Former chief Carolyn Buffalo and Robbie Dickson, president of Quebec-based Rainbow Tobacco Co., were arrested in 2011 following an investigation by the Alberta Gaming and Lottery Commission.
The contraband smokes were not marked for legal sale in Alberta and were seized from a building on the central Alberta reserve.
The two were charged under the Alberta Tobacco Tax Act with illegally possessing and storing contraband cigarettes.
A government official confirms charges against Buffalo were stayed last Thursday but the case against Dickson is proceeding in court.
When the charges were laid, the Alberta government estimated it would have lost $3 million in tobacco tax revenue if the seized cigarettes had been sold.