As Peter Callaghan writes for MinnPost: “Proceeding directly to the Department of Revenue to pay taxes for illegal drug sales may not be your usual practice.”
One year ago, no one in the Minnesota Legislature found it wise to require drug dealers to purchase tax stamps for illegal goods they sold; one year later, nearly everyone felt it wiser to remove this remnant of 1980s antidrug policies and eliminate this requirement altogether.
But in 2018, its repeal did not pass, caught up in the final days of 2024 legislative session’s confusion and noncompliance of major bills that contained repeal provisions despite being popular. Though included on a Mega Omnibus Bill with hundreds of bills that covered 1,400 pages+.
Sponsors have come back swinging. Our current statute requires those selling illegal drugs to purchase stamps from the Department of Revenue on every sale,” explained Rep. Jessica Hanson (DFL-Burnsville). However, many do not expect that visiting DOR in person to pay taxes is necessary when selling illegal narcotics – “it likely wouldn’t be seen as common practice”.
Tax collection seems to raise minimal funds, with sales coming mostly from collectors rather than drug dealers. County prosecutors outside the Twin Cities metro area may use it; however, Hanson said there has been no position taken by his association regarding its repeal.
Rep. Aisha Gomez of Minneapolis cosponsored this bill, while DFL Taxes Committee Lead Greg Davids from Preston offered support by saying he may consider moving it quickly rather than waiting until later to include it as part of an omnibus omnibus bill.
“After this bill passes,” Davids predicted while holding up a revenue stamp designed to be attached to drugs when sold, “these stamps may soon become collector’s items or collectors items.”
The Senate version is sponsored by Sen. Clare Oumou Verbeten (DFL-St Paul).
House File 100 of 2023 legalizing cannabis for recreational purposes includes its own taxation structure for legal sales only; current law dictates that anyone selling illegal weed would still need to purchase stamps as per current regulation of state.
Under Minnesota law, sellers are expected to pay $3.50 per gram of cannabis sold and $200 per gram of controlled substances sold; or $400 per dose sold not by weight. Dealers that have already paid similar taxes elsewhere in another state may claim credit against their Minnesota levy.
Assumptions about drug dealers paying taxes before selling drugs often result in laughter; but this provision seems intended to give prosecutors additional grounds to file against those accused of selling illegal substances. While not raising significant revenue, failure to pay taxes charges have been successfully utilized against dealers accused of selling illicit substances.
Kurtis Hanna has made it his mission to repeal the tax. Working as a lobbyist working on cannabis legalization issues, Hanna has long advocated for legalization following his experience with similar laws in Iowa, when he was arrested for possessing three ounces of marijuana without an appropriate tax stamp affixing stamp affixing tax stamp; these charges in Iowa were ultimately dropped because police conducted searches of his car without his permission and without warrant.
Hanna’s research revealed that from 1937 until 1969, when it was overturned by the Supreme Court because it violated 5th Amendment provisions against self-incrimination, there existed an illegal drugs tax within federal jurisdiction. This tax had an effective collection rate of 30 cents for every kilogram sold illegally between those years – it ultimately received only 2 percent revenue collection due to this.
But in 1988, when Minnesota Supreme Court faced an identical situation, they determined that an illegal drug tax is permitted and should still be used during drug prosecutions, as Hanna discovered by looking through Minnesota court records.
He found 70 convictions of failing to pay drug taxes since 2012 in 55 different prosecutions; although rare–usually around 12-15 annually mostly across greater Minnesota–he noted these cases as rare occurrences.
Stamps may be ordered via postal service; however, that requires providing your return address and providing your name as part of a return address list. The Department of Revenue offers another anonymous option by accepting cash purchases at its St Paul headquarters window; however they require advance notification so someone is available to handle and deliver stamps upon delivery. Hence this story was first featured by MinnPost.
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