On August 8, 2019, I published an opinion piece on North Carolina’s Unauthorized Substance Tax in Carolina Journal. As I wrote in the piece:
The unauthorized substance tax is an excise tax on controlled substances such as marijuana, cocaine, and moonshine.
…This tax brings in between $6 million and $11 million each year in North Carolina. Three-quarters of those proceeds from the unauthorized substance tax goes to law enforcement, and the other 25 percent goes to the state’s general fund.
While that piece covered a lot of information, there were still interesting things I learned along the way that I had to leave out for the sake of space. Let me share those with you now:
- The federal government imposed a similar tax in the 1930s
In 1937, Congress passed the Marihuana Tax Act (interestingly enough, a North Carolina U.S. Representative introduced this bill – we have a long history in this kind of thing). The tax, much like the one in our state, was an excise tax on illegal drugs. Only this tax solely applied to marijuana or, back then, “marihuana.” This tax was struck down after the U.S. Supreme Court ruled if violated the fifth amendment self-incrimination clause.
- It would be a crime for a DOR officer to tell the police you purchased these stamps
North Carolina learned from the federal government’s mistakes. In an attempt to prevent a self-incrimination violation the law makes it illegal for DOR officers to report your purchase of a drug stamp. According to the NCDOR’s website:
“Not withstanding any other provision of law, information obtained pursuant to the unauthorized substances tax law is confidential and may not be disclosed or, unless independently obtained, used in a criminal prosecution other than a prosecution for a violation of the unauthorized substances tax law. Revenue employees who divulge information regarding stamp purchasers to law enforcement shall be guilty of a Class 1 misdemeanor.”
- North Carolina received 106 orders for these stamps between its implementation in the 1990s and 2010
According to an interview with Cale Johnson, Director of Tax Enforcement for the Department of Revenue, most of those orders were from stamp collectors.
- North Carolina is not the only state who taxes illegal drugs
Many states have some form of an illicit substance tax. According to a 2007 report from the Reason Foundation, 21 states impose taxes on illegal drugs.
Read my full piece on North Carolina’s unauthorized substance tax here. You can also watch my interview with Carolina Journal Radio on the piece here.
