COLORADO EVEN TRIED POT TAX STAMPS

A Taxing Problem

Medical marijuana not only makes legal sense, it also can make legal
cents for Colorado's future budgets. How Colorado got this far is
based on past experience and also President Barack Obama's "advice" to
the U.S. Justice Department. The past: In the 1988 Colorado General
Assembly, then-Majority Leader Chris Paulson introduced House Bill
1167 to impose a stamp tax on marijuana and controlled substances.

In fairness, Paulson didn't dream it up. The concept came from a book
of suggested legislation for conservatives and the law had been
adopted in several other states. By 1994, similar laws were adopted by
a total of 27 states. In the Colorado version, which took effect Jan.
1 1989, the tax was $100 per ounce of marijuana and $1,000 per ounce
of an illegal controlled substance.

"Payment of the tax . . . shall be evidenced by the affixing of stamps
to packages containing a controlled substance or marijuana." It would
be up to the State Revenue Department to determine the type of stamp.
But the department was told by statute to handle the taxable drug
transactions in cash. The reason was to avoid a constitutional problem
of self-incrimination. Those buying would not be asked for
identification or proof that he or she possessed illegal drugs.

The penalty for the "owner" of the illegal drug who didn't have the
tax stamp affixed would be 10 times the amount of taxes owed. That was
reduced to "three times" by amendment in 1993 to HB1088. However, if
you were "legally " in possession of marijuana or controlled
substances, you did not owe any tax.

The Denver Post report on the debate in the House said, "Rep. Kopel
(this writer) voiced the only opposition to the idea during discussion
on the House floor . . . stating that 'enacting a drug tax would send
the wrong message by implying there is something OK about drugs or
they wouldn't be taxed by the state government.' "

Final votes were 45-14 in the House and 22-11 in the Senate.
Opposition in both houses was bipartisan. When the bill reached Gov.
Roy Romer's desk, there was significant opposition raised, including
the Colorado Federation of Parents For Drug Free Youth, Inc., who
urged a veto. Instead Romer issued a letter stating HB1167 "has become
law without my signature."

Romer wrote that opposition groups "have expressed doubts about
whether this legislation can be enforced and whether young people will
understand taxation of an illegal pursuit."

The press had a field day as Jan. 1, 1989, approached. In the
Colorado's stamp center was the seal of the state that you also see on
legislative stationery, colored green for marijuana, red for
controlled substances and the words "marijuana" and "controlled
substances."

Revenue spokewoman Kathy Kanda told the Denver Post, "We're still
trying to figure out how one would affix the stamps and to what. Will
they stick onto Ziplock bags, or whatever?" One thousand stamps were
printed.

The first stamp was purchased by Woody Paige of the Denver Post who
then made back the $100 cost by writing a column about his venture.
And that first sale didn't happen until the third day of availability.
Paige told how to attach the stamps: "Bag top is to be folded down at
least one inch. The stamp is to be placed in the center of the bag
overlapping the edge and sticking to the bag so that the stamp will be
destroyed when the bag is opened."

According to information given me through 1994, there were 35 other
stamps sold on marijuana and none on controlled substances.

In June 1994, the U.S. Supreme Court handed down a decision that
doomed Colorado's drug tax law. By 5-4, the court expanded the Fifth
Amendment prohibition against double jeopardy (multiple punishments
for the same offense) to taxation. The opinion, written by Justice
Paul Stevens, said states may not follow up a narcotics conviction by
imposing a tax on illegal drugs.

How does a history of drug stamps affect medical marijuana?

Amendment 20 (Section 14 of Article 18 of the state constitution)
spells out how legal growing, selling and buying of medical marijuana
is to work. However, the constitution does not deny the Legislature
the ability to pass additional language insofar as it does not
conflict with the constitution.

So a legal tax could be levied on the dealers, at least as far as
Colorado law is concerned. On the federal level, President Obama told
the Justice Department basically to leave "real" medical marijuana
alone.

The HB1167 discussion does not apply to medical marijuana. The
constitution provides for a reasonable use of the plant being sold and
it has nothing to do with other controlled substances.

It would be useful for the Legislature to seek a Colorado Supreme
Court judgment on a bill dealing with the legality of taxing profit
made by dealers in medical marijuana.