March 2013 Newsletter

Litigation Updates
Enforcement of Tax Evasion Laws
Center Updates
Welcome Stephanie Sheehan

Litigation Updates

To read full updates of the cases mentioned below visit our Recent Cases page.

U.S. Smokeless Tobacco v. City of New York

An appellate court ruled that New York City’s ordinance restricting the sale of flavored tobacco products to tobacco bars is not preempted by the Family Smoking Prevention and Tobacco Control Act.

Red Earth LLC v. United States

Red Earth LLC, a Seneca Nation tobacco retailer, voluntarily dismissed their suit in the U.S. District Court, Western District of New York challenging the constitutionality of the Prevent All Cigarette Trafficking Act (“PACT Act”).  The Plaintiff argued that the PACT Act violated both federal Native American Treaty Rights and provisions of the U.S. Constitution.  In particular, they argued the PACT Act violated Due Process because it required retailers to pay a state or local tax even if that retailer had not transacted enough business to be subject to that state tax. The voluntary dismissal does not prevent the Plaintiff or others to litigate the claims at a later date.

National Association of Tobacco Outlets Inc. v. City of Providence

The U.S. District Court for the District of Rhode Island upheld two tobacco control ordinances adopted by the City of Providence, finding that neither law violates the U.S. Constitution nor is preempted by the FCCLA or the FSPTCA. The ordinances at issue prohibit retailers from redeeming or accepting tobacco product coupons or multi-pack discounts and restrict the sale of flavored tobacco products, except for menthol products.

United State v. Phillip Morris

U.S. District Judge Gladys Kessler issued the specific language tobacco product manufacturers will be required to include in future advertising and promotions.  The “corrective statements” are a result of her 2006 decision finding tobacco companies defrauded the public in violation of the Racketeer Influenced and Corrupt Organizations Act by concealing known health risks of smoking, including addictiveness of cigarettes and nicotine.

Enforcement of Tax Evasion Laws

The New York State Attorney General’s Office (NY AGO) and The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) are cracking down on cigarette tax evasion. New York State law requires a $ 4.35 excise tax per package of twenty cigarettes, plus additional tax for every five cigarettes in a package over the initial twenty. A New York state tax stamp must be affixed to all cigarette packs for sale in New York. Unstamped (and therefore untaxed) cigarettes are contraband and illegal.

On January 16, ATF agents raided the Sky Dancer Smoke Shop in Seneca Falls, NY, confiscated 500 cases of unstamped cigarettes and seized over $500,000 in a business-related bank account. The raid was a result of complaints filed with the ATF in 2012 and a subsequent disregarded Cease and Desist letter from the NY AGO to Sky Dancer, claiming that the shop was selling untaxed cigarettes to the disadvantage of nearby law-abiding stores. According to the complaints, Sky Dancer Smoke Shop was selling unstamped cigarettes made and distributed by the Seneca-Cayuga Tribe of Oklahoma in violation of New York State law.

Separately, on November 6, NY AGO investigators purchased unstamped Seneca brand cigarettes from a smoke shop on the Poospatuck Reservation in Mastic on Long Island. That purchase led to NY AGO charges this month (March) against Grand River Enterprises (based on Six Nations land in Ohsweken, Ontario), and its wholesaler, Native Wholesale Supply (located in Perrysburg, NY).

Although all cigarette packs must be tax stamped, certain cigarette sales may be tax exempt. For example, “qualified Indians” are exempt from paying sales tax on cigarette purchases when they purchase cigarettes on a “qualified reservation” (e.g,  New York registered Native Americans purchasing cigarettes for their own use on their own qualifying nation or tribe’s reservation). To be considered a qualified reservation, the land must be held by a New York-recognized Indian nation or tribe. New York recognized nations or tribes are limited to: Cayuga Nation of New York, Oneida Indian Nation of New York, Onondaga Nation of Indians, Poospatuck or Unkechauge Nation, St. Regis Mohawk, Seneca Nation of Indians, Shinnecock Tribe, Tonawanda Band of Senecas, and Tuscarora Nation of Indians. Notably absent from this list is the Seneca-Cayuga Nation of Oklahoma and Grand River Enterprises.

The American Cancer Society (ACS) estimates that cigarette tax evasion costs the state $800 million each year. For more information on the role of cigarette taxes and public health please visit our Taxation page.

Click here for the ACS Resource.

Center Updates

Farewell Micah

The Policy Center bids a fond farewell to the Center’s founder and former director, Micah Berman. Micah departed New England Law | Boston and the Policy Center in January, to accept a joint teaching position with Ohio State University’s Moritz College of Law and the University’s College of Public Health. Micah will return from his current overseas travel in time to relocate to his hometown Columbus, Ohio and begin teaching this autumn.

Micah founded the Policy Center in 2010 with a five year grant from the New York Department of Health Tobacco Control Program. Under Micah’s leadership, the Center expanded its scope of work to provide policy support to the Vermont Department of Health Tobacco Control Program and New York’s Bureau of Chronic Disease. Micah enjoyed working work with the New York tobacco control community and the Center benefited from Micah’s tobacco control and public policy knowledge. We wish Micah the best of luck with his new endeavors.

Staff Updates

Micah Berman’s role as Director has been filled by the Center’s previous Assistant Director, Ilana Knopf. Kerry Snyder has assumed the position of Assistant Director. Ilana and Kerry are excited to continue their work with the New York tobacco control community in their new roles. Complemented by Staff Attorneys Whitney Dodds and Sarah Herbert, the Center has a tremendous team in place, with policy and legal knowledge to assist you and your communities. The contact information for all Center staff remains the same, and most importantly, we remain available to assist you with your tobacco control policy initiatives. Please do not hesitate to get in touch and let us know how we can help.

Welcome Stephanie Sheehan

The Policy Center is pleased to welcome Stephanie Sheehan as the Assistant Director of the Bureau of Tobacco Control at the New York State Department of Health. Stephanie assumed the position on January 24, 2013. As Assistant Director, Stephanie will provide leadership to the Bureau of Tobacco Control and she will work with the program’s management team to establish, refine, implement and evaluate tobacco control interventions in New York State.

Stephanie comes to the Bureau of Tobacco Control from the Office of Health Insurance Programs where she worked on a wide range of contract, procurement, community engagement and leadership projects in support of Medicaid transportation policy issues. Prior to this, she held positions in the Bureau of Maternal and Child Health, the Adolescent Health Programs, the Division of Nutrition and the Office of Medicaid Management. Stephanie is also Registered Professional Nurse.

Stephanie brings experience in management, public health, policy, and Department of Health systems and administrative processes, along with enthusiasm over joining a team with a nationally recognized reputation for excellence. The Center looks forward to working with Stephanie and the management team. Welcome Stephanie!