The company was founded in 1982 by Bill Drake, author of The Cultivator's Handbook of Natural Tobacco; Robert Marion, an acupuncture student at the Kototama Institute in Santa Fe; and Chris Webster, a Santa Fe entrepreneur and realtor.

[2] Japan Tobacco announced in September 2015 that it acquired the right to sell Natural American Spirit products in markets outside the United States.

[11] The use of Native American/American Indian imagery by the brand, such as the depiction of an Indigenous person on the package and the use of fake folktales, has been criticized as cultural appropriation and promoting stereotypes.

[12][13] Research found that the use of this imagery led to many smokers, including Indigenous peoples, having the misperception that the brand was owned or operated by a tribe/on tribal land and that it was more "natural" and thus healthier.

[14] In response, Robin Sommers, the CEO and majority owner of Santa Fe Natural Tobacco Company, stated that "Native Americans are not a target market for American Spirit", stating that the use of this imagery was due to the company's goal to bring tobacco usage more in line with a perceived "moderation" by Indigenous peoples in the 15th century and that proceeds from sales support Native communities.