New York Attorney General Letitia James announced a $50 million agreement with two companies that allegedly sold cigarettes without paying the required state excise taxes.
Article continues below
The agreement resolves allegations that Grand River Enterprises Six Nations, Ltd. (Grand River) based in Canada, and its wholesaler, Native Wholesale Supply Company, Inc., located in Western New York, violated state and federal laws by shipping, selling, and distributing cigarettes in New York without paying state taxes.
The two companies brought millions of cartons of unstamped cigarettes into New York from Canada. In addition to paying $50 million, the agreement also permanently prevents the companies from selling unstamped cigarettes in New York.
New York imposes state taxes on cigarettes to curtail the usage of tobacco products that are known to have serious and sometimes deadly health effects and significant related economic costs.
State excise taxes on tobacco products have been proven to prevent smoking imitation among adolescents and young adults, reduce cigarette consumption, and increase the number of smokers who quit.
When state excise taxes are evaded, cigarette prices become artificially low, making them more attractive and accessible to young people. Moreover, the sale of contraband cigarettes also reduces valuable tax revenue used to pay for essential state services and public infrastructure.
Grand River manufactures the cigarette brands Seneca, Couture, and Opal. Grand River’s primary distributor and wholesaler of cigarettes in New York is Native Wholesale.
The two companies are alleged to have operated as a joint venture to manufacture, transport, and sell cigarettes and other tobacco products in New York.
As alleged in the complaint, Native Wholesale purchased cigarettes and tobacco products from Grand River, imported them into New York, and distributed the cigarettes to retailers in the state.
Native Wholesale was not licensed by New York to distribute or sell cigarettes. Grand River knew that the cigarettes it sold to Native Wholesale would be sold into New York without going through a New York state licensed stamping agent for pre-payment of state taxes and would be neither stamped nor taxed as required by New York law.
These unstamped cigarettes then ended up on shelves in New York retailers throughout the state. On multiple occasions, investigators from the Office of the Attorney General (OAG) were able to purchase these unstamped cigarettes from retailers in the state.
As a result of the agreement, New York will be paid $50 million. ■