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Court battle brewing over illegal Alberta cigarettes

Carolyn Buffalo - An Alberta First Nation council that had 14 million illegal cigarettes seized by the Alberta government this month is mounting a legal challenge, saying the province had no authority to take tobacco from its reserve. The defiant chief, Carolyn Buffalo, is also striking up something of an ethical battle, saying the illegal cigarettes (which represent about $3-million) are a job and wealth creator for the impoverished first nation.

Carolyn Buffalo photo/Carolyn Buffalo photo

After provincial officials seized 14 million "contraband" cigarettes from its reserve earlier this month, an Alberta first nation is threatening to mount a legal challenge to get them back and keep provincial tobacco inspectors off its land for good.

Any such case would pit provincial jurisdiction over tobacco taxes and regulation against the sovereignty of aboriginal first nations.

The Alberta government and RCMP made the seizure, the largest in provincial history, from the Montana First Nation, located in Hobbema, Alta., about an hour south of Edmonton.

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Chief Carolyn Buffalo signed a deal to distribute the cigarettes to create local jobs. Her lawyer is arguing the province has no jurisdiction to interfere in trade between two sovereign Canadian first nations, on the basis that aboriginal affairs fall under federal purview.

"The ultimate goal is to have the tobacco back and to have direction from the court, at least, to the provincial authorities not to interfere with federal reserve lands," said Edmonton lawyer Chady Moustarah, who is also representing Rainbow Tobacco Co., based in Quebec's Kahnawake Mohawk nation. The company says it is federally licensed to produce and trade the cigarettes.

The legal push is supported by the Confederacy of Treaty Six First Nations. The group issued a statement saying it agrees "the provincial government has no jurisdiction to enter" Montana's land. Provincial approval on tobacco sales "is not required for trade between sovereign nations and the cigarettes must be returned," it said.

Rob Dickson, chief executive officer of Rainbow and himself a member of the Kahnawake nation, said Alberta stands alone - he sells his cigarettes in Ontario and Quebec without trouble.

"I fully believe this is a national issue. The provincial governments are infringing upon our sovereign rights more and more," said Mr. Dickson, who met with his lawyer Monday. "This has to be dealt with now or it's only going to further deteriorate our rights in the future."

Contraband cigarettes in Kahnawake sell for as little as $6 per bag of 200, a markdown of over 90 per cent from store price. Mr. Dickson expected the value of the 75,000 cartons of seized cigarettes, destined for sale in British Columbia reserves, would be several million dollars.

Despite all its support, the Montana tribal council is divided. Ms. Buffalo has been asked to step down by an unknown number of her four fellow band councillors, but has so far refused, her lawyer said. She said the distribution deal was a necessity.

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"The truth is we were trying to get our economy going, because we have no money to work with," Ms. Buffalo told a band meeting earlier this month.

The cigarettes were seized by RCMP and the Alberta Gaming and Liquor Commission on Jan. 5, two days after the band called police to report that some of the cache had been stolen.

"We called RCMP, because we consider everything legitimate, legal and no-problem," Mr. Dickson said. "That's when all the problems started."

The cigarettes aren't properly labelled for distribution in Alberta, and the Montana First Nation isn't a licensed provincial tobacco importer, the province said in a statement. It called the cigarettes "contraband" with a "potential value of $3-million in lost tax revenue," though that cash would only be collected if they were sold off-reserve, which the manufacturer insists wasn't the plan.

Alberta hasn't laid any charges in the case. The AGLC says the "investigation is ongoing."

Mr. Moustarah, the lawyer, is still trying to pressure the AGLC into voluntarily returning the cigarettes. If they don't, he's pledging to file a civil suit. The province remained tight-lipped this week, declining to say what it might do in response.

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Time is precious - even if stored under ideal conditions, the cigarettes will expire in about six months, Mr. Dickson said. In normal conditions, they'll be worthless in about two months.

"We're trying to do everything by the books here," Mr. Dickson said. "In our eyes, how much more can we do? There are companies out there who aren't abiding by all the rules, and we're the ones being penalized."

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About the Author
Parliamentary reporter

Josh is a parliamentary reporter in Ottawa. Before moving to the nation's capital in 2013, he covered provincial affairs in Edmonton and throughout Alberta. He joined the Globe in 2008 in Toronto before returning to his home province in 2010. More

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