Opinion ID: 623760
Heading Depth: 5
Heading Rank: 1

Heading: OTC-Licensed Wholesalers

Text: The Excise Tax Statute requires tribally-licensed retailers to purchase cigarettes and other tobacco products from OTC-licensed wholesalers. Thus, if MCN wishes to -31- operate a tribal wholesaler and distribute cigarettes and other tobacco products to triballylicensed retailers, that wholesaler must be licensed by the OTC. MCN argues that these requirements infringe on its tribal self-government because it cannot obtain cigarettes or other tobacco products without either doing business with other OTC-licensed wholesalers or having its tribal wholesaler obtain a license from the OTC. Although some authority suggests that the State cannot require MCN’s tribally operated wholesaler to obtain a license from the OTC, see Moe, 425 U.S. at 480-81 (prohibiting vendor license fee as applied to tribal member conducting business on Indian country); State ex rel. Okla. Tax Comm’n v. Bruner, 815 P.2d 667, 669-70 (1991) (prohibiting the OTC from imposing a license and permit requirement on tribally licensed cigarette retailers in Indian country but permitting a registration requirement), in Rice v. Rehner, 463 U.S. 713 (1983), the Supreme Court held that where a tribal retailer sells to non-tribal members, state licensing requirements do not “infringe upon tribal sovereignty.” Id. at 720 (“To the extent that [the Indian trader] seeks to sell to nonIndians, or to Indians who are not members of the tribe with jurisdiction over the reservation on which the sale occurred, the decisions of this Court have already foreclosed [the Indian trader’s] argument that the licensing requirements infringe upon tribal sovereignty.”). Even if we were to question such a licensing requirement, MCN provides no authority for why the State cannot require it to purchase cigarettes and other tobacco products from an OTC-licensed wholesaler. The precedent on this question goes the -32- other way. In Milhelm Attea, the New York statutory scheme that the Court reviewed required “licensed agents [to] purchase tax stamps and affix them to cigarette packs in advance of the first sale within the State.” 512 U.S. at 64. Requiring wholesalers, who are the stamping agents, to be OTC-licensed helps protect the State’s valid interest in preventing evasion of its valid cigarette tax. See Id. at 75 (“We are persuaded . . . that [the State’s] decision to stanch the illicit flow of tax-free cigarettes early in the distribution stream is a ‘reasonably necessary’ method of ‘preventing fraudulent transactions,’ one that ‘polices against wholesale evasions of [the State’s] own valid taxes without unnecessarily intruding on core tribal interests.’” (quoting Colville, 447 U.S. at 162)). Therefore, we hold that either requiring MCN’s wholesaler to obtain a license from the OTC or requiring its tribally-licensed retailers to purchase cigarettes and other tobacco products from OTC-licensed wholesalers does not infringe on MCN’s tribal selfgovernment.