2017 News Releases

New tribal cigarette-tax compact submitted to Legislature

Release Date: Feb 23, 2017

TOPEKA – (February 23, 2017) – Kansas has negotiated an agreement with the Kickapoo Tribe in Kansas to improve accounting for cigarettes and tobacco products sold on tribal lands, Governor Sam Brownback and Attorney General Derek Schmidt announced today.

The agreement, known as a compact, has been signed by tribal leaders and by Governor Brownback, and was submitted to the Legislature last week. Two similar compacts negotiated with the Prairie Band Potawatomi Nation and the Iowa Tribe of Kansas and Missouri were approved by the Legislature and signed into law in April 2016.

“Thanks to the spirit of cooperation between tribal leaders and the State, we were able to work in close partnership to reach this agreement with the Kickapoo Tribe,” Brownback said.

Attorney General Schmidt has asked the Legislature to begin the process of approving the compact.

“This compact, if approved by the Legislature, will significantly improve cooperation between the tribe and the state to prevent the illicit shipment of untaxed and unaccounted-for cigarettes from other states for sale on qualified tribal lands in Kansas,” Schmidt said. “The compact will strengthening the state's ability to comply with the terms of the 1998 Tobacco Master Settlement Agreement that governs cigarette sales in our state.”

Under the 1998 tobacco settlement, known as the Master Settlement Agreement (MSA), most tobacco companies have agreed to make annual cash payments to the State of Kansas. At the same time, Kansas agreed to diligently enforce its obligations under the MSA, including accounting for cigarette sales within the state. In 2012, Kansas resolved a longstanding dispute with tobacco companies, which had accused the state, among other things,  of failing to live up to its diligent enforcement obligations under the MSA by not accounting for tobacco sales on qualified tribal lands. Before it was resolved, that dispute had placed at risk hundreds of millions of dollars in future tobacco payments for Kansas, which generally total $50-$60 million each year.

To resolve the dispute, and to eliminate the potentially large financial liability for the state, Kansas as part of the 2012 settlement agreed to strengthen its diligent enforcement efforts in the future. One step needed to accomplish that improved enforcement is to account more fully for cigarettes sold on tribal lands in Kansas. Because the tribes are considered sovereign nations, it is necessary for the state to work cooperatively with them to improve cigarette enforcement on tribal lands.

Schmidt said approval of the compact this year will help the state comply with its enforcement obligations under the MSA.

“Legislative approval this year can strengthen our ability to protect the continued flow of millions of dollars in annual tobacco settlement payments to the state treasury," Schmidt said.

A copy of the compact negotiated with the Kickapoo Tribe is available at http://bit.ly/2mgR4qk. Schmidt said compact negotiations with the state’s fourth resident tribe, the Sac and Fox Nation of Missouri in Kansas and Nebraska, are nearing completion.

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