Oneidas’ won’t sell brand-name smokes, boosts other stores

VERNON — The smokers are coming back!oneida store

Local gas stations and convenience stores appear to be experiencing an uptick in sales over the last couple of weeks as the Oneida Indian Nation’s supply of mainstream brand cigarettes dwindles.

In June, a New York state law that ensures that taxes are paid when Indian retailers sell popular brands of cigarettes went into effect.

The state’s Indian nations had not been charging the tax, which enabled them to undersell non-Indian retailers on popular brands such as Marlboro, Camel and Lucky Strike.

Now, tribes such as the Oneida Indian Nation have opted to sell only Indian cigarette brands because they don’t want to pay the taxes.

That’s sending smokers back to the non-Indian stores.

“I don’t like the brands they are selling,” said Sue Fort, who was buying a pack of USA Gold Lights at FasTrip, a Mobil gas station with a convenience store outside Vernon. “I won’t buy there anymore.”

She’s not the only smoker who has shifted her buying habits.

Paul Badhan, who owns FasTrip, said he started noticing the change around two weeks ago.

“It was hurting us real bad,” he said of the Oneidas’ cigarette selling. “Gas and cigarettes are our main business. We think it’s going to be better for us now.”

Years in the making

New York state and its municipalities lost millions in tax revenue as Indian tribes grew their retail cigarette business.

And the governments weren’t the only ones who lost out.

Gas station and convenience store owners have pointed to drops in sales of gas and other goods. That’s because smokers often buy other things at the same time they pick up their cigarettes.

“Now people come in and then we sell a lot more stuff,” Badhan said.

Though Indian tribes are required to pay taxes on cigarettes and other items sold to non-Indians, they did not do so despite the efforts of a succession of state governors.

Cigarette wholesalers operating in the state have long had to pay certain cigarette taxes up front rather than having retailers pay them.

Indian tribes have maintained that wholesalers who sell to their retailers should not pay the tax. Many wholesalers sold cigarettes to Indian retailers without charging for the tax. That has meant the Indian stores had a price advantage.

In summer of 2010, New York state decided to crack down on the policy, but the tribes sued. In June, the Second Circuit Court of Appeals ruled in favor of the state.

Many of the tribes, including the Oneidas, manufacture their own cigarettes and will be selling those exclusively when they run out of their supplies of mainstream brands.

“Our customers are able to purchase lower-cost cigarette brands manufactured by the Nation in its own factory on Nation lands,” Oneida Nation spokesman Mark Emery said. “Other cigarette brands not manufactured on Oneida Indian Nation homelands will be available to our customers as long as the current supply in our stores lasts.”

Is it working?

Robert Batson, Albany Law School’s government lawyer in residence, said the law appears to be having its intended effect.

“It’s cutting off their access to out-of-state manufactured cigarettes,” he said. “The wholesalers are complying with the law.”

James Calvin, president of the New York Association of Convenience Stores, said the impacts on convenience stores would be positive but wouldn’t completely solve the problem of cheap Indian cigarettes.

He said anecdotal evidence across the state shows sales increases in some, but not all, non-Indian stores.

“In some cases, the improvement has been significant, but it’s not universal,” he said.

Calvin also said many people now are smoking the cheaper Indian-brand cigarettes.

“Those products are still being sold in huge quantities at the SavOn stores and other tribal stores in New York,” he said.

Many smokers say they won’t make the switch, even if the Indian cigarettes are cheaper.

Mike Collins of is one of them. He likes his signature red-pack Marlboro, and had been buying them at a SavOn.

But now, there are none there to be found, he said.

“My wife likes the Indian cigarettes, but I don’t like the taste,” he said as he prepared to drive away from Badhan’s FasTrip. “I’m going to have to pay the tax.”

And what about the SavOn?

“I don’t even go there to buy gas,’ he said.

By ELIZABETH COOPER
Observer-Dispatch

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