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ONEIDA, N.Y. — The trucks lumber past cornfields and dilapidated farm houses, pull up to a onetime bingo hall and unload their cargo: boxes of tobacco imported from the Carolinas.
Inside, employees of the Oneida Indian Nation dump the shredded tobacco leaves into rolling machines and fashion them into cigarettes to be sold at a dozen tribal convenience stores midway between Syracuse and Utica.
The cigarettes, branded with names like Niagara’s and Bishop, sell for as little as $39.95 for a 10-pack carton — much cheaper than those at non-Indian retailers — and bring in millions of dollars a year to the tribe, which also has a resort casino, five golf courses and a multimedia production house.
The Oneidas’ cigarette manufacturing business is part of a new strategy that is quickly being embraced among New York’s eight federally recognized Indian tribes. After years of fighting a losing battle against the state over the taxation of name-brand cigarettes sold on reservations, many are now manufacturing their own cigarettes.
The tribes argue that because they are sovereign nations, the cigarettes they make are exempt from the state’s $4.35-a-pack excise tax, the highest in the United States. But the tobacco industry and owners of other convenience stores say tribal cigarette manufacturing is just an elaborate form of tax evasion.
The administration of Gov. Andrew M. Cuomo, which pursued the legal fight to tax name-brand cigarettes sold on reservations, asserts that New York has the right to tax Indian-made cigarettes sold to non-Indians. But it has done little to test or enforce that claim, leaving the tribes, at least for the moment, free to sell their own cigarettes at cut-rate prices to any and all comers.
