association both said sales were up at stores near the Indian reservations, but could not offer specific numbers.
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