COURTS MAY JUST SAY NO TO TAXES ON ILLEGAL DRUGS

When fans of the Bonnaroo summer music festival in Tennessee arrive at
the gates, they are searched. Anyone caught carrying drugs not only
gets a summons to appear in criminal court but also receives an
on-the-spot tax assessment. At a nearby booth they are required to pay
a tax on the illegal substances, which are then seized. If they don't
have enough cash, ATM machines are provided for their
convenience.

The money collected at Bonnaroo makes up part of the $3.5 million that
Tennessee has raised since its Unauthorized Substance Tax was adopted
in 2005. Tennessee is the latest of at least 21 states to tax illegal
substances to help fight the war on drugs. But opponents of these
laws, questioning their constitutionality and the feasibility of
enforcing them, hope that a lawsuit pending in Tennessee may lead to
an end to these laws nationwide.

The case is typical: Jeremy Robbins was arrested in March 2005 on
charges of attempting to bring two tons of marijuana into Tennessee.
The federal authorities seized what drugs they could, charged him and
notified the Tennessee Department of Revenue, which immediately
assessed Robbins a fine of $1.1 million for unpaid drug taxes. Robbins
argued that the fine was a punishment rather than a tax and that it
violated his Fifth Amendment right to not be punished twice for the
same crime.

A Tennessee chancery court agreed, ruling last July that the law
violated Robbins' constitutional rights. The state has appealed the
decision and is awaiting a hearing date in a state court of appeals.

"We're hopeful," said Richard Holcomb, Robbins' lawyer. "But in
fairness, it could go either way." Holcomb explained that the same
arguments have been used to challenge a tax on unauthorized substances
in a number of states, but that only about half of the courts had
ruled that the taxes were unconstitutional.

A decades-old federal tax was overturned in 1969, when writer and
psychologist Timothy Leary, a proponent of psychedelic drugs,
successfully argued that the law violated his Fifth Amendment
protection against self-incrimination. At the time, drug users had to
provide personal information when purchasing drug tax stamps to attach
to their drugs' packaging - information that was then passed on to law
enforcement agencies. Soon after the law was overturned, Congress
passed the Controlled Substance Act, criminalizing the possession of
drugs like marijuana, methamphetamines and cocaine.

But in the frenzy to fight the war on drugs in the 1980s, states began
to adopt their own updated versions of the drug tax to provide extra
financing for anti-drug initiatives.

Tennessee's law is modeled after North Carolina's program, which has
collected more than $82 million since 1990, more than any other state.
The law requires drug dealers and buyers to affix stamps, bought from
the state, on each package of drugs. Anyone carrying more than 42.5
grams of marijuana is expected to buy a $3.50 stamp for each gram.
Other drugs, like cocaine and steroids, carry heavier fees.

Proponents of the law point out that as much as 75 percent of the tax
revenue is given directly to law enforcement agencies to help
investigate the drug trade. Virginia recently tried to adopt a state
drug tax for the same reason.

"A lot of money is spent on very expensive, often very dangerous
undercover operations to fight drug trafficking," said state
legislator Robert Hurt, who sponsored the bill in Virginia. Most of
the tax revenue, he said, would go toward buying law enforcement
surveillance and protective equipment.

But opponents of the tax argue that enforcing the law is
unconstitutional and is a costly waste of government resources. Drug
dealers are unlikely to approach one government agency to pay tax on a
substance that would get them in trouble with another government
agency, said Paul Messino, the author of a report on these laws that
was released in February by The Reason Foundation, a libertarian think
tank. As part of his research, Messino said he called North Carolina's
Department of Revenue and explained he had 200,000 pounds of marijuana
coming into the state for which he wanted to buy stamps. The person he
spoke to simply asked for his mailing address.

While the law prohibits the Department of Revenue from sharing his
information with the police, Messino said, "Was I really supposed to
believe that they wouldn't tell the police that 200,000 pounds of
marijuana was on its way into the state? If I was a drug dealer, I
wouldn't believe it."

So far, drug dealers and users do seem to be wary of the law.
Tennessee has only sold 799 stamps and most of those were to stamp
collectors. Ten years ago, attorney Robert Henak successfully argued
that Wisconsin's drug tax violated self-incrimination protections,
leading the state to revise the law, which was later ruled
unconstitutional again. Today, Henak collects those stamps.

Nevada has sold only a handful of stamps and when Henak called to buy
one for his collection, the revenue officials couldn't recall having
printed any. "I guess they just lost track of the stamps," Henak said.

For many states, the real money is in the tax evasion fines, not in
stamp sales. When Virginia recently tried to introduce its tax, Hurt
expected that within six years, Virginia would make more than $750,000
a year this way.

The bill did not pass, but it was this type of thinking that
frustrated The Reason Foundation and the National Organization for the
Reform of Marijuana Laws. In testifying against the Virginia bill in
January, the president of the state's chapter of NORML, Michael
Krawitz, argued that the tax was just a grab for money and wouldn't
help treat addiction or curb drug use.

"It's 'throw out any attempt to get people off the drug. We'll just
put our hands next to the drug dealers hands to make some extra
money,'" Krawitz said.

Henak hopes that with the state legislatures in Virginia and Arkansas
recently deciding not to adopt drug tax laws, and court rulings
overturning laws in eight other states so far for violating
constitutional rights, the demise of the "crack tax" could be nearing.

"It was a fad in the mid-to-late '80s and early '90s," Henak said. "It
was just a fad that I don't think anyone thought through very well.
They wanted to look tough on drugs but ended up doing something really
stupid."