<< Previous   of   Next >> Michael O'Leary / The Herald  (click to enlarge) Sjoukje Groen sells cigarettes from the drive-up window at the Blue Stilly smoke shop near Arlington on Friday. Michael O'Leary / The Herald  (click to enlarge) Cigarettes sold at the Blue Stilly smoke shop now bear a stamp showing tobacco taxes are being collected.

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Stillaguamish tribe reaches cigarette deal with state

Smoke shop no longer risks having smokes seized as contraband

By Krista J. Kapralos
Herald Writer

ARLINGTON -- Truckloads of cigarettes delivered to the Blue Stilly smoke shop near Arlington are no longer at risk of being seized as contraband by the federal government.

The Stillaguamish Indian Tribe, which owns the land where the shop exists, signed an agreement called a cigarette compact with the state early last week. This week, smoke shop employees worked through the night to restock the store with cigarettes bearing a stamp that proves the tribe is collecting a tobacco tax.

"The store is now in full compliance with state law," said Stillaguamish Tribal Executive Eddie Goodridge Jr., who owns the store privately with his family.

The Blue Stilly opened in 2003 after tribal leaders shut down the Stilly Trading Post, a smoke shop owned by Stormmy Paul, a Tulalip tribal member. Since 2003, the Stillaguamish tribe has imposed a $2 per carton tax on all cigarettes sold at the shop.

Under the new cigarette compact, smokers will pay $16.20 per carton in tribal tax. In three years, that tax will rise to $20.25 per carton -- the same amount charged in state tax at non-Indian smoke shops and other Indian smoke shops operating under state compacts.

The Stillaguamish tribe also charges a 9 percent retail sales tax.

In most cases, the cost per carton of cigarettes won't go up, Goodridge said. Thanks to the compact, the tribe can purchase cigarettes more cheaply through local distributors, and can qualify for other discounts.

"A third of our product is staying the same, a third went up between $1 to $3 per carton, and a third is actually cheaper now," Goodridge said.

The shop is now offering brands produced by the Squaxin Island tribe, which operates a cigarette manufacturing plant on its reservation in Mason County.

The Stillaguamish tribe is considering building its own cigarette factory in the future. Under state law, tribes that produce cigarettes on their own land can sell them tax-free on that same reservation.

Goodridge said he doesn't know how many cartons of cigarettes are sold at the Blue Stilly, but that the tax increase of more than $14 per carton will bring a windfall to the tribal government.

The Stillaguamish tribe will use the taxes collected to pay for tribal government services.

At non-Indian smoke shops, the tax is collected by the state and used for state programs including water quality testing and health care.

One purpose of the state compacts is to level the competition between Indian and non-Indian smoke shops, said Mike Gowrylow, spokesman for the state Department of Revenue, which handles cigarette compacts.

"The tribal smoke shops can still compete on price like anyone else, but we don't want the taxes to be a factor," Gowrylow said.

The state can't force tribes to charge the tax, Gowrylow said. It's up to the federal government to enforce the law on Indian land.

Including the Stillaguamish, 21 of the state's 29 federally recognized tribes have negotiated cigarette compacts with the state, according to the Department of Revenue.

The agreement also gives tribes opportunity to legally sell large numbers of cigarettes on each other's land. Transporting more than 10,000 cigarettes without a state compact is a crime under federal law.

"We negotiate with the tribes and enter into an agreement to collect tribal tax in lieu of the state tax," Gowrylow said. "In exchange for that, we will consider any sales to non-Indians to be legal and not contraband, which would be the case if we did not have the compact."

The state passed legislation in 2001 that required tribes to apply to become eligible to negotiate for a cigarette compact. The Stillaguamish tribe was among the first tribes to apply and become eligible, but the tribe did not pursue negotiations for a compact until July 2007, after the Blue Stilly was raided by federal officials.

No indictments have been filed in connection with that raid.

Reporter Krista J. Kapralos: 425-339-3422 or kkapralos@heraldnet.com.