Have You Paid Your Marijuana Taxes?


Tennessee has a nifty new tool for fighting drugs and simultaneously enriching law enforcement agencies: an Unauthorized Substance Tax of $3.50 a gram for marijuana, $50 for cocaine, and $200 for methamphetamine or crack. The first target of the new levy is Jerry Palk, whose Bloomington Springs house has been seized in lieu of the taxes on 80 marijuana plants police found there.

Since "the tax is a civil matter handled by the Tennessee Department of Revenue," A.P. explains, "the taxing of the illegal substance does not have to await criminal conviction of the owner. The possession of the substance alone triggers the tax." And as with civil asset forfeiture, the "tax" does not count as double punishment even if the "taxpayer" also does time and/or pays a fine for the same offense. Another similarity is that police have an incentive to target people based on their property holdings. The law enforcement agency that initiates a case gets 75 percent of the proceeds, with the rest going to the state's general fund.

[Thanks to Bill Piper at the Drug Police Alliance for the link.]

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  1. Man, the gov’t never ceases to amaze me. This is absolute brilliance. An Unauthorized Substance Tax. I’m sure the only reason this wasn’t done sooner is that it’s far too clever for most politicians to come up with.

  2. Didn’t a guy in Arizona successfully avoid prosecution for posession because he paid the tax a few years ago?

  3. And I guess tax doesn’t take into account quality. It might make more sense to start buying the good stuff in lower quantities.

  4. Great, now there’s going to be 2 black markets, one for the taxed stuff and one for the untaxed!


  5. This wasn’t really a surprise to me; sounds like Kansas beat them to the punch:

    “The fact that dealing marijuana and controlled substances is illegal does not exempt it from taxation. Therefore drug dealers are required by law to purchase drug tax stamps.” — Kansas Dept. of Revenue

    They also are demanding $3.50/g.

  6. Does this mean they can start something like an Unauthorized Speed Tax, where they charge x$ per mile in addition to the punitive fine?

  7. On the plus side, it makes it more likely that the WTO can get involved.

  8. On the plus side, it makes it more likely that the WTO can get involved.

  9. The idiocy of the “war on drugs” not withstanding, giving police a 75% share of the take is just obscene and a recipe for corruption – but understanding the power of incentives has never been a strength of politicians.

    Maybe what we need is an “unauthorized legislation tax.” Every time a law gets struck down as unconstitutional all politicians that voted for it will be taxed 20% of their annual income. As a mechanism to get lots of laws tied up in judicial review, the lawyer that brings the suit can keep 75% of the proceeds.

  10. Are the police just ASKING to be murdered?

  11. for a time, I think Florida WAS in fact charging by the # of mph over the speed limit you were traveling, in addition to the baseline fine

    I don’t know if they still do this, I haven’t had a speeding ticket in a while

  12. biologist, this is pretty normal, but I was speaking about actually conceiving of an extra tax in addition to all punitive fines, including mileage.

    Since a tax doesn’t count as double punishment, then however the fine is calcuated, and whatever the amount, it should be irrelevant to the extra tax.

    Perhaps speeding was a bad example. Maybe something like an Unauthorized Occupation of Space by a Motor Vehicle Tax in addition to the parking ticket.

    Or perhaps an Unauthorized Bipedal Locomotion in a Restricted Area Tax in addition to a jaywalking ticket.

    Or perhaps and Unauthorized Imbibing Tax in addition to underaged drinking punishment.

    This is actually kind of fun. Maybe I’ll become a politician.

  13. This is actually kind of fun. Maybe I’ll become a politician.

    Quick, someone shut him up before he gives them anymore ideas!

  14. Crack Dealer: “Man, Dealing just isn’t as profitable as it was before the state demanded “thier share” of the cut. Im switching over to selling mutual funds, less paperwork.”

  15. That’ll be $12.50 for the Unauthorized Exclamatory Speech Tax. That’s $1 per word and $1.50 for the exclamation point. Commas are exempt from taxation.

  16. Perhaps a bit OT, but now that I think about it, how about just a plain old “legislation tax.” If we assume that most legislators don’t take the true costs of their actions into account when passing legislation (not an unrealistic assumption, I submit) then the very act of legislating is producing externalities which need to be accounted for. When the price of a good does not fully reflect the true costs we are sure to get too much of it (e.g. pollution – a rather apt analogy in the case of legislation). If each legislator had to pay a tax on every bill they voted for that became a law, with perhaps a surcharge for sponsoring the bill, I am confident this would be a good lesson for them in the power of incentives and we would get much less lawmaking.

  17. Interesting idea, Brian, but you just know that if they passed a “Legislation Tax” they would be making us pay for every silly law they pass. They’d probably like that.

  18. And people say drug laws don’t encourage criminal activity. 🙂


    The Federal government has done this with a number of contraband items as well as I recall from my tax law course.

  19. Not news here. As noted above, Kansas has had this since the 1980s (see this FAQ site). According to the Tax Foundation, a total of 17 states have something like it.

  20. Yep. It was income taxes that brought down old scarface capone! Just goes to show one might get away with murder, selling dope, bootlegging and bootlicking but damn well better pay the taxes.

  21. “Another similarity is that police have an incentive to target people based on their property holdings. The law enforcement agency that initiates a case gets 75 percent of the proceeds, with the rest going to the state’s general fund.”

    Sounds like what stockbrokers call a win-win situation.

    Speaking of which, the War on Drugs has provided the money to entrap young, black men. That, in turn, keeps the police gainfully employed, not to mention it allows whitey to fulfill his racist fantasies while keeping said fantasies as unremarked upon as are farts.

  22. “allows whitey to fulfill his racist fantasies while keeping said fantasies as unremarked upon as are farts.”

    Deniability I think is the operative word in the spook community.

  23. I can see the conversation now, in the state capitol:

    “We have to increase our unauthorized substance revenues. I’m looking for ideas to get us to 200% of current inflow, people!”

    “We could subsidize TV and movie productions, which show the young, sexy, and cool using taxable substances.”

    “Yeah, but the young, sexy, and cool don’t want to go to jail, lose out on scholarship money, or rack up a ‘strike’ that could help put them away for decades.”

    “Hmmm … that does sound like a problem. Maybe there is a natural limit to what persuasion can achieve.”

    “I know a solution.”


    “Remove the criminal penalties and increase the tax! The extra revenue from the surge in usage would give us a huge ‘rainy day fund,’ if you know what I’m sayin’.”

    “I like the cut of your jib! Let’s do it!”

    And thus will the state bring us the end of drug prohibition, whether we like it or not. Nudge nudge, wink wink.

  24. Coming in late. OK, I’m trying to figure out why this strikes us as so whacky.

    OK, got it.

    The state has decided to tax our “ownership” of a substance that it does not legally recognize our right to own.

    So what is next — “A robbery tax”? The state gets 20% of the proceeds from the robbery of a store, bank or residence.

    Or how about a “slave tax”? Actually a closer analogy. Slavery is illegal, but nonetheless the state gets $1,000 for each hitchhiker you have chained up in the basement.

  25. Stevo-

    If you can persuade the religious right of your ideas they’ll probably push for a tax on gay marriage: They don’t actually want it to happen, but as long as it does happen, they want some money from it to spend on wars, pork for red states, “faith based programs”, and enforcement of laws against homosexuality.

    Actually, supposedly there’s a marriage penalty in the tax code, so maybe that would cover it. I’ve never gotten a straight answer, because conservatives complain about the marriage penalty, while gays supposedly want the right to file a joint tax return. I know that our taxes have gone up since my wife and I married, but our combined income has also gone up, and I’ve been too lazy to do anything more than fill out the form as quickly as possible and then try to forget that the miserable experience ever happened. (The thought that our money may be going into the pockets of Tom Delay and Ted Kennedy is enough to raise my blood pressure 20 points.)

    My hunch is that, since the tax code is big enough to fill a library, there’s probably a marriage penalty and a marriage benefit.

    Ah, the strange thoughts that come to my mind while writing my thesis at 2am. Back to work.

  26. Well the obvious one is a tax on prostitution. If they tax the proceeds of illegal prostitution and call it the ?Unauthorized Sex Tax? then the states would finally have you by the short hairs.

  27. I had absolutely no idea this was happening. Forgive me for asking the obvious, but how the FUCK can the government “tax” something illegal? Isn’t the correct term a “fine”?

    But they already impose fines..

    AAAAAArgh! My head is exploding!!

  28. Mr. Nice Guy,
    The government has you by the, not just short, but fine hairs.

    As Olivia Nude John used to say: “Let’s get pubical, pubical.”

    I’m a native of Tennessee. Trust me. Everything will be just fine. (or short. I forget which.)

  29. “Have You Paid Your Marijuana Taxes?”

    Hmmm . . . that’s funny, I don’t remember.

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