Tobacco compacts expire

OKLAHOMA CITY – Tobacco compact extensions for more than 20 tribes expire this week and at press time, many still do not have a new agreement in place with the state of Oklahoma.

Despite a written request earlier this year from 22 tribes to extend current tobacco compacts through August 2017, Gov. Mary Fallin’s office refused to renew any existing compacts, forcing most of Oklahoma’s 38 federally recognized tribes to negotiate new rates.

On Sept. 25, compacts with the Miami, Wyandotte and Quapaw tribes were all filed with the Oklahoma Secretary of State’s office, placing the number of Oklahoma tribes with current tobacco agreements at 11.

Starting Oct. 1, those three tribes will charge the full $1.03 state excise tax rate on all tobacco purchases made in their smoke shops, compared to the $0.575 per pack tax that was assessed under the expiring compact. 

From Oct. 1 through Dec. 31, 2015, the tribes will receive 94 percent of the tax revenue from tobacco products sold in its convenience store, with the state receiving the remaining 6 percent. The tribe’s share decreases to 92 percent on Jan 1, 2016 and drops annually on New Year’s Day until the tribe and state receive equal portions starting on Jan. 1, 2023. The new compacts will expire on Dec. 31, 2023.

The rates in the Miami, Wyandotte and Quapaw tribes’ compacts are comparable to the agreement reached the previous week between the state and the Ottawa Tribe. All four are among the six tribes that operate at least one compacted smoke shop within 20 miles of the Oklahoma-Missouri border. Under their previous compacts, in order to compete with Missouri’s $0.17 per pack excise tax, those six tribes were able to charge a lower excise tax rate. That provision does not exist in the new agreements.

Similar ato the other compacts signed under the Fallin administration, the wholesalers used by the Miami, Wyandotte and Quapaw smoke shops will collect the compact taxes assessed by the tribal retail outlets and turn that money in to the state’s tax commission. The tribes will receive a monthly check from the state for their portion of the proceeds within 30 days.

Despite the three new agreements kicking in, several tribes’ compacts are still in limbo.

A few tribes, including the Cherokee Nation and Citizen Potawatomi Nation, are still in active negotiations with state officials. Officials with the Tahlequah based tribe confirmed that they are temporarily extending their current compact a second time, this time through Oct. 31 as talks continue.

“We’re close,” Cherokee Nation attorney general Todd Hembree said. “We’re very close.”

To date, Cherokee Nation smoke shops have generated an average of $300,000 in revenue per month this year. Under its expiring compact, five of its smoke shops near Oklahoma’s borders with Kansas, Arkansas and Missouri qualified for a reduced excise tax rate.

On Friday afternoon, published reports indicated that Gov. Fallin’s office was not willing to accept compact proposals from the Osage Nation. Headquartered in Pawhuska, the Osage Nation sold more than 3.5 million packs of cigarettes in 2011 at its 14 northern Oklahoma smoke shops.
 

Gov. Fallin’s office did not respond to requests for comment.

 


Oklahoma Governor Mary Fallin and Kaw Nation Chairman Guy Munroe sign the tribe’s renewed tobacco compact March 11.
FILE  PHOTO