Native cigarettes are now a problem for Western provinces, too

Tax-free have long been a big business in Ontario and Quebec

Trouble at the smoke shack tax-free native cigarettes, a big business in Ontario and Quebec, are now a problem for Western provinces, too

Tim Smith/Brandon Sun

Trouble at the smoke shack tax-free native cigarettes, a big business in Ontario and Quebec, are now a problem for Western provinces, too
Tim Smith/Brandon Sun

Chief Frank Brown of the Canupawakpa Dakota Nation doesn’t smoke, but he swears by the Mohawk-manufactured cigarettes on sale at the Dakota Chundee Smoke Shack near Pipestone, Man. “We did our research and the provincial [name brand] cigarettes have a lot of chemicals in them,” he says. “We think our smokes don’t have the cancer that the province’s cigarettes do.”

Whatever the supposed health claims put forth by Brown, the Manitoba government isn’t listening. In mid-November, officials seized 90,000 contraband cigarettes, which were not authorized for sale in the province. The next day, Dakota Chundee, which doesn’t sit on reserve land, was open again, crowded with non-Aboriginal buyers.

The raid, and subsequent reopening of the smoke shack, is the latest in a growing frontier war between First Nations and western provincial governments. Unlike in Ontario and Quebec, where the booming Indian tobacco business has also been linked to gangs, not to mention billions in lost taxes, Indian cigarette sales haven’t been an issue in the West. That’s changing as western bands turn to smokes to not only fill their coffers, but to assert land claims, too.

Last year, Kahnawake Mohawk-owned Rainbow Tobacco Co., which is based in Quebec and is the best-known native-owned tobacco manufacturer, announced a new western marketing offensive, entering into talks with various Prairie bands and touting the economic benefits of selling tax-free cigarettes. With these native-manufactured cigarettes there is no question of “smuggling” per se, since the smokes are licensed for on-reserve sale by the federal Customs and Revenue Agency.

It’s at the provincial level where the line between contraband and legal native cigarettes gets problematic. The provincial tax treatment of tobacco sold on-reserve varies from province to province, but the federal Indian Act says that provinces cannot tax “the personal property of an Indian or a band situated on a reserve,” thus requiring courts to make tricky ontological decisions about the definitions of “personal property” and “situated.” In April, Alberta Gaming and Liquor Commission officials seized 16 million cigarettes from a Quonset hut on the reserve of the Montana First Nation in Hobbema, Alta. The seized cigarettes were Rainbow Tobacco brands, and Rainbow CEO Rob Dickson claims that he had not yet been paid for them. His case is before a court in Wetaskiwin, Alta., where he claims the cigarettes were intended for sale to other First Nations in Alberta and that the Indian Act trumps the provincial Tobacco Tax Act. Smaller amounts of Rainbow Tobacco cigarettes have also been seized in B.C. and Saskatchewan.

The situation in Manitoba is even more complicated. The language of the Indian Act exemption might not apply to the off-reserve Dakota Chundee Smoke Shop, but Chief Brown points out that the treaty status of the Dakota is in question; the Dakota claim historic roots on both sides of the international border, but were considered refugees from American power by the British government of the 19th century. “We consider ourselves a sovereign nation that made a military, economic and trade alliance, as equals, with the British,” he says. Later Canadian treaties do not include the Dakota at all, he adds.

The federal government is staying out of the fights, even though cheap cigarettes take away the main leverage governments have to reduce tobacco use: taxes. Manitoba’s provincial tax on cigarettes is a whopping $45 a carton.

Those who have the most at stake may be non-Aboriginal mainstream retailers, whose National Coalition Against Contraband Tobacco says adventurous Indian vendors are on the same legal and ethical footing as smugglers. “Imagine how the typical convenience store owner feels about this—a Canadian, very often a new Canadian, who works 12 hours a day and lives in fear that a government ‘secret shopper’ might catch him selling cigarettes to a minor,” says NCACT spokesman Gary Grant. “We support the Manitoba government in putting a stop to what, according to the law in Manitoba, is illegal.”