Drug Use Tennessee: Tennessee’s Crack Tax Goes Up in Smoke

Politicians love to spend money and states work hard to come up with it. A recent ruling on an inventive Tennessee drug tax shows just how far they are willing to go.

Like just about every state, Tennessee has tried many different ways to generate new tax revenues. They offer incentives to businesses to come to the state. They create beautiful relocation brochures to attract individuals. Oh, and they try to tax the illegal drugs being sold in their state!

One of the arguments for legalizing recreational drugs is the massive amount of tax revenues that can be generated. Well, Tennessee decided to jump the gun. Who needs to legalize the drugs? We can just tax them anyway, but how?

The answer for Tennessee was the drug stamp. Tennessee asserted that people with illicit drugs were required to pay a fee in exchange for the stamp of approval. The fee was not cheap. $ 50 for a gram of cocaine and $ 3.50 for a gram of marijuana.

Ah, but what fool would actually go to the state office to have his or her drugs stamped? Wouldn’t they be arrested? Nope. The state promised this would not happen, but who could guess what would happen later.

As you can imagine, the Tennessee law was actually passed for a different reason. Nobody really expected dealers to come down and get their drugs stamped. Instead, the law was used to hammer people arrested for drugs. Not only did they face jail, but they would also get hit with “back taxes” on their drugs. Throw penalties and interest into the pot and the state had a windfall.

This nasty little law has been challenged in the courts and you can imagine the judges rolling their eyes. Yes, the law has been ruled unconstitutional and invalidated. Why? The justices ruled that Tennessee cannot profit by taxing illegal activity. In short, the state cannot have its cake and eat it too.

Richard A. Chapo is with BusinessTaxRecovery.com – providing information on taxes.

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