Cigarette wars

Northwest Indians want no taxation in their sovereign nations


Alison Gottfriedson was no stranger to breaking state and federal laws. She was arrested repeatedly as a teenager in the 1960s and '70s for fishing in areas that were off-limits to Indians. She and her family ultimately won a victory for Indians throughout the Northwest — the right to half of the fish harvest in their traditional fishing areas.

When Gottfriedson died last month at age 57, she was embroiled in yet another battle for Native sovereignty: the right to sell tax-free cigarettes in her smoke shop at Franks Landing, south of Seattle.

In its heyday, cars looped around the garish smoke shop awaiting their turn at the drive-through window, while lines of smokers stretched through the front door, emerging with stacks of cartons of Marlboros, Newports and Camels. Signs boasting rock-bottom prices were posted near tribal paraphernalia, making the message clear: These deals are possible only on Indian land. Federal law states that only Indians can buy tax-free cigarettes, and smoke-shop clerks are required to check IDs. But Gottfriedson — and countless other smoke-shop owners — sold tax-free tobacco to anyone.

It was a lucrative business. Gottfriedson and her husband, Hank, members of the Squaxin Island Tribe, made more than $20 million between 2001 and 2007, selling cigarettes to their customers for about half the price they would have cost anywhere else.

But in May 2007, Gottfriedson emerged from her home to find a row of guns pointed at her. A team of federal agents ransacked her smoke shop. Children at the nearby Wa He Lut School, which was largely funded by smoke-shop proceeds, watched the whole thing.

"I've always been controversial, ever since I was a girl," Gottfriedson said just weeks before her death.

Gottfriedson was one of dozens of Pacific Northwest Indians in recent years to face federal charges over the sale of untaxed cigarettes. She was ordered to repay $9.2 million in back taxes, but because she used the proceeds to benefit the tribe, the judge — impressed by the respect she enjoyed among Northwestern tribes — sentenced her to only five years' probation. State and federal officials say members of other tribes became cogs in the wheels of international cigarette smuggling operations and spent their profits on lavish homes and luxury cars, all in the name of tribal sovereignty.

According to 2003 estimates by Washington's Liquor Control Board, the state has lost up to $223 million each year from the sale of untaxed cigarettes, with 60 percent of that loss due to Indian-owned smoke shops. The battle has been simmering since at least 1980, when a federal court judge ruled that Washington has the right to tax tobacco sold to non-Indians and members of other tribes on the Colville Indian Reservation. Many tribes consider the decision a blow to sovereignty, says Melody McCoy of the Native American Rights Fund in Colorado.

"The court allowed the state taxing jurisdiction to leap over reservation boundaries," she says.

Washington state lawmakers decided in 2001 to negotiate compacts that require tribes to tax cigarettes sold to non-Indians but allow the tribes to keep the tax revenue. Lawmakers hoped the solution would appease the tribes without undercutting non-Indian sellers.

Since then, Washington has increased its tobacco tax to $2.025 per pack, the fifth-highest in the country. Even as many tribes sign compacts with the state, prosecutors are cracking down on Indians who sell untaxed smokes.

"If you have a retailer that's not collecting the tax and trumping their own economic interests over the community, I don't see that as sovereignty, I see that as greed," says Tate London, a Tlingit Indian and federal prosecutor.

Washington is a hotbed for counterfeit, smuggled and tax-free cigarettes because of its high tax, and because it shares a long border with Idaho, where sales laws are less stringent. That means smoke-shop owners in Washington can easily transport cheaper cigarettes from Idaho.

The state is also home to 29 federally recognized tribes who have a long history of fighting for rights originally guaranteed by treaties signed in the 1800s. Tribes here don't hold the same reverence for tobacco as do Indians in other regions, but they consider their rights sacred — especially the right to hunt, fish and conduct business in their own way.

There's no difference between the fight for fishing rights and the fight for the right to sell goods and services tax-free on Indian land, says Billy Frank, Gottfriedson's uncle and a respected Indian leader.

"They say Alison owed $9 million, but she didn't owe a dime," Frank says. "The federal government violated our sovereign rights."

Frank longs for the day when Indians will be able to sell products on their own land without regard to outside tax laws. That might seem impossible now, but Frank is widely regarded as the driving force behind tribal fishing rights in the Pacific Northwest. He's seen the impossible happen before.

"The way things are now, there's nothing to say that our kids won't go to jail, just like Alison did," he says. "There's fishing, and there's taxation, but it's the same issue."

Krista Kapralos is a journalist based in the Pacific Northwest, where she writes about American Indian tribes and religion.

Cigarette wars
Joan Falconer
Joan Falconer
Aug 18, 2009 08:49 PM
The article didn't say what Alison died of. Perhaps lung cancer? While I'm sympathetic to the Indians' point of view, I am certainly not sympathetic to the tobacco element. They don't need that.
Indian Smoke Shops Indian Gambling Casinos
Aug 19, 2009 12:32 AM
I'm sympathetic to heinous historical mistreatment, of course, who isn't. But Indian sovereignty my ass. These people who claim Native American blood just want to enrich their individual selves by hiring lawyers to play games with governmental authorities then by "getting back" at the White Man, making money off his pathetic addictions to gambling & smoking. If the revenue were pooled and truly went to benefit ALL impoverished reservations, it still wouldn't be justifiable, but seeing some so-called proud Indians (with, you know, 8% Indian blood) driving around in brand-new Escalades really chaps my ass. It's irresponsible the Feds didn't crack down on this from the get-go.
Aug 19, 2009 12:52 AM
Alison died fighting for what she believed in. Why does it matter what she died fom?
Say What????
Deb Krol
Deb Krol
Aug 19, 2009 11:18 AM
I'm sorry that the previous poster feels the way he does. To reiterate: blood quantum is a policy imposed upon us by the federal government in an effort to be rid of tribes. The thought was that, if Indians were intermarried with white people, they would give up being Indian--that is, give up their cultural, economic and political ties to their communities--which would result in the feds declaring our tribes 'dead' and taking what was left to us of our lands.

Tribal sovereignty is older than America. The Supreme Court has upheld at least a portion of our right to self-governance, as well as more than 200 years of federal Indian law.

If you may recall, the United States tried prohibition, which was a complete failure and which led to the proliferation of organized crime.

At least Indian gaming is strongly regulated, and tribal casinos do contribute to problem gambling organizations. And in California, my home state, the tribes that have prospered through gaming do help those that have not been able to make gaming work so well. They are quite generous with this help, too!

We can't regulate people's addictions; it's still a free country last time I looked.

It seems to me and to some of my fellow tribal members that what really chaps people is that Indians have been able to adapt to Western ways in the arena of the free market, and to use existing law to become prosperous while keeping their cultural ties intact [isn't that what the Amish do? They're only required to send their kids through the 8th grade and they also are granted other concessions, and nobody complains about them].

Sorry that we are learning how to be prosperous...and that we have survived despite the federal government's best efforts to eliminate us.
Aug 19, 2009 11:31 AM
To clarify, because the state chooses to regulate tobacco instead of banning it, it's a legal product, so anyone can legally sell it and do whatever they choose with their profits. That's the white man's way.

Native Americans have been murdered, forcibly denied their rights, had their lands stolen, seen their abundant rivers polluted and trashed, and locked into reservations. They're right to resist any more encroachments from the state.