“Therefore, pursuant to Mescalero, even if a cigarette manufacturer is a tribal nation, it is subject to State regulation and taxation when the cigarettes leave the manufacturing Nation's Indian country. Thus, if a manufacturing nation is a non-compliant tobacco manufacturer, its products may be seized outside of Indian country under Oklahoma's tax and escrow statutes. The Nation's theory would require the Court to afford the protection of Indian Country from coast to coast, in spite of Mescalero, on the sole basis the cigarettes were manufactured in Indian Country and ordered by the Nation.
Therefore, precedent establishes States have the right to tax sales of cigarettes and other tobacco products occurring within the Indian country of a Tribe, except those to tribal members. Precedent also makes it clear that Indian tribes going beyond their Indian Country boundaries are subject to non-discriminatory state laws, such as the challenged escrow statutes.”
The Muscogee Creek Nation, seeking declaratory and injunctive relief from the defendants, challenged an Oklahoma Tax Statute which imposed excise tax on all non-tribal member consumers purchasing cigarettes and tobacco products from retailers located on the Tribe's Indian Country, and an Oklahoma escrow statute requiring third party cigarette manufacturers who had not joined the Master Settlement Agreement with the State to make escrow payments. The Nation claimed that sales of tobacco products in its Indian Country were exempt from Oklahoma's excise tax and from the manufacturers escrow payment. The Court found that the Plaintiff had failed to state a plausible claim of a violation of federal law and dismissed proceedings for lack of subject matter jurisdiction, and alternatively, for failure to state a claim upon which relief may be granted.