NC to Congress: Hey, you don’t have to legalize weed to tax it

The Drudge Report has this AP article up under the headline “FEDS MAY TAX POT,” which opens with the lede “An effort is building in Congress to change U.S. marijuana laws, including moves to legalize the industrial production of hemp and establish a hefty federal pot tax.”

Way back in 1990, North Carolina moved to tax marijuana, among other illegal substances, without legalizing them. It’s the little-known Unauthorized Substance Tax:

Sometimes fact is stranger than fiction, and this past week, one of my colleagues shared that North Carolina places a tax on banned substances, including marijuana and cocaine. The tax rates are oddly intricate and suggest the authors know a thing or two about what they’re taxing; they merely want a piece of the action (p. 2, Chapter 105-113.107).

That’s right, while possessing these substances illegally, one is supposed to tell government officials about it within 48 hours in order to pay the tax. North Carolina Department of Revenue officials would then provide them with a stamp to affix to the items as evidence of tax compliance, although that does not make the possession legal.

That people, while rebelling against the law, are paying the tax is perhaps even harder to believe. In 2010 the unauthorized substance tax generated $9 million, and to bring in this money, Department of Revenue officials state on their web site that any such information associated with the tax is confidential and will not be disclosed.

A message to those advocating drug legalization so it can be taxed: Legislators here in North Carolina are already having their cake and eating it too.

Jon Sanders / Director of Regulatory Studies

Jon Sanders studies regulatory policy, a veritable kudzu of invasive government and unintended consequences. As director of regulatory studies at the John Locke Foundation, Jo...

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