Government press releases are usually quite entertaining, so when Indiana’s attorney general used the word contraband in a headline concerning a business in Sellersburg, I knew I was in for a treat.
The word contraband just sounds so amazingly sinister doesn’t it? It conjures up images of sneaky people gathering in dark corners doing very scary stuff. But in this case the reality didn’t exactly match the hype.
The contraband was cigarettes. Of course, cigarettes in the general sense are not illegal in Indiana, but certain brands not on the state government’s approved list are. If the brand is on the list, all is well, but if not, then cigarettes suddenly transform into evil contraband.
One reason business owners cannot sell any brand consumers might like to purchase in Indiana has to do with the Tobacco Master Settlement Agreement made in 1998 with the major tobacco companies.
The settlement requires those companies to pay Indiana a specific amount of money per pack sold. This creates a potential problem, though, because a company not involved in the agreement does not have to add the settlement fee to their price.
They could sell the product at a lower cost. This is bad news for government, because not only would they lose the increased settlement tax per pack from these companies, but the market share of those who agreed to the settlement would decrease.
It’s not much of a problem for a government to solve, though, because they can simply declare those brands illegal, creating price protection for the settlement brands. Then all cigarettes sold in the state would include the settlement fee per pack. The ability to forcibly manipulate markets comes in so handy sometimes.
That explains why a company can’t sell other brands, but it doesn’t explain what happened in Sellersburg, where the company was only storing nonapproved brands. They found out that even though a brand can be legally sold in other parts of the country, it does not mean they can legally store them in Indiana.
I don’t know why that company didn’t know this already. Any mafia, oops, I mean state government, worth its salt would never allow any part of commerce to occur when they can’t take their chunk.
Of course a warehouse holding cigarettes that can’t make money for the state definitely needs to be emptied and the attorney general even found ways to get the most political benefits possible too.
He brokered a two-part deal, with one part consisting of the government destroying half of the cigarettes. This was a masterful feel-good move that makes him look like a moral crusader to the anti-smoking crowd.
The second part forced the company to take the other half of the nasty contraband out of the state, which plays nicely to the get-tough crowd. This also allowed the attorney general to cover his back with other states. Since each state makes its own statutes regarding the settlement, cigarettes that are useless to Indiana’s revenue grabbers are money-makers in other places.
So if Indiana would have destroyed the whole bunch, the attorney general would be eliminating easy revenue for other states. Therefore, by allowing half the product out of the state, he helped those states collect taxes, too.
To further ingrain the get-tough image, bureaucrats from the attorney generals’ Tax Division followed them all the way out of the state and by golly, made completely sure those nasty, evil, horrible, dirty, revolting, stinking illegal products were no longer on Indiana’s pristine soil.
After all, only cigarettes that include the revenue-producing settlement tax deserve to sit on our pristine soil.
Sellersburg resident Debbie Harbeson loves to sit on pristine soil and think dirty thoughts. Write her at Debbie@debbieharbeson.com
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