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Thu., Aug. 15, 2013, 2:39 p.m.

Idaho high court backs state regulation over Native Wholesale Supply cigs

The Idaho Supreme Court ruled today that company on a New York Indian reservation shipping Canadian cigarettes to a retailer on the Coeur d'Alene Reservation isn't exempt from state law due to tribal sovereignty. Native Wholesale Supply, a supplier on New York's Seneca Reservation, argued that Idaho had no business interfering with shipments of more than 100 million Canadian cigarettes since 2004 to Warpath Inc., the Coeur d'Alene reservation business, the AP reports. States are forbidden by federal law from meddling in activities of a tribal member or a member's business operating within Indian Country, Native Wholesale Supply contended. But Idaho justices concluded such sovereignty claims weren't applicable in this case.

Not only was Native Wholesale Supply a corporation not entitled to protections otherwise afforded individual tribal members, the high court concluded unanimously, but the nature of its transaction with Warpath involving two countries, multiple tribes and at least three states was sufficient to transform the cigarette shipments into an off-reservation activity that Idaho had every business regulating. Click below for a full report via the Associated Press.

Justices: Idaho can regulate tribal cig shipments

BOISE, Idaho — The Idaho Supreme Court on Thursday ruled that tribal sovereignty doesn’t exempt a company on a New York Indian reservation shipping Canadian cigarettes that are illegal in Idaho to a retailer on the Coeur d'Alene Reservation.

Native Wholesale Supply is a corporation, not a tribe or a tribal member, the Idaho justices held in a nine-page ruling. Therefore, it can’t sell cigarettes that are illegal in Idaho, and aren’t a part of the nationwide tobacco settlement with states.

The firm, a supplier on New York's Seneca Reservation, argued that Idaho had no business interfering with shipments of more than 100 million Canadian cigarettes since 2004 to Warpath Inc., a Coeur d'Alene reservation business owned by a tribal member.

Native Wholesale Supply prevailed on a separate issue: The Supreme Court ruled that it doesn’t need a state wholesaler’s permit, overturning a lower court ruling. “Any cigarette sales made to a business owned by a tribal member are exempt from tax, and thus exempt from the requirement to obtain a wholesaler permit,” wrote Justice Joel Horton in the court’s unanimous opinion.

States are forbidden by federal law from meddling in activities of a tribal member or a member's business operating within Indian Country. But Idaho justices concluded such sovereignty claims weren't applicable in this case involving illegal cigarettes; neither the Coeur d’Alene Tribe nor Warpath was a party to the Native Wholesale Supply case.

Not only was Native Wholesale Supply a corporation not entitled to protections otherwise afforded individual tribal members, the high court concluded unanimously, but the nature of its transaction with Warpath involving two countries, multiple tribes and at least three states was sufficient to transform the cigarette shipments into an off-reservation activity that Idaho had every business regulating.

"Native Wholesale Supply's activities in this case are not limited to a single reservation, or even several reservations," justices wrote. "Native Wholesale Supply is operated on the Seneca reservation in New York, but is organized under the laws of a separate tribe. It purchases cigarettes that are manufactured in Canada. It stores those cigarettes in a foreign trade zone in Nevada. It then ships those cigarettes from Nevada into Idaho."

Brett DeLange, chief of the Idaho attorney general's Consumer Protection Division who argued the case for the state, said Native Wholesale Supply must pay a $214,200 fine originally levied by a 4th District Court judge in Boise for shipping cigarettes to Idaho that aren't on a list approved by the state.

DeLange said Thursday's decision underscores a previous Idaho Supreme Court ruling that affirmed the state's authority in regulating Internet cigarette sales to retailers on Idaho Indian reservations.

"We respect Indian sovereignty, and feel like we have a good working relationship with the tribes," he said. "But the court's decision here makes clear that under the facts of this case, those principles don't pre-empt state law. … If you wholesale cigarettes, or ship cigarettes into Idaho, you need to comply with Idaho law."

Samuel Diddle, the Boise attorney who represented Native Wholesale Supply, wasn't immediately available for comment.

Copyright 2013 The Associated Press.




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Betsy Z. Russell
Betsy Z. Russell joined The Spokesman-Review in 1991. She currently is a reporter in the Boise Bureau covering Idaho state government and politics, and other news from Idaho's state capital.

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