Marijuana Tax Stamp Felony

[Read_Icculus]

A friend of mine was recently charged with a felony for not having a tax stamp for the 4 ounces of pot that he he had in his trunk. He was travelling from Colorado to New York and was arrested in Iowa. I didn’t believe him at first, but I just did some research and found that these laws do exist. For lack of a better way to phrase the many questions that I have about this, how is this possible? For what I presume to be obvious reasons, this makes no sense at all.

[Mr.Slant]

You require a tax stamp from the federal government to have marijuana.
No one actually buys the stamps, but apparently they have printed a few of these stamps, just so they can prosecute offenders such as your friends for evading the marijuana tax.
It’s basically a grab at a federal jurisdiction over marijuana, which one imagines really should be a state issue.

[Walloon]

Rather than prohibit the purchase of marijuana directly, the federal Marihuana Tax Act of 1937 imposed a prohibitive tax of $100 an ounce on designated transactions. The penalty provisions of the Act: up to five years’ imprisonment, a $2,000 fine, or both. Furthermore, any marijuana dealer who did pay the token $3/year dealer tax had to keep written records of each transaction, including the names and addresses of all buyers.

[Donovan]

I have a a couple questions related to this - I once heard that someone who had been busted for selling pot (don’t know if he was actually selling, but he had an ‘intent to sell’ charge, but that’s another story), but he did have tax stamps. The story went that the case was dismissed, I think along the lines of double jeapordy - he had already paid the gov’t a fee to own it, so they couldn’t hit him again for owning it. Is there any grain of truth to this story? I highly doubt it, as then every pothead and their mom would have tax stamps on hand in case they get caught.
RE: the stamps - when something is taxed and there is a stamp (like cigarettes), is there a gov’t official there to affix it to the product? If not, what would keep someone from buying the stamp and ‘reusing’ it? If so, then isn’t the tax stamp a total sham as (I would assume) that the gov’t official on hand to affix the stamp would promply arrest you/turn you in?

[Walloon]

It’s not double jeopardy. The government wasn’t after him for owning the tax stamp.

[doverpro]

Nebraska has marijuana tax stamps. Here’s a recent article about the things.

Anyone can buy a stamp and it seems that there are some who collect the stamps. The states just use them as another way to punish drug dealers. Brings to mind how they busted Al Capone on income tax evasion.

[Otto]

How does one register with the federal government to obtain a marihuana dealer’s license?

[Bricker]

*Originally posted by Donovan *
The story went that the case was dismissed, I think along the lines of double jeapordy - he had already paid the gov’t a fee to own it, so they couldn’t hit him again for owning it. Is there any grain of truth to this story?

No. Double jeopardy prevents being tried twice for the same crime, or receiving multiple punishments for the same crime.

[Otto]

For a slight hijack, The Netherlands have just approved marijuana as a prescription drug for the treatment and relief of some diseases. What’s US law on the possession of drugs which are legal by prescription in other countries but are illegal here?

[neutron_star]

Otto: if it’s illegal here, it’s illegal here. That’s all that matters. You can get Rohpynol and Quaaludes by “prescription” in Mexico, but they’re still illegal here.

As far as tax stamps go, the Supreme Court doesn’t seem to have a problem with them:

Our Supreme Court reasoned that as the Kentucky tax applies only to “conduct not previously punished as a crime,” to wit, the failure to anonymously purchase and affix a tax stamp to marijuana and controlled substances upon possession of such, rather than the already-punished conduct of possession or trafficking, it passed constitutional muster.

Am I reading this correctly? That since the technical act of purchasing a stamp and affixing it to a plant is not illegal, this is just fine? Don’t you have to have possession of the plant to put the stamp on it? Aren’t you admitting to a crime just by buying the stamp?

In a similar vein, how about a speeding tax? If I get pulled over and get a ticket for speeding, I also get a fine for not paying my speeding tax. Good deal? What about an armed robbery tax? Or a serial killer tax?

[Master_Wang-Ka]

Well, duh.

The politicians will do anything they can get away with.

[clayton_e]

A while ago in Playboy (HA! See? I do read the articles!) they had something on the stamps. Mostly collectors buy them, though from time to time they are used by dealers.

[Walloon]

*Originally posted by neutron star *
Am I reading this correctly? That since the technical act of purchasing a stamp and affixing it to a plant is not illegal, this is just fine? Don’t you have to have possession of the plant to put the stamp on it? Aren’t you admitting to a crime just by buying the stamp?

When the federal Marihuana Tax Act of 1937 was passed, there was no federal law against growing, possessing, buying, or selling marijuana. There were only state laws. Different jurisdictions. Legally speaking, the stamp tax was not forcing a pothead into self-incrimination under federal law, since there were no federal prohibitions on marijuana.

[neutron_star]

*Originally posted by Walloon *
**When the federal Marihuana Tax Act of 1937 was passed, there was no federal law against growing, possessing, buying, or selling marijuana. There were only state laws. Different jurisdictions. Legally speaking, the stamp tax was not forcing a pothead into self-incrimination under federal law, since there were no federal prohibitions on marijuana. **

According to this DoJ PDF, the Marihuana Tax Act was repealed and superceded by the Controlled Substances Act in 1970. We are talking about state tax stamps - in states that also have laws against possession and cultivation.

[Read_Icculus]

I’m still confused. I don’t understand how these laws can still be on the books even on the state level. It makes about as much sense as a serial killer tax. How could this hold up in court?

[Xgemina]

Like doverpro said, and from what I’ve read (the cites provided here in this thread), the MJ tax stamp laws are just another way for the State to smack a drug dealer upside the head. You’re getting busted for selling and not paying your taxes on what you sell.

The reasoning is kinda like this:

1. It is illegal to sell marijuana.
2. It is also illegal to run a business and not pay taxes for the business.
3. Selling marijuana is a business, therefore you must pay taxes for the marijuana you sell.

If you get caught without the tax stamp you can be charged for both possession/sell and not paying taxes on your earnings. OTOH, if you do have the tax stamp then you can only be charged with the former.

Since it looks like most states that “require” marijuana tax stamps allow you to do so anonymously there is no excuse not to buy them as a safe guard if nothing else.

[Walloon]

Xgemina hit the nail on the head. The state marijuana tax stamps can be bought anonymously for cash at a clerk’s office, so a buyer is not compelled to self-incrimination. The idea from a prosecution standpoint is that the burden of evidence to prove a tax violation is easier than the burden of evidence to prove a criminal enterprise.

[neutron_star]

Originally posted by Xgemina *
If you get caught without the tax stamp you can be charged for both possession/sell and not paying taxes on your earnings. OTOH, if you do have the tax stamp then you can only be charged with the former.*

But there are already increased jail times and fines for people who sell. The more you’re caught with, the higher they are. Not to mention seizing one’s property that may-or-may-not have been bought with illegal gains.

Plus, they can’t (and don’t have to) even prove that you actually sold a damn thing! The OP’s friend was caught with four ounces. If it’s low grade stuff, a heavy smoker could take care of that in two weeks!

In poking around the web, I found that, prior to the U.S. Supreme Court decision, the state Supreme Courts of both Indiana and Illinois found tax stamps to Unconstitutional.

Justice Harrison, on behalf of the Illinois court:

“Under the Act, the only persons liable for the tax are ‘dealers,’” the justice writes. “[T]o be a ‘dealer’ within the meaning of the statute, one must have carried out certain enumerated acts ‘in violation of the Illinois Controlled Substances Act or the Cannabis Control Act,’ both of which are criminal statutes. [Hence,] by the terms of the Act, criminal conduct is a prerequisite to tax liability. …”

… [Consequently,] because the Department of Revenue cannot determine whether a person is a ‘dealer’ subject to the tax unless and until that person had been found guilty of the underlying criminal offense, the Cannabis and Controlled Substances Tax Act not only assumes that a crime has been committed, it also presupposes that the offending party has been arrested, charged and convicted. In this regard, the act … [is] a form of punishment for double jeopardy."

[whatmove]

I recently stopped by a garage sale and not a single item had a tax stamp on it. To whom should I report this?

[Donovan]

---

Originally posted by Donovan
The story went that the case was dismissed, I think along the lines of double jeopardy - he had already paid the gov’t a fee to own it, so they couldn’t hit him again for owning it. Is there any grain of truth to this story?

No. Double jeopardy prevents being tried twice for the same crime, or receiving multiple punishments for the same crime.

OK, I’m a stubborn little bastard who doesn’t like to admit he is wrong. I KNOW I read something to the effect of the double jeopardy defense on this in the mid 90’s, that’s where I heard about tax stamps, and the whole situation seemed illogical. So I googled:

http://www.druglibrary.org/olsen/DPF/longstaff.html

And I was wrong. The double jeopardy defense was attempted, but it was shot down.

However, this had to be the funniest thing I read on the page:

Iowa Code § 453B.1(3). Persons who lawfully possess marijuana are not required to pay the tax or affix stamps.

It goes on to say, in effect, if you don’t have a stamp affixed to the drugs you are caught with, you can be assessed the tax (with no extra fines or jail time) - So the tax is on illegal marijuana. Why not just give them a bigger fine?

Before I posted, I read a little further; for you law talking guys, what does this mean? (all footnotes from site removed)

In Department of Revenue of Montana v. Kurth Ranch, 114 S. Ct. 1937, 1945 (1994), the United States Supreme Court considered whether Montana’s 1987 tax on possession of unlawful drugs had “punitive characteristics that subject[ed] it to the constraints of the Double Jeopardy Clause.” Montana imposed a tax of the greater of $100 per ounce or 10 percent of the market value on the possession of marijuana. Id. at 1941. The law required collection of the tax “only after any state or federal fines or forfeitures ha[d] been satisfied.” Id. Tax funds were allocated “to support ‘youth evaluation’ and ‘chemical abuse’ programs and ‘to enforce the drug laws.’” Id. Law enforcement officers were required to report each person subject to the tax to the department of revenue. Id. n.5. Under administrative rules, taxpayers had to file a return within 72 hours of their arrest. Id. at 1941. Officers completed a dangerous drug information report at the time of arrest, and if the taxpayer refused to sign the report, the officer was required to file it within 72 hours of arrest. Id. at 1942. The Supreme Court stated that under the law, “[t]axpayer ha[d] no obligation to file a return or to pay any tax unless and until he [wa]s arrested.” Id.
The Court acknowledged that, generally, unlawful activities may be taxed. Id. at 1945. It went on to explain that although the Montana law’s high tax rate1 and obvious deterrent purpose did not mean the tax was punishment, the factors are at least consistent with a punitive character." Id. at 1946. The Court then focused on “[o]ther unusual features [that] set the Montana statute apart from most taxes.” Id. at 1947. First, the tax was “conditioned on the commission of a crime,” which suggested it had a punitive, rather than a revenue-raising, intent. Id. It was “exacted only after the taxpayer [was] arrested for the precise conduct that [gave] rise to the tax obligation in the first place,” and only persons arrested for a crime were subject to the tax. Id. (footnote omitted). The Court distinguished Montana’s tax from a valid federal tax imposing liability on a transferor when a transferee failed to pay a special tax and register before a transfer of marijuana. Id. at n.20 (citing United States v. Sanchez, 340 U.S. 42, 45 (1950)).2 The Court further explained the Montana tax was on forbidden conduct, and consequently it lost any revenue-raising justification because the sovereign imposing the tax could obtain the same revenue-raising objective by increasing the criminal fine for the activity. Id. at 1947. The Court also distinguished cases in which different sovereigns, as opposed to the same sovereign, imposed taxes on unlawful activities. Id. at n.22.

    Second, the Court found it unusual that the tax was a species of property tax on possession and storage of goods, yet it covered goods the taxpayer neither owned nor possessed when the tax was imposed, and in fact, was a tax on goods the taxpayer never lawfully possessed.  Id. at 1948.  The Court held the law had attributes indicative of a punitive intent and concluded that "[t]aken as a whole, [Montana's] drug tax is a concoction of anomalies, too far-removed in crucial respects from a standard tax assessment to escape characterization as punishment for the purpose of Double Jeopardy analysis."  Id. (footnote omitted).

Is that saying that Montana’s tax stamp could be considered punishment and therefore double jeopardy if the tax payer is arrested?

I would also note that the case addresses my second question; at least in terms of Iowa law, all tax stamps are bought anonymously.