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Justices: Idaho can regulate tribal cig shipments

The Idaho Supreme Court on on August 15 bolstered the state’s power to regulate cigarettes shipped to Indian-owned businesses with a ruling that concludes Native American sovereignty does not pre-empt state law in the matter.

In their nine-page ruling, justices concluded Idaho could forbid Canadian-made cigarettes that are illegal in Idaho from being shipped to a Coeur d’Alene Indian Reservation-based retailer.

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.

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.

“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.

Among other things, cigarettes sold in Idaho must be certified by the state fire marshal. All the cigarettes Native Wholesale Supply sold to Warpath were either Opal or Seneca brand, neither of which was certified.

DeLange said the decision August 15 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,” DeLange said.

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

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