KOPEL: COLORADO PASSED A MARIJUANA TAX IN 1988
Legal medical pot can make sense and cents
Medical marijuana not only makes legal sense, it also can make legal cents for Colorado’s future budgets.
How Colorado got this far is based on past experience and also President Obama’s “advice” to the Department of Justice.
The past: In the 1988 General Assembly, then-Majority Leader Chris Paulson introduced House Bill 1167. The plan was to impose a stamp tax on marijuana and controlled substances.
In fairness, Paulson didn’t dream it up. The concept came from a book of suggested legislation for conservatives, and the law had been adopted in several other states. By 1994, similar laws were adopted by a total of 27 states. In the Colorado version, which took effect Jan. 1, 1989, the tax was $100 per ounce of marijuana and $1,000 per ounce of an illegal controlled substance.
“Payment of the tax ... shall be evidenced by the affixing of stamps to packages containing a controlled substance or marijuana.” It would be up to the Revenue Department to determine the type of stamp, but the department was told by statute to sell (the drugs) “for cash.” This was to avoid a constitutional problem of self-incrimination. Buyers would not be asked for identification or proof that they possessed illegal drugs.
The penalty for the “owner” of an illegal drug who didn’t have the tax stamp affixed would be 10 times the amount of taxes owed. That was reduced to three times the amount by a 1993 amendment to HB 1088. However, if you were “legally” in possession of marijuana or other controlled substances, you did not owe any tax.
The Denver Post report on the debate in the House said, “Rep. Kopel voiced the only opposition to the idea during discussion on the House floor ... stating that ‘enacting a drug tax would send the wrong message by implying there is something OK about drugs or they wouldn’t be taxed by the state government.’”
The final vote in the House was 45 to 14, and the bill passed 22 to 11 in the Senate. Opposition in both houses was bipartisan. When the bill reached Gov. Roy Romer’s desk, significant opposition arose from such groups as the Colorado Federation of Parents for Drug Free Youth, Inc., which urged a veto. Instead Romer issued a letter stating HB 1167 “has become law without my signature.”
Romer wrote that opposition groups “... have expressed doubts about whether this legislation can be enforced and whether young people will understand taxation of an illegal pursuit.”
The press had a field day as Jan. 1, 1989, approached. In the Colorado’s stamp center was the seal of the state that you also see on legislative stationery, colored green for marijuana, red for controlled substances and including the words marijuana and controlled substances.
Revenue spokesperson Kathy Kanda told The Post, “We’re still trying to figure out how one would affix the stamps and to what. Will they stick onto Ziploc bags, or whatever?” One thousand stamps were printed.
The first stamp was purchased by The Post’s Woody Paige, who then made back the $100 cost by writing a column about his venture. And that first sale didn’t happen until the third day of availability.
Paige explained how to attach the stamps: “Bag top is to be folded down at least one inch. The stamp is to be placed in the center of the bag overlapping the edge and sticking to the bag so that the stamp will be destroyed when the bag is opened.”
According to information given me through 1994, there were 35 other stamps sold on marijuana and none on controlled substances.
In June of 1994, the U.S. Supreme Court handed down a decision that doomed Colorado’s drug-tax law. By a 5-to-4 vote, the court expanded the Fifth Amendment prohibition against double jeopardy (multiple punishments for the same offense) to taxation. The opinion, written by Justice Paul Stevens, said states may not follow up a narcotics conviction by imposing a tax on illegal drugs.
The case arose in Montana after drug agents seized 1,811 ounces of marijuana in a raid on a ranch. The party pleaded guilty, and the state assessed $848,000 in penalties and interest.
The party filed bankruptcy, and bankruptcy court, U.S. District Court and the U.S. Court of Appeals all agreed that imposition of the tax after a criminal prosecution amounted to double jeopardy.
Stevens, during oral arguments, before the Supreme Court reflected, “It’s a little bit unusual to tax something that a person is not permitted to own.” That is close to the comment I made to House members on second reading of HB 1167.
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How did drug stamps affect medical marijuana? Section 14 of Article 18 of the state Constitution spells out how legal growing, selling and buying of medical marijuana is to work. However, the Constitution does not deny the Legislature the ability to pass additional language insofar as it does not conflict with constitutional language.
The only money received by the government is in Section 14 (3) (i) dealing with funding to pay for regulation by the Department of Health. So a legal tax could be levied on the dealers, at least as far as Colorado law is incurred.
On the federal level, President Obama basically told the Department of Justice to leave “real” medical marijuana alone. If the department ignores the president, the U.S. Constitution gives the president power to “grant reprieves and pardons for offenses against the U.S. except in cases of impeachment.”
Justice Stevens’ discussion on HB 1167 does not apply to medical marijuana, which can, by state law, be owned property. The Constitution provides for a reasonable use of the plant being sold and has nothing to do with other controlled substances.
It would be useful for the Legislature to seek a declaratory judgment from the state Supreme Court on a bill dealing with the legality of taxing profit made by dealers in medical marijuana.
Jerry Kopel served 22 years in the Colorado House.