Vice Squad
Wednesday, July 28, 2004
State Marijuana Taxes

The blogosphere has been jumping about the fact that many US states officially tax marijuana, even though it is an illegal product. Here is the webpage from Kansas, which explains:
A dealer is not required to give his/her name or address when purchasing stamps and the Department is prohibited from sharing any information relating to the purchase of drug tax stamps with law enforcement or anyone else.

Purchasing drug tax stamps does not make possession of drugs legal.
Two things that seem to be overlooked in the discussion of these taxes are (1) taxing illegal vices is not novel and (2) the prohibitionists better watch out, despite what Kansas claims, because this can lead to legalization. After the 21st Amendment ended national alcohol prohibition in the US, many states maintained their own prohibitions. Mississippi prohibited anything stronger than 3.2 beer, but in the 1940s passed a tax on stronger stuff. In the mid-1960s (following a high-profile alcohol raid), a judge ruled that the fact that taxes were being collected meant that alcohol was de facto legal. The state legislature followed by making the de facto legalization de jure, and in 1966, Mississippi became the last state to get rid of statewide alcohol prohibition. Along similar lines, brothels became legal in Nevada because an illegal brothel owner was fined (as I recall, $1000 per month for the previous three months that the brothel had been in business.) He didn't go out of business, but kept sending $1000 per month to the relevant (Storey county, as I recall) authorities. Eventually, the courts again said, you have been cashing the checks, so it's de facto legal. The state then passed a statute setting up the broad rules for legal brothels in those rural Nevada counties that were willing to have them.

Pete at Drug WarRant has more. Also, a couple of months ago a federal court ruled that Wisconsin's marijuana tax law violated the double jeopardy clause of the US Constitution, so it is doubtful that any tax evasion charges brought in addition to criminal charges would stick (especially in the 7th Federal district)!

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