METH, ILLEGAL DRUGS TAXED

ROGERSVILLE--If someone in Hawkins County intends to sell crack cocaine,
crystal methamphetamine or any other "unauthorized substance" the Tennessee
Department of Revenue expects some tax money off their illegal activity.

A state law went into effect January 1 implementing a new excise tax on
controlled substances including marijuana, cocaine, meth, prescription
drugs that are being used by someone other than the individual to whom they
were prescribed and untaxed liquor.

The law requires drug dealers to contact the Tennessee Department of
Revenue to obtain a stamp to be affixed to the illegal drugs indicating the
appropriate tax has been paid.

The revenue generated by the new tax will primarily be earmarked for use by
state or local law enforcement agencies to help combat drug crimes.

"The department is equipped to administer this tax that assists in
controlling crime," Revenue Commissioner Loren L. Chumley said.

State officials project the estimated cost of collecting the tax at
approximately $800,000, with possible revenues exceeding $3 million.

According to the Tennessee Department of Revenue, the tax is due from any
"dealer who possesses an unauthorized substance," with a dealer defined as
any person who possesses more than 42.5 grams of marijuana, seven or more
grams of any other unauthorized substance or 10 or more dosage units of a
substance.

The Tennessee law, which is similar to one in 22 other states, notes the
tax is payable within 48 hours after a dealer acquires the illegal
substance "exclusive of Saturdays, Sundays and legal holidays."

Tax rates under the new law include:

40 cents per gram of harvested marijuana stems or stalks;

$3.50 per gram of processed marijuana;

$50 per gram of cocaine;

$200 per gram of any other controlled substance or "low value street drug"
sold by weight;

$50 for each 10 dosage units of any "low value street drug" that is not
sold by weight;

$31.70 for each gallon of illicit alcoholic beverages sold by the drink; and

$12.80 for each gallon of illicit alcoholic beverages not sold by the drink.

Once the tax has been paid and the stamp affixed to the illegal drugs,
revenue officials say no additional tax is due even though the substances
may be handled by other individuals.

Under the law an individual is not required to give any identifying
information when they purchase stamps from the Department of Revenue and
any information gathered will be considered confidential and will not be
disclosed or used in a criminal prosecution, other than a prosecution for a
violation of the unauthorized substance tax law.

According to the Department of Revenue, purchasing the tax stamps does not
represent any type of immunity from criminal statutes relating to the
possession of drugs but only fulfills a civil tax obligation.

Although the law establishes a procedure for a drug dealer to voluntarily
pay the tax, according to officials the most likely way the tax will be
assessed is after law enforcement agencies make an arrest.

According to authorities, in neighboring North Carolina, which collected
approximately $8.5 million from a similar tax last in 2003, of the more
than 70,000 individuals required to pay the illegal drug tax only 79
voluntarily contacted the state.

Law enforcement agencies are required to call tax officials within 48 hours
detailing the drugs found. Tax collectors then assess the tax on the drug
suspects, as well as additional fines for not paying the tax in the first
place. If the suspects cannot make immediate payment, the state can seize
and sell any assets, including cars, homes and personal belongings, to pay
off the tax liability.

A local law enforcement agency that conducted the investigation that led to
the assessment will receive 75 percent of any tax proceeds for use in the
investigation and prosecution of drug related crimes, state officials said.