It's Tax Season... For Drugs

I spent a few years working on drug cases when I was a prosecutor, so I was generally aware that North Carolina has a set of laws that impose taxes on “unauthorized substances.” See G.S. 105-113.105 – 113. Just like cigarettes, cars, or blue jeans, these unauthorized substances are commodities that people buy and sell, so they are subject to taxation by the state. I was also aware that, not surprisingly, virtually no one pays these taxes or obtains the appropriate “tax stamps” to put on their drugs and moonshine. Instead, the laws are used primarily as a mechanism to pursue civil forfeiture of a defendant’s assets after he or she is convicted of a drug offense. But recently, I began to wonder – are these laws purely theoretical? Is it even possible for drug dealers to comply? Does the Department of Revenue keep big rolls of stamps behind the counter, like a post office? What would happen if someone walked into a Revenue office one day and said “hello, will you sell me some tax stamps for illegal substances, please?” I wanted to find out, so that’s exactly what I did. Overview of Drug Tax Laws If you’re curious about these laws, the Department of Revenue has a helpful FAQ available here. Briefly, these laws only apply to a “dealer,” which is defined as a person who possesses more than X amount of certain drugs (e.g., 42.5 grams of marijuana, 7 grams of a drug sold by weight such as [...]