State official wants smoke shops to comply before they can sell lottery tickets

Saturday, October 8th 2005, 11:39 am
By: News On 6

OKLAHOMA CITY (AP) _ State Treasurer Scott Meacham advocates not allowing tribal smoke shops that violate state law or tobacco compacts to sell lottery tickets until they are in compliance.

No applications have been submitted by tribal smoke shops, which have to go through a compacting process to be approved to sell lottery tickets, Meacham said Friday.

``That would be relevant: How are they complying with their other obligations with the state of Oklahoma?'' Meacham said.

According to the latest figures, tobacco wholesale tax collections at non-tribal retail stores totaled $13.9 million, or $1.6 million below estimates in September.

Tribal stores appear to be buying cigarettes bearing an ``exception'' tax stamp that costs 6 cents a pack, then reselling them in the Tulsa market, officials have said. The tax stamp for non-tribal retailers is $1.03, giving the Tulsa area tribal stores a 97-cent-per-pack advantage.

``That causes demand to shift from the nontribal side that are paying $1.03 over to the tribal side that's paying 6 cents, and the state loses 97 cents on each package that is sold,'' Meacham said.

Total tobacco collections for September were $17.9 million, below the budgeted $22.2 million.

Tribal cigarette tax collections amounted to $1.8 million, $200,000 above the $1.6 million projection.

``You see an increase of $200,000 from August to September, but that $200,000 is at 6 cents a pack,'' Meacham said. ``If it had been at 97 cents a pack, it would be 15 times that ... about $1.5 million.''

The biggest noncompliance issue appears to be in the Tulsa area. Meacham alleges the Cherokee and Muscogee (Creek) tribes are selling cigarettes with the 6-cent stamps, which are supposed to be affixed on stores close to states that have a lower tax.

Non-tribal retailers are reporting that 19 of 21 smoke shops in the Tulsa area are selling cigarettes with 6-cent stamps, he said.

As for the lottery, Tulsa area convenience stores, such as QuikTrip, have received permission from the Oklahoma Lottery Commission to sell scratch-off tickets, which go on sale Wednesday.

The lottery tickets may draw customers to the non-tribal stores, where cigarette sales have lagged since new tobacco regulations took effect, Meacham said.

Gov. Brad Henry plans to meet again this month with the chiefs of the Cherokee, Osage and Creek tribes to discuss tobacco tax collections, Meacham said.

If no agreement can be reached, the matter would go to arbitration concerning the Cherokee and Osage nations, Meacham said. Because the Creeks don't have a compact with Oklahoma, the state would have to file a lawsuit, he said.

``The problem is, under federal law, states don't have an effective tax enforcement mechanism against the tribes,'' he said.