NEW YORK Attorney General Eric T. Schneiderman announced today that his office has filed a lawsuit against two companies for illegally selling contraband cigarettes without paying the required state excise taxes. The lawsuit, which is the result of an ongoing investigation into contraband cigarette sales across the state, was filed in U.S. District Court for the Eastern District of New York against Grand River Enterprises based on Six Nations land in Ohsweken, Ontario and its wholesaler, Native Wholesale Supply, located in Perrysburg, New York.

The lawsuit charges that Grand River Enterprises avoided state taxes by illegally selling its products to Native Wholesale Supply instead of a New York State licensed stamping agent who would prepay the New York State cigarette excise tax and affix the state tax stamp, as required under the law. During the eight month period from November 2011 to July 2012, Native Wholesale Supply paid $85 million to Grand River Enterprises for its cigarettes, which accounts for more than three million cartons of cigarettes and a potential tax loss to the state of more than $13.2 million. Under federal law, Grand River Enterprises could face a civil penalty of up to two percent of the gross sales of cigarettes for the year. Based on 2011 2012 sales, the company’s civil penalty could be tens of millions of dollars.

“The illegal sale of contraband cigarettes violates both state and federal laws, robs New Yorkers of the funds to pay for essential state services, places legitimate businesses that play by the rules at a competitive disadvantage, and makes it easier for young people to take up a deadly habit, said Attorney General Schneiderman. My office is committed to taking action to stop the illegal sale of contraband cigarettes to protect our state s fiscal and physical health, and ensure all businesses in New York are playing by one set of rules.”

According to the complaint filed today in federal court, Grand River has sold and distributed its tobacco products in New York without shipping its cigarettes to a New York State licensed stamping agent who would pre pay the New York State cigarette excise tax and affix the state tax stamp, as required by state tax laws. Licensed stamping agents are the only entities in the State authorized by the New York Department of Taxation and Finance to affix a tax stamp and collect the excise tax due. On reservation cigarette sales to tribal members can be made tax free, but those cigarettes must nonetheless have the tax stamp affixed by a licensed stamping agent.

The lawsuit is the result of an ongoing investigation into contraband cigarette sales across the state. The lawsuit charges Grand River Enterprises and Native Wholesale Supply with selling illegal cigarettes in New York and is based on several incidents that establish the companies are selling and trafficking large quantities of illegal, untaxed cigarettes.

  • On November 6, investigators from the Attorney General’s office purchased unstamped Grand River Seneca brand cigarettes from a smoke shop on the Poospatuck Reservation in Mastic on Long Island. The purchases came as investigators spotted over 50 cartons of Seneca brand cigarettes on display in the store.
  • On January 16, 2013, as part of Attorney General Schneiderman’s investigation, ATF agents raided the Skydancer smoke shop in Seneca Falls where they seized, among other items, over 16,230 cartons of unstamped Seneca brand cigarettes. With 10 packs in each carton, and 20 cigarettes in each pack, ATF agents seized over 3 million contraband Seneca brand cigarettes at that one location.

The federal Contraband Cigarette Trafficking Act (CCTA) makes it unlawful to possess, sell or distribute over 50 cartons of untaxed cigarettes in a state, such as New York, that requires tax stamps and tax collection. Defendants also violated the federal Prevent All Cigarette Trafficking (PACT) Act and New York State tax and public health laws by not reporting these sales to the Department of Taxation and Finance, as required.

In December of 2012 Attorney General Schneiderman filed a lawsuit against King Mountain Tobacco Company for selling hundreds of thousands of its cigarettes in New York each year without paying the required state excise tax.

The matter is being litigated by Tobacco Compliance Bureau Assistant Attorney General Sarah Evans under the supervision of Tobacco Compliance Bureau Chief Dana Biberman and First Deputy of Affirmative Litigation Janet Sabel.

2. smoking smarter?

Seminole e-cig

Crack nicotine
What may be the most dangerous additive of all by reinforcing the addiction with a deadly stronghold is nicotine itself, says James Pankow of Oregon Health and Science University in Portland. Nicotine occurs naturally in tobacco, but cigarette manufacturers have banked on nicotine’s allure by encouraging a form known as “free base” nicotine in the final product.

Nicotine, Pankow explains, occurs naturally in tobacco plants as either an acid or a base. The acidic form is more stable, and therefore more concentrated. The basic form, known as “free base” nicotine, is volatile, especially when smoked. As a result, it is absorbed quickly and efficiently into the lungs when a person smokes, where it quickly reaches the brain. Acidic nicotine, conversely, clings to the particles of smoke as they settle into the lungs, and is slowly absorbed before it is transported to the brain.

The difference, Pankow says, is analogous to the difference between powder and crack cocaine, the latter of which is smoked in a similar free base form and is considered to be the most addictive form of the drug.

Tobacco companies have learned how to maximize the amount of free base nicotine in commercial cigarettes by carefully blending different tobacco varieties and by directly converting the existing acidic nicotine into the free base form. The result, researchers think, is a more addictive, and thus more deadly, cigarette.

“In the 1990s, the courts demanded the release of tobacco company documents, which are now available. There’s much about converting more nicotine into the freebase form to get more nicotine into the smoke and so that the nicotine in the smoke becomes more available,” says Pankow.

Pankow and his team recently compared the levels of free base nicotine found in the most common brands of American cigarettes (see “Percent Free Base Nicotine..” in the bibliography). They found that some including the famously popular Marlboro contain 10 to 20 times higher percentages of free base nicotine than other brands. But the brand with the most free base nicotine? The “Natural American Spirit” cigarette, marketed here as “100% Chemical Additive Free Tobacco.” American Spirit cigarettes contain 36 percent free base nicotine, compared with 9.6 percent in a Marlboro, 2.7 percent in a Camel, and 6.2 percent in a Winston.

Nicotine for health nuts?
As most conscientious consumers know by now, the all natural label doesn’t always translate to all healthy. But as anti tobacco ads flood the airwaves and health warnings abound, the market for “alternative” cigarettes is swelling noticeably. Enter the era of the concerned smoker, who passes up additive laden cigarettes issued by corporate giants in favor of “clean” tobacco.

In response, a whole new crop of products has emerged from the tarpool. American Spirit is one of them. As for the rest, take your pick

Bidis are the groovy hand rolled cigarettes from India, popular with teens because they are manufactured in a variety of flavors, like strawberry or root beer. But buyer beware A study released published last December in the journal Nicotine and Tobacco Research found that after smoking bidis, study participants’ blood nicotine levels were higher than when they smoked conventional brands.

“Welcome to the world of nicotine free smoking!” is the plug for Quest Cigarettes, a cigarette that is available in three nicotine levels, “low,” “extralow,” and “nicotine free,” intended for smokers who want to cut back or eliminate cigarettes entirely. Unlike nicotine replacement strategies, Quest cigarettes give smokers a chance to hang onto the habit while kicking the addiction. But many studies have shown that when smokers switch to cigarettes with less nicotine, they simply (and probably unconsciously) take deeper, longer drags to get the familiar buzz.

Philip Morris is testing a high tech cigarette called the Accord. The $40 kit includes a battery charger, a puff activated lighter that holds the cigarette, and a carton of special cigarettes. When a smoker sucks on the little box (which could pass for a kazoo), a microchip ignites the cigarette. The process gives the smoker one drag and releases no ashes or smoke. Accord appears to reduce the risk of secondhand smoke, but a study published late last year reported that Accord smokers took bigger and longer puffs than with conventional cigarettes. The researchers concluded that the Accord is unlikely to reduce the smoker’s risk.

Less tar, more carbon monoxide. Is this alternative cigarette a real alternative?

R.J. Reynolds’ Eclipse cigarette heats tobacco rather than burning it. When users light the cigarette like tube, heated glycerin and tobacco vaporize the nicotine. The process produces less tar, but more carbon monoxide (see “Long term effects of the Eclipse cigarette…” in the bibliography).

So far, tobacco companies have succeeded in stalling legislation that would require them to disclose or even test for the amount of free base nicotine or other additives in their products. “They have always argued these are trade secrets… but we’re not talking about making software. This is a product that kills,” says Pankow. In the meantime, he says, smokers should be wary of claims that link alternative cigarettes to better health.

Who’s in a puff over passive smoking?