Background
The Twenty-Nine Palms Band of Mission Indians sells cigarettes exclusively to other federally recognized tribes in California. These tribal businesses then sell the cigarettes to individual consumers on their respective reservations. The tribe does not hold a state license to distribute cigarettes, nor do its customers, and no state taxes are collected in the distribution chain. The Bureau of Alcohol, Tobacco, Firearms and Explosives placed the tribe on the non-compliant list under the Prevent All Cigarette Trafficking Act for selling untaxed cigarettes purchased from out of state to more than fifty tribal retailers without a distributor license.
The court’s reasoning
The panel held that the tribe’s remote cigarette sales to other tribes constitute off-reservation conduct subject to California’s Cigarette and Tobacco Products Tax Law and Licensing Act. The tribe’s sales to Native Nation Customers, who sell to individual consumers, are delivery sales to consumers under the Prevent All Cigarette Trafficking Act. As a delivery seller, the tribe must comply with state laws applicable to cigarette sales. By selling untaxed cigarettes without a distributor license, the tribe violated California law and the Prevent All Cigarette Trafficking Act. The panel further found that the Bureau of Alcohol, Tobacco, Firearms and Explosives did not violate procedural requirements or fail to provide adequate notice or explanation.
We conclude they are, and we affirm.
What it means going forward
The decision reinforces that federally recognized tribes engaging in remote cigarette sales to other tribes for resale must comply with state tax and licensing laws if the ultimate sale is to individual consumers, and failure to do so can result in placement on the federal non-compliant list.
Podcast (federal-narrative-summaries): Play in new window | Download