By JAMES FINK
jfink@bizjournals.com | 716-541-1611

Sitting in the back room of her Salamanca convenience store, Marcia Gordon is light years away from the legion of lawyers battling over whether New York state has the legal right to collect tax from Native American tribes on sales of tobacco.

But she and others - especially along a stretch of Broad Street in this Southern Tier city - are the pawns, they say, in a legal battle that may end up in U.S. Supreme Court. The latest turn in the seesaw battle was in New York's favor following a June 21 ruling in Appellate Court.

None of that matters to Gordon, 57, a former nurse who has run Robert Gordon Enterprises with her husband, Robert, for nine years. For her, the battle hits much closer to home.

The shelves of her warehouse, which a year ago were packed with inventory valued at more than $700,000, are stocked with just a smattering of Indian-produced and premium-brand cigarettes. Last summer, Robert Gordon Enterprises employed 22; now it's down to six. And the company recently had another layoff.

Cigarettes accounted for the bulk of sales, although the Gordons sell other items including lacrosse sticks, fishing gear and apparel such as sweatshirts and Buffalo Bills baseball caps. These days, business is way down, she said.

"It's probably off 90 percent. I wish it was only off 80 percent. I probably wouldn't have to lay off so many people," she said.

Forget that her husband is a member of the Seneca Nation of Indians or that selling cigarettes and other tobacco products is a lightning-rod issue. In the end, this has become a legal tug of war between the state and a sovereign tribe, with small-business owners caught in the middle.

The Gordons say their company is struggling.

There are two primary reasons. First is the federal Prevent All Cigarette Trafficking Act, adopted last year. It governs the collection of taxes on cigarettes and other products sold on the Internet and prevents the shipping of orders through the U.S, Mail.

Second, New York raised the tax by $4.35 per pack. The tax went into effect Sept. 1 and is at the center of legal wrangling between the state and Native American tribes, including the Seneca Nation of Indians.

Together, they form a "one-two punch" that is forcing mom-and-pop convenience stores into hardship, according to Gordon. Cigarette sales are a major source of revenue for many stores, which she said represent the bastion of Native American entrepreneurship.

"All they are trying to do is take money from all of the Native Americans," she said. "If Gov. Cuomo walked into my store, I'd kick him out the door. I'm that mad."

While the state talks about recovering $100 million in lost revenue, Gordon said she is faced with the reality of laying off loyal employees - many of them friends and neighbors who were earning slightly above minimum wage.

"Do you know how sick I felt when I had to tell these people - my people - I couldn't afford to keep them on? You have no idea," she said. "These are people who counted on the paychecks and now they are going on welfare. That's the irony. I was keeping them off the welfare rolls and now New York has forced me to put them on their welfare rolls. Doesn't anyone in Albany think?"

Cigarette sales are as much of an issue for the Seneca Nation and other tribes as casino operations and discounted gas sales.

"Small businesses, which is what these stores are, need to sustain themselves," said Robert Odawi Porter, president of the Seneca Nation. "They need cigarette sales to help make that happen."

Jeff Lenard of the National Association of Convenience Stores, based in Washington, D.C., tells a different story, however. The group supported New York's effort to collect sales tax from Native Americans. It has supported similar legislation in other states.

"We want a comparative and level playing field for everyone," Lenard said. "We aren't looking for ways to damage or hurt someone's business, but we do want every business to compete on fair and equal footing. We know this is a dogfight."

Across the street from Robert Gordon Enterprises is convenience store Antone's II. Dawn Kindt, 39, a single mother of three who works there as a clerk, said she is scared and frustrated. The same issues that brought a drop in sales for Robert Gordon Enterprises are affecting her store.

Kindt said she wakes up at night, shaking at the prospect of losing her job because of the dramatic decrease in cigarette sales.

"I feel powerless, like a pawn and like I'm being stabbed in the back by the state that's supposed to be protecting and helping me," Kindt said. "And I'm just someone trying to earn a paycheck to support my family."

She wears wears a tie-dyed T-shirt bearing a 1960s-era peace sign. She has worked for Antone's for six years but isn't sure how much longer she will have her job.

"My job is hanging by a thread because of people in Albany," Kindt said. "I don't know. Maybe they want me on welfare and being supported by the state."

The New York Appellate Division ruled June 21 that New York could collect the $4.35 in taxes per pack from Native American businesses that sell cigarettes on sovereign territory to non-tribal members. Salamanca is tribal territory. There are other Native American enclaves touching portions of Erie, Niagara and Genesee counties.

New York has vowed to start enforcing and collecting the tax.

While the Seneca Nation of Indians is challenging the Appellate Court ruling, Porter - a legal expert on tribal rights - urged retailers on sovereign territory to sell only Indian-produced cigarettes, not premium brands. Those produced by tribal manufacturers are exempt from the tax.

That is reflected in several stores along Broad Street.

Native American-produced Seneca brand cigarettes sell for an average $3.35 per pack. Buffalo cigarettes, another Native American brand, cost $3.15. Marlboros are $6.35 per pack while Newports are $6.25.

"The reality is our businesses work off of a model where they are heavily dependent on non-native customers," Porter said. "If New York would just leave us alone, we could be creating thousands of new jobs for the region. I feel like New York is preying on us."

The Senecas will fight the state through every possible legal avenue, he added.

Courtroom battles aside, Gordon faces the basic issue of business survival. The pool of customers is drying up because customers assume the pricing difference between tobacco products sold on sovereign territory and off has evened out.

Packs of cigarettes sold in off-sovereign territory run nearly $9 per pack.

"No one should have that kind of advantage," Lenard said.

Gordon said it was a different story as recently as two years ago. She and her husband were glad to employ fellow Senecas and Salamanca residents and they helped people in other ways, too.

"When I had money, they had money," she said. "If someone needed extra money for a set of tires, we helped them out. If their kids needed something, we were there."

Those days are over.

"I can't take care of my own bills, let alone those of my employees - those few I have left," she said. "That's what hurts the most in all this. New York took away the chance for me to help people."