NY Indian smoke shops keep operating despite court order

Although NYS federal court uphold a ruling to close several cigarette stores across Indian Reservation located in the State, other shops haven’t stopped brisk sales of untaxed cigarettes.

Smokers searching for inexpensive cigarettes surrounded the small tobacco shops of the Poospatuck Reservation, last week, despite a judicial restraint came into effect closing down several of the Indian nation’s largest shops.

Poospatuck Tribal Nation runs 14 smoke shops across the reservation territory. An order by federal court entered into force last Friday prohibiting five of those stores from selling untaxed tobacco products to any individual, being non-member of the tribe.

These 5 stores, which in total sold at least four millions of tax-free cigarettes, attracting numerous customers from neighboring New York City and suburbs, appeared to be shut down.

Coming closer to one of that stores, customers saw a woman telling them that the Peace Pipe smoke shop has been closed.

However, the injunction by federal court was restricted only to the shops that were sued by New York City administration.

As regards other tribal smoke shops, they were not included in the injunction and continued their operation, having even more customers who headed to those stores from the closed ones.

Employees of operating cigarette stores refused from speaking with reporters and directed them to the head of Unkechaug tribal council, Harry Wallace. 

Wallace, who kept claiming that NYS authorities are not entitled to compel sovereign Indian nations to levy taxes on their products, stated that the court’s ruling is not final and they appeal to the constitutional court.

Michael Bloomberg, mayor of New York City filled a lawsuit against eight Indian smoke shops in 2008, claiming that sales of untaxed cigarettes to non-tribal members stripped the city budget from millions in revenue. 

Average cigarette prices differ according to the brand across the NYC, but a pack of Marlboros is selling for $9-$9.50, including the state excise tax of $2.75 and city’s duty of $1.50 a pack.

At the same time, reservation’s smoke shops offer tax-free cigarettes, which are frequently selling for a half of their price in the city, or even less.

In conformity with the state legislation Indian shops are required to levy taxes on sales to non-members of the tribe, however that laws has never been properly enforced and continually flouted by many new Yorkers. 

But in August, federal court ruled that tribal land smoke shops have to collect taxes from general public or cease the sales of tax-free cigarettes, limiting them only to members of the tribe.

While several smoke shops decided to get out of the suit and close, others have remained in the suit and filled an appeal against the ruling to the 2nd U.S. Circuit Court of Appeals.

Although the Circuit Court decided to uphold the injunction last Friday, the hearing of the case has been scheduled for October and could cancel the federal court ruling allowing the sales to be restored during the case.

The NYC officials claim that in addition to the sales of tax-free cigarettes to general public, Indian smoke shops earn thousands of dollars by selling their products to the smugglers who then resell the untaxed cigarettes illegally getting huge revenues