The Oneida Indian Nation plans to start making its own cigarettes at a factory it purchased last fall in Angola.

The nation, which sells $34 million in untaxed cigarettes a year, has agreed to purchase the former grocery store at 35 N. Main St. in Angola for $6.6 million, according to sales documents filed with the federal government. The transaction is expected to be completed by October 2010, said Bob Hilburger, a business development director for the nation.

By making its own cigarettes, the Oneidas would be cutting out the tobacco wholesalers who are required to pay the $27.50-per-carton excise tax under a state law adopted last summer.

The law was designed to collect the excise tax at the wholesale level, before the cigarettes could be sold to retailers, ranging from convenience stores to Indian tribes that have long fought state efforts to collect taxes on cigarettes and gasoline sold on reservations.

James Calvin, executive director of the New York Association of Convenience Stores, said the Oneidas are following a trend of Indian

tribes making their own cigarettes to prevent the state from collecting taxes on the middlemen.

“This, I believe, is designed by the tribes to try to control their own destiny,” should the state try to collect taxes on cigarettes sold in Native American businesses, Calvin said.

Indian tribes in New York have long opposed state efforts to collect sales and excise taxes on the cigarettes they sell, citing their sovereign status. While a U. S. Supreme Court ruling in 1994 said states have the right to collect those taxes, a succession of governors from George

E. Pataki to Eliot L. Spitzer and David A. Paterson all have declined to enforce the tax laws.

The Sovereign Tobacco plant in Angola makes Niagara and Bishop brands of discount cigarettes, which sell for $30 a carton, which is about half the cost of a carton of taxed, name-brand cigarettes sold in a non- Indian store.

The plant employs 28 people and sold 1.4 million cartons of cigarettes last year, distributed mostly to about 60 Native American outlets in upstate New York. The plant is expected to add 20 workers as it expands during the next year, Hilburger said.

The Oneida Nation also runs the Turning Stone Resort & Casino near Utica, a dozen SavOn gas station-convenience stores, a gaming software company and five golf courses. It sells about $34 million worth of untaxed cigarettes a year at its stores.