Provinces frustrate tobacco trade on First Nations territory

Canada’s three most western provinces are taking exception to cigarettes crossing their borders and bearing only the federal stamp for taxes paid.

Rainbow Tobacco Company’s latest shipment of cigarettes, a gift to a woman in the Federation of Saskatchewan Indian Nations, was the latest tobacco seized by a provincial financial department.

“I’m getting frustrated,” said Rob Dickson, chief executive officer for Rainbow Tobacco Company, which operates on the Kahnawake First Nation, Mohawk territory in Quebec.
“I met with the federal government (early in February). They said I’m in good standing, but they don’t want to get involved.”

Dickson’s company supplies tobacco for sale to First Nations in both Quebec and Ontario and sales tax is not paid in those provinces.

But Dickson’s plans to expand his company’s business to western Canada have raised an issue that has forced Dickson to hire legal counsel in Alberta.

“The constitutional argument is that the Provincial Tobacco Tax Act does not apply to First Nations lands because they are federal lands,” said legal counsel Chady Moustarah. “It’s quite clear this is federal lands. Our view is that the provincial government doesn’t have the jurisdiction to enforce the Provincial Tobacco Tax Act.”

Moustarah cited section 35 of the Constitution Act in conjunction with sections 87 and 88 of the Indian Act.
The issue came to the fore in early January when 14 million cigarettes were seized by the Alberta Gaming and Liquor Commission ( AGLC) from a Quonset in Hobbema on the Montana First Nation. The cigarettes were not marked for legal sale in Alberta. Provincial taxes are approximately $3 million.

On Jan. 5, the RCMP was called in by Montana First Nation Chief Carolyn Buffalo, who reported a break and enter at the Quonset containing the 75,000 cartons of cigarettes. A small quantity had been stolen. The RCMP notified the AGLC and Buffalo was served with a warrant. The cigarettes were seized and are being stored in an undisclosed secured facility. No charges have been laid.
“Wherever cigarettes are sold in Alberta they do have to be marked for legal sale in Alberta and there are legal tobacco sales that take place everywhere in Alberta, including on First Nations,” said Lynn Hutchings-Mah, spokesperson for AGLC.

As money had not changed hands between Montana First Nation and Rainbow Tobacco Company, Dickson flew to Alberta to claim his product. He was refused.

Moustarah was then obtained as legal counsel for Rainbow Tobacco Company, the Montana First Nation and Buffalo.

The AGLC was given until Jan. 27 to either return the tobacco or respond to correspondence demanding the return of the product. The AGLC did not respond. Moustarah has made a legal claim on behalf of his clients.

“I think it will take quite some time to deal with this issue,” said Moustarah. He expects the Alberta government will move ahead on Sect. 4(1) of the provincial Tobacco Tax Act which states, in part, “. . . no person shall, in Alberta, purchase, possess, store, sell or offer for sale tobacco products that are not marked for tax-paid sale in Alberta. . . .”

Six days after the tobacco was seized in Alberta, the federal government renewed Dickson’s federal manufacturing license.

Dickson has been in contact with the federal government since the latest seizures in early February. Ten thousand cigarettes intended as a gift for Elders in Squamish First Nations in B.C. were seized along with 20,000 cigarettes heading to Saskatchewan as a sample product to be stored on a First Nation in that province.

Dickson said he will continue to focus his legal efforts in Alberta at this time.

“We’ve received so many calls of support. Everybody says the province does not have jurisdiction,” said Buffalo. She noted that the sale of tobacco products was an economic venture that would bring much needed employment to her impoverished people. The cigarettes would only be sold to other Alberta First Nations.

Assembly of First Nations National Chief Shawn A-in-chut Atleo had strong words.

“First Nations leaders and governments are legitimately asserting their authority and jurisdiction regarding tobacco sales and distribution in their communities based on their authority over health, commercial activity and economics and trade,” he said in a news release issued after the seizure on the Montana First Nation. “Furthermore, it is obvious that there is no consensus regarding the jurisdiction issue since the tobacco products seized come from federally licensed First Nation tobacco manufacturers and, generally, provincial jurisdiction on reserve is limited according to Canada’s own constitutional law.”