Tobacco compact agreement reached

An agreement for a tobacco compact between the state and the Muscogee (Creek) Nation has been realized after years of failed negotiations. The battle between state and tribe has been ongoing for at least seven years, and began after the last tobacco compact expired. Since then, the state and tribe have negotiated twice and failed to come to an agreement. The new compact signed Friday will result in payment of $11.5 million and dismissal of litigation by the state and the tribe, according to a media release from Gov. Mary Fallin’s office.

The agreement allows for a five-year term for settlement of payments. The compact governs the payment of taxes to the state on the retail sale of cigarettes and other tobacco products sold on Creek Nation lands, according to the media release. The Oklahoma tax on cigarettes is $10.30 on a 10-pack carton. Under the new compact, the state will receive $5.15 per 10-pack carton from retails sales by the Creek Nation. Creek Nation Chief George Tiger said it was time for the tribe and the state to resolve their differences over the tobacco compact or lack of one. “I am pleased that we can finally put this issue to rest and our Nation can focus on our citizens and other issues of importance to our people,” he said in a media release.

After the last tobacco compact expired, the tribe and state came to an impasse after nearly three years of negotiations. In 2008, the tribe, under then-Chief A.D. Ellis, rejected the state’s revisions to a compact proposed by the tribe. Some of the problems the state had with the tribe were the tribe’s wholesale tobacco business, the tribe’s funneling of low-tax cigarettes purchased from border tobacco stores into resale in Tulsa, and the tribe’s sales of cigarettes not on the state’s Master Settlement Agreement list.

Negotiations lulled from 2008 to 2010 — when the tribe and the state attempted to create a compact again. However, the tribe voted to strike down the proposal after two shipments of unstamped tobacco were seized by the Oklahoma Tax Commission while being transported from the Creek Nation’s wholesale company to tribal smoke shops. Additionally, in 2010 the state filed a federal lawsuit against some members of the tribe who operate the wholesale company and some of the smoke shops. The new compact calls for dismissal of litigation between the tribe and state.