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Who Gets to Sell Cigarettes Without Taxes?

A First Nation tobacco company wields its sovereign status in court against Big Tobacco and revenue-hungry governments.
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Illustration: Ellie Andrews

American Indians introduced tobacco to the rest of the world centuries ago, and the nicotine-laden herb remains an important part of their culture and religious ceremonies. It’s also key to the commercial success of Grand River Enterprises, a company dominated by two Mohawk men on the Six Nations of the Grand River Reserve in Ontario, Canada. GRE manufactures Seneca and other brands of cigarettes at a sprawling plant on the reserve in Ohsweken. They’re sold at smoke shops there and through distributors who market them across Canada, the U.S., Central America, and even Germany, where that nation’s armed forces have bought them for their personnel. There’s only one problem with this highly visible example of indigenous people’s success: taxes.

Because of Canadian and U.S. laws that give the Canadian tribes First Nation sovereign status, GRE contends sales of cigarettes manufactured on tribal land aren’t subject to many taxes—giving its smokes a huge advantage over heavily regulated mainstream brands such as Marlboro. That’s caused blowback not only from Big Tobacco companies that are required to pay hefty excise and sales taxes on their products, but also from governments that are losing out on tax revenue from the estimated hundreds of millions of dollars in annual sales of the First Nation company.