Big Tobacco Launches $1.5-B Lawsuit Against First Nations Smoke Shops

Source from:  Canada 06/20/2011

Imperial Tobacco Canada Ltd. has decided to butt into the debate on contraband cigarettes, launching a $1.5-billion lawsuit against what it calls contraband tobacco manufacturers and retailers on First Nations reserves. "We operate with over 200 laws and regulations," Eric Gagnon, a spokesman for Imperial Tobacco, told Postmedia News on Friday. "There's no reason why tobacco manufacturers on First Nations reserves should be treated any differently from legal manufacturers. This is what the lawsuit is all about." Imperial also wants to bring smaller producers - whether operating legally or not - in as third parties to a lawsuit it faces from the Ontario government, which is suing tobacco giants, including Imperial Tobacco, for health-care costs resulting from tobacco-related illnesses. If what the Ontario government claims is true, Gagnon said, then tobacco businesses selling and operating on reserves in Ontario should also respond to the same allegations faced by Imperial. The government should target all tobacco manufacturers for generating health-care costs, he said. Gagnon said 18 manufacturers on reserves, including Tyendinaga Mohawk Territory near Belleville, Ont., and Kahnawake, Que., have been served with papers over the past few weeks. Shawn Brant, who co-owns the Two Hawks tobacco store in Tyendinaga, said he was served with papers by Imperial about two weeks ago. "We're prepared to fight," Brant said, adding that he was appalled the company would go after First Nations tobacco businesses and threaten an industry that has improved living standards on reserves such as his. He added that the Mohawk nation, which has historically traded tobacco, has an ancestral right to the trade and that the government and police forces recognize this historical attachment. Brant said he thinks this lawsuit against businesses such as his is a tactic by Imperial to drag out legal proceedings with the province. The government of Ontario launched its lawsuit in 2009. It does not target licensed First Nations tobacco companies nor does it address the issue of contraband cigarettes. It will probably take years to settle, said Michael Perley, the director of the Ontario Campaign for Action on Tobacco. It's possible the province did not target smaller producers on reserves because the lawsuit focuses on marketing behaviours and advertising, not illicit activity, he said. Tobacco producers must be licensed to manufacture and sell tobacco. Because of special tax exemptions for First Nations, retailers on reserves can sell cigarettes to Status Indians without charging tax. However, Gagnon said, there are hundreds of illegal operations, selling products under the table, not paying taxes and taking away market share from licensed companies like Imperial. "They're selling to kids, they're selling without collecting taxes, they're not respecting the display and labelling regulations," Gagnon said. "Since government doesn't want to take the responsibility, we've decided to move forward." What is needed is better regulation, said Joe Delaronde, a spokesman for the Mohawk Council of Kahnawake. He said First Nations have been asking for their own tobacco regulations for years because the current patchwork of provincial and federal regulations leaves some gaps which allow contraband operations to crop up. "We support the (tobacco) industry but we understand there's a need for regulation," he said. The RCMP has special units to deal with contraband tobacco and organized crime surrounding the trade. In 2010, the RCMP seized approximately 782,000 cartons and bags of illegal cigarettes nationwide. According to its website, illegal operations exist in the Akwesasne and Kahnawake territories bordering the U.S. and Quebec, and the Tyendinaga and Six Nations territories in Ontario, although licensed manufacturers and retailers also operate there. A spokesman for the Attorney General of Ontario told Postmedia News in an email that two defendants in its lawsuit, JTI-Macdonald Corp. and Rothmans, Benson & Hedges Inc. have brought third-party claims against "various aboriginal parties." Enditem