Judge temporarily halts cigarette mail ban
Tue, 29 Jun 2010 14:26:48 GMT —
Seneca businesses have gotten some relief from a federal judge who ordered a temporary halt to a new law that bans the shipment of cigarettes through the mail.
Federal District Judge Richard Arcara ruled Monday in favor of Seneca tobacco business owner Aaron Pierce by granting a temporary restraining order. The new law would have taken effect Tuesday. The judge scheduled a July 7 hearing.
The Seneca Indian Nation, whose member-owned businesses dominate the discount mail order cigarette industry, said the Prevent All Cigarette Trafficking Act will gut its $100 million-per-year tobacco economy and eliminate 3,000 jobs held by workers inside and outside the tribe. The tribe's businesses are estimated to sell four of every five packs of mail order cigarettes.
"It's a major impact, a major obstacle we're going to have to find a way to overcome," said J.C. Seneca, a counselor of the 8,000-member nation.
Health and anti-smoking groups cheer the mailing ban as a way to limit teenagers' access to cigarettes. Cigarette giant Philip Morris USA praises it for keeping smokers from dodging state taxes, which the Senecas don't charge. In New York, the excise tax is $2.75 per pack but is being raised to $4.35 per pack.
The law's Indian country opponents, however, see it as an attack on tribal sovereignty and a ploy by big tobacco to regain market share being lost to fast-growing native brands that, at half the price, often outsell name brands.
"I sell three cartons of Seneca brand, at least, to every carton of Marlboro," said Bob Stevens from behind the counter at Red Nation Tobacco, which was advertising a pre-closing blowout sale because of the PACT Act.
Before closing its doors, the Salamanca convenience store counted on walk-in customers for about 10 percent of its business and cigarette mail orders for the rest.
It is one of more than 100 businesses put in jeopardy by the law, ranging from mom-and-pop operations that mail 100 cartons a week to humming call centers processing 30,000 to 50,000 cartons.
"We're completely gone if this happens," said Janelle Pedulla, president of a mail order business that employs 10 of her family members. "The good thing is we're all going down together, but the worst thing is we're all going down together."
Seneca businesses are estimated to account for at least 80 percent of all cigarettes sent through the mail. Pedulla and others put the number of customers who receive cigarettes by mail in the tens of thousands, but precise numbers are unavailable.
A 4-year-old internal stamping program ensures that 75 cents per pack goes to the nation for health and education programs.
"The effect of the PACT Act on the Seneca Nation is particularly severe, and we have no doubt that the Seneca Nation and Seneca mail order businesses were targeted for destruction," council chairman Richard Nephew said in testimony before a Department of Justice panel seeking input on the bill earlier this month.
Philip Morris spokesman David Sutton said the tobacco giant's support for PACT was based on efforts to see that its products are sold through face-to-face retail transactions, in which sales taxes are collected and the buyers' ages are verified.
"To claim that it was some sort of a conspiracy or some sort of shadow dancing is a bit of a stretch," Sutton said, noting much of the state's congressional delegation voted in favor of the bill.
The postal service, meanwhile, estimates it will lose $30 million to $40 million a year, spokeswoman Karen Mazurkiewicz said. Carriers such as UPS and FedEx already refuse to ship cigarettes.