Councilors pass smoke shops subsidy act

Tribal Councilors unanimously passed an act on Sept. 17 that calls for subsidizing 75 percent of monthly land lease payments for operators of certain Cherokee Nation-regulated smoke shops. “One of the burdens the retailers face is the payments they make each month to landowners. So in a situation like this you have someone that operates the smoke shop. The land on which they operate is land held in trust for a Cherokee.

A lease payment is paid from the shop operator…to the landowner,” Tribal Councilor Chuck Hoskin Jr. said. He said Legislative Act 12-109 calls for the subsidies to be disbursed only for fiscal year 2013, which runs from Oct. 1 to Sept. 30, 2013. According to Cherokee Nation Tax Commission records, the commission regulates 52 operational smoke shops. However, only 37 shops will be eligible for the subsidy because 15 are owned by Cherokee Nation Businesses. Financial Resources personnel said the subsidies are expected to total nearly $725,000 and come from the tribe’s General Fund, which will receive $4.9 million in FY 2011 carryover to cover the subsidies and other expenses.

Hoskin said the subsidy amount each smoke shop operator will receive is based on individual land lease agreements. He said the subsidy would “free up” cash for operators and allow them to keep their doors open, Cherokees employed and revenue coming to the Nation. “They employee a lot of Cherokees, and they pay lease payments for the most part to Cherokee landowners,” Hoskin said. “So there’s a lot of economic activity that’s generated by our smoke shops that benefit the Cherokee people, but we know that they’re struggling.” He said one reason why smoke shops struggle is because the tribe’s tobacco compact with the state restricts how the Nation can help CNTC-regulated smoke shops.

“The current tobacco compact, which comes up for negotiation next year, was generally considered not to be a good compact for the retailers,” Hoskin said. “They’ve struggled under it, and there’s other market forces at play – neighboring tribes, and of course, you’ve got the big players in the industry. So there’s a lot of market pressure on these smoke shops.” He added that some shops have closed and others are near closing, which will result in more lost revenue and jobs. Hoskin said the legislation should help operators bridge the gap until a better tobacco compact is signed next year.

According to the tribe’s FY 2011 audit, tobacco tax revenues have decreased from $7 million in FY 2006 to $3.99 million in FY 2011. The Cherokee Phoenix contacted several smoke shop operators for statements but was told they did not know enough about the legislation to comment. Councilors also unanimously passed an act that allows armed security staff at Cherokee casinos. Previously, the only armed security officers at the casinos were reserve marshals. However, the new act allows any CNE security personnel to become armed. Also, councilors unanimously confirmed Linda O’Leary, Betty Barker and Farrell Mackey Prater as CN Registration Committee members.