A tobacco compact was signed Friday between the state of Oklahoma and the Muscogee (Creek) Nation, which settles a lawsuit filed by the state over the practice of tribal stores selling cigarettes with the wrong and much cheaper tax stamp.
The compact with the Creek Nation, one of the few tribes that didn't have a compact with the state, ends several years of frustration by state officials because tribal stores were buying cigarettes bearing an “exception” tax stamp that costs 6 cents a pack and then reselling them in the Tulsa market. The tax stamp for nontribal retailers is $1.03, giving the Tulsa area tribal stores a 97-cent-per-pack advantage and shortchanging tax dollars owed the state.
According to the compact, Creek Nation tribal stores, often called smoke shops, are required to sell cigarettes bearing the $1.03 tax stamp. Oklahoma will receive 50 percent of that tax rate. The compact recognizes the right of the Creek Nation to charge a higher tax on cigarettes, with all tax revenue going to the tribe.
The compact also gives the state the right to inspect the stores and shops selling the cigarettes on tribal land, and grants enforcement power if the shops are not in compliance.
The compact settles a lawsuit filed in 2009 by the state attorney general's office against more than a dozen Creek Nation smoke shop owners and tribal officials. The lawsuit accused them of conspiring to violate state and federal laws on the sale of cigarettes in the state.
The Creek Nation filed a federal lawsuit the next year, claiming the wholesaler was on American Indian land and the state could not regulate sales from one tribe to another. In February, the U.S. 10th Circuit Court of Appeals ruled on the side of the state in the federal lawsuit, giving Oklahoma authority to regulate tribal tobacco sales even if the cigarettes are bought from another tribe.