As state budgets across the country bend to the breaking point under the weight of a stagnant economy, officials in some places, particularly in California, have debated legalizing and taxing illegal drugs.
No such talk has been seriously floated in Alabama, where drug laws continue to be some of the harshest in the nation. But people might be surprised to know that Alabama has been taxing the sale of illegal drugs for years.
It is one of 20 states that issue some form of tax stamp on the sale of illegal drugs, according to the National Organization for the Reform of Marijuana Laws.
The stamps, created in Alabama in 1988, function as an excise tax, similar to the levies imposed on cigarette sales.
They were meant to be a means for the state to generate income from the illegal drug trade, but in recent times they've produced next to nothing, according to state revenue officials. Mobile and Baldwin counties haven't brought in income from the stamp law in years, prosecutors said.
The cost of the stamp usually varies, based on weight. A stamp for a gram of marijuana is $3.50; for a gram of a controlled substance, such as cocaine, it's $200.
Not surprisingly, drug dealers never warmed to the idea of buying excise stamps for their wares, which remained illegal.
But the state didn't expect to collect the tax by selling stamps on the front end, said Charles E. Crumbley, director of investigations for the Department of Revenue. The idea was to collect the money on the back end, after the dealers were arrested.
Anyone caught with large quantities of drugs but no stamps would not only face jail time, but prosecution for tax evasion unless they paid up.
For a while, it worked. Alabama took in hundreds of thousands of dollars each year through most of the 1990s, according to numbers provided by the state.
Eventually, however, the money slowed to a trickle as the department stopped pushing the stamps and county prosecutors relied on other means of digging into the pockets of drug offenders.
Crumbley said that so little money comes in under the statute now that the Revenue Department no longer includes it as a line item in the agency's books.
Mobile County District Attorney John Tyson Jr. and Baldwin County District Attorney Judy Newcomb said they have never attempted to bring in money under the statute.
Both said they prefer to use asset forfeiture -- the seizure of any property associated with the drug trade -- as a means of hitting drug dealers and earning extra revenue for their own offices.
Crumbley said that, in the past, the Revenue Department dedicated manpower to pursuing accused drug dealers under the tax stamp statute. Over time, though, it became clear that it wasn't worth the trouble.
There were continuous challenges, some of them successful, lodged by people who felt it was absurd to require someone to buy tax stamps for an illegal product. Fighting the challenges was costing more money than it was bringing in, he said.
Moreover, Crumbley said, the statute was designed with rich drug kingpins in mind. But, "A lot of the people who were busted weren't the main people," he said. "They had the drugs, but not the money. That's one of the problems with trying to tackle an underground economy."
Nonetheless, the Revenue Department continues to carry the stamps and even sells a few from time to time. Crumbley said that those probably go to people who buy them as a curiosity.
"We don't care who you are, or what you're going to use them for," said Crumbley. "All we need is a cashier's check and a place to send the stamps."
By Robert McClendon
January 6, 2010
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Taxing illegal drugs? Alabama's done it since 1988