The pact reduces the price advantage at tribal shops at the border and drops prices in Tulsa shops.

After years of heated dispute between the state and the Cherokee Nation over a tobacco compact, the two sides have reached an agreement.

The two sides agreed on a 67-cents-per-pack rate for all tribal Cherokee Nation smoke shops.

The state gave up its goal of lowering the tax advantage that tribal smoke shops have held over nontribal retailers, and the tribe agreed to give up low tobacco taxes in border areas.

On Monday night, as part of a last-minute addition to the Cherokee Nation General Council’s agenda, the council unanimously approved the compact.

The council also approved a measure that would provide a rebate to tribal border store owners who would be hurt financially when the tobacco taxes rise. Details of the plan have not yet been worked out fully, tribal spokesman Mike Miller said.

The deal, which runs until June 2013, means that in nonborder areas such as
Tulsa, Cherokee Nation smoke-shop customers could see cigarette prices drop about 20 cents per pack. In areas near the state line, customers could see cigarette prices rise by 36 to 61 cents.

Although the compact does not eliminate low tobacco-tax border rates, it maintains them in name only.

Consumers would not see a difference in the tax rate at border and nonborder Cherokee Nation smoke shops. Under the deal, border rates expire when the neighboring state raises its tobacco taxes.

Nontribal retailers have a tax rate of $1.03 per pack.

The tobacco issue has long been a point of contention between the tribes and the state.

The state protested after tribal border stores began moving low-tax cigarettes into nonborder areas.

In the spring, an arbitration panel ruled that the Cherokee Nation violated the compact by allowing retailers to do so.

The state is in talks with the Osage Nation to forge a similar deal, state Treasurer Scott Meacham said, but talks with the Muscogee (Creek) Nation have stalled.

The Creeks and the state have been involved in a game of cat-and-mouse in recent months, as tribal stores continue to sell low-tax and nonstate-approved cigarettes while the state tries to lock down the supply.

The compact with the Cherokees also contains language prohibiting the retail-to-retail sale of cigarettes, the method used by the tribes to funnel border cigarettes into locations such as Tulsa.

The compact increases the percentage of tax the state receives and mostly moves the grievance procedure from arbitration to federal court.

“It’s a step in the right direction,” Meacham said.

“From the state’s standpoint, we get to increase the amount of state money we’re receiving for health-care programs and get rid of this whole issue once and for all of border versus nonborder and the movement of cigarettes.

“It sort of puts this issue behind us once and for all. It was the best compromise we could find.”

Cherokee Nation Principal Chief Chad Smith said he hopes that the tobacco issue is settled between the state and the tribe.

“It brings to closure the four years of conflict over the existing compact agreement and will conclude the state’s arbitration process,” he said.