Editor’s Note: For information about the State of California’s lawsuit against GRE, see here. For information about GRE’s lawsuit against the Canadian government asserting Counterfeit Cigarettes: An Enforcement F…that government failed to stop contraband cigarettes, see here. For information on the role of areas of graduated sovereignty in facilitating the illicit trade, see here.
From: Bloomberg News
Who Gets to Sell Cigarettes Without Taxes?
A First Nation tobacco company wields its sovereign status in court against Big Tobacco and revenue-hungry governments.
By David Voreacos and Andrew Martin
The business practices of GRE are inextricably bound with its First Nation-owned status. Tribal and First Nation governments are considered sovereign nations in the U.S. and Canada, though there are legal differences, and tobacco is big business on reserves such as Six Nations. Smoke shops are ubiquitous there, selling several GRE brands for $15 a carton, as well as plastic baggies with 200 unbranded cigarettes—the equivalent of a carton—for as little as $8.
Officials say such disparities foster smuggling of cigarettes sold in American Indian smoke shops or low-tax states such as Virginia into higher-tax venues like New York. For smugglers, the appeal is undeniable. A shipping container with untaxed cigarettes can be bought for $100,000 and resold for $2 million, says Alvise Giustiniani, vice president for illicit-trade strategy and prevention at Philip Morris International Inc. “The economics are tremendous,” he says. “It’s big money that’s attracting organized crime and, in some places, terrorism.” There’s also far less risk of a lengthy prison term than with narcotics trafficking.