Purchasing cigarettes on Indian reservations is a matter of simply purchasing them from the store or facility set up on the reservation for that purpose. Most Indian reservations have smoke shops that sell cigarettes and other tobacco products to visitors to the reservation or online. Purchasing cigarettes on reservations with smoke shops is attractive to buyers because they can usually purchase these items at lower prices than they can elsewhere.
The smoke shops can sell cigarettes at lower prices because many reservations are not subject to local or state laws regarding taxation of tobacco products and can sell cigarettes without charging the otherwise applicable excise and sales taxes. Cigarettes sold on Indian reservations are exempt in total or in part due to the tribe’s status as a sovereign nation. Because the reservations are considered tribal lands, sales that occur on reservations of sovereign tribes are exempt from local tax laws. The degree to which this sovereignty exempts tribes from state laws varies by state and by tribe.
Many states rely heavily on the revenue generated by taxes levied on cigarettes. Some tribes have agreed to concessions that exchange some rights for benefits provided by the state and must abide by state laws regarding taxation of cigarettes. Some states respond to the loss in revenue by conducting raids on Indian smoke shops that sell tax-free cigarettes without the proper authority or by preventing companies such as FedEx and UPS from delivering cigarettes purchased online from reservations without taxes. States also prosecute individuals who purchase cigarettes on reservations and attempt to sell them for profit off the reservation.