The Marijuana Tax Stamp

By Mark Miller

If there is a “benefit” to cannabis being illegal, perhaps it’s no sales taxes for pot sellers and buyers to bear. Yet in half the states in the US, there actually is a tax on pot – in the form of marijuana tax stamps – that technically requires those possessing pot in those states to purchase and attach stamps onto that bag of buds.

In most states, the base tax is $3.50 per gram, with some requiring a minimum amount possessed for the tax to kick in (such as 42.5 grams total in several states). Other states, such as Oklahoma, tax a single gram. Some states require a minimum number of tax stamps to be purchased at one time, others don’t. And yes, other illegal drugs also have tax stamp requirements.

The Nevada pot tax is particularly outrageous – $100 per gram, not to mention a $250 registration fee ($1000 per gram for other controlled substances!). The penalties for nonpayment range from mild, in states like Georgia with fines equaling 200 percent of the tax, to extreme, in perceived “liberal” states like Minnesota, where avoiding drug taxes can cost an offender an additional $14K and increase one’s sentence up to seven years.

The Marijuana Tax Act of 1937 (which criminalized pot) first imposed the tax stamps on marijuana possession. However, the Supreme Court ruled the Act unconstitutional on self-incrimination grounds in 1969.

Despite this, the drug stamp tax resurfaced in the generally pot-unfriendly state of Arizona in 1983 as the Reagan-fueled “War on Drugs” was underway, the motivation of the tax being to further the penalties on drug dealers/users, while adding drug tax and unpaid tax penalty revenue to state coffers. Some states annually collect over seven figures in illegal drug taxes.

The dichotomy of pot tax stamp laws is obvious; to comply with the law, one must admit he/she illegally possesses marijuana or other drugs. A particularly heinous example of this is the case of Debby Moore; in 1992, despite displaying her marijuana tax stamps to invading narcotics officers, she was still arrested for 14 pounds of pot. Fortunately the charges against Moore were dropped when it was revealed the police surreptitiously obtained the search warrant from a judge.

Though scarcely publicized, drug tax laws in various states have been challenged numerous times in the courts – sometimes successfully, resulting in modifications to the state’s drug tax laws. In Indiana it was found to violate double jeopardy protections, thus tax stamp violations must be adjudicated separately from other drug charge proceedings.

A ruling in Idaho addressed the dichotomy that having to pay a tax on an illegal substance is declaring to the government you’re a criminal, and the tax was found to violate protection against self-incrimination, resulting in purchase of tax stamps now being confidential. Tennessee’s tax stamp was declared unconstitutional in 2006; despite this, the Tennessee Department of Revenue continues to collect drug stamp taxes.

There have also been setbacks – two challenges in Georgia in the 1990’s went for naught as the Peach State’s drug tax laws withstood constitutional challenges on both the grounds of self-incrimination and double jeopardy.

While the tax stamps that currently exist are bogus contrivances to further penalize pot dealers and users, could they play a role in a post-legalization society? Possibly, utilized like government seals on bottles of alcohol that are broken by the purchaser, the tax on the seal would be based on the amount of pot in the container, the intent to ensure retailers are paying full taxes on all pot sold in the marketplace. Such a ‘pot bag seal’ would also eliminate one of the major arguments of those opposed to legalization – that there’s no legitimate way to collect taxes off commercially sold pot.

For more information on marijuana tax stamps (as well as images of some of the more creative stamps out there - Nebraska's is particularly disturbing) head over to norml.org.