Officials taxing illegal drugs at record rates

An obscure portion of the state tax code has allowed Nebraska to collect record levels of revenue from drug runners this year.

Since last summer, the state has taken in $146,790 from the state drug tax — the highest the figure has ever been, and more than double the previous record that was set in 2006.

The drug tax, which exists in 20 states, means places like Nebraska can collect funds from the sale of illegal drugs. It requires that sellers of marijuana, crack-cocaine and others drugs affix stamps to their product or face stiff penalties.

But historically, very little money has come from the actual sale of drug stamps; Nebraskans have bought only $980 worth of drug stamps this year. The rest has been collected in restitution and criminal penalties.

Revenue from those fines has skyrocketed in recent months, as law enforcement officials have ramped up drug tax assessments. Before 2014, Nebraska had assessed just over $200,000 in drug taxes since 1990.

Counties across the state have begun cracking down in recent months, said state tax commissioner Kim Conroy.

In March, the state had only collected $42,588 in drug tax assessments, on pace for an above-average year. But in the ensuing three months, between March and June, Nebraska took in $104,202 from the drug tax.

Nebraska has collected record fines on illegal drug tax stamps this year. Note: Nebraska tax officials could not provide figures from 2010 and 2011.

Nebraska has collected record fines on illegal drug tax stamps this year. Note: Nebraska tax officials could not provide figures from 2010 and 2011.

Those funds poured in after a March report in the Omaha World-Herald that detailed the origins and purpose of Nebraska’s drug tax. Conroy did not explain the reason behind upsurge, saying only it was not a result of the 2012 legalization of marijuana in neighboring Colorado.

Local law officials say police have increased patrolling along Interstate 80 in the wake of the Colorado law’s passage.

“If there are more restitution orders, there are higher drug tax assessments,” Conroy said.

The upsurge in tax assessments has probably resulted from increased police presence along the Interstate, said Omaha criminal defense attorney Bill O’Brien, who has represented clients in drug tax law cases.

“There’s more marijuana coming through,” he said. “I think also police are pulling more people over because they have an incentive.”

Since the colorful stamps were first offered, following the 1990 drug tax law’s passage, the state has only collected $10,600 from their sale. In fact, according to Conroy, the state is still using the supply of drug stamps dating back to 1991. No more have had to be printed.

In all, just over 625 had been sold in the past 14 years, mostly to collectors and stamp seekers. It is unlikely actual drug dealers have gone to the state Department of Revenue to buy the stamps, as they don’t legitimize the product.

O’Brien thinks the stamps are unconstitutional. No other illegal product or act comes with a tax, he said in a phone interview.

“Why don’t they have a murder tax if it’s worse than marijuana?” he said. “It’d be just as absurd for someone to say you could have gone and bought a stamp before you committed murder.”

Not only that, he thinks the skull-and-crossbones design featured on the stamps is bizarre. Clients often cannot believe the drug tax is part of state law.

“It’s absurd but it’s completely legal,” he tells them.

Conroy did not say whether law enforcement officials would continue assessing the drug tax at higher rates going forward.

As for the future of the law itself, Conroy was blunt: “same as it is today,” she said.

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