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Drug tax dealings in Tenn., Calif.

Discussion of drug taxes provokes a variety of reactions.

"Crazy" is the usual comment about state efforts to wring some tax dollars out of drug dealers. "Useless" is another frequently uttered word in connection with controlled substances and taxes.

But in Tennessee, the state's highest court has pronounced the final word: "Unconstitutional."

Tennessee drug tax stamp In late July, the Tennessee Supreme Court deemed the state's so-called "crack tax" invalid because it exceeds the state's constitutionally defined taxing authority.

The Unauthorized Substances Tax was enacted by Volunteer State lawmakers five years ago. It required individuals holding marijuana, cocaine and other illegal drugs to buy tax stamps from the Department of Revenue.

Constitutional considerations: Creators of the tax thought they had covered all possible constitutional bases.

Noting that the tax collector's job is not to enforce drug laws but to bring in revenue, state officials promised confidentiality to drug stamp purchasers. By making the process anonymous, and specifically prohibiting the sharing of any drug-tax related information with criminal investigators, the tax would not violate federal and state constitutional rights against self-incrimination.

And since the tax is classified as a civil sanction rather than a criminal punishment, it wouldn't violate constitutional double jeopardy clauses.

But Tennessee high court justices say that lawmakers missed a constitutional consideration.

The Tennessee constitution allows the legislature to impose taxes on merchants, peddlers and privileges.

The drug tax is a levy only on possession, not the transfer or sale, of unauthorized substances. Therefore, said the court, the tax cannot be classified as a tax on merchants or peddlers.

That leaves the allowable state tax on privileges.

But the drug levy is not a valid privilege tax, according to the Tennessee Supreme Court's 3-to-2 ruling, because possession of unauthorized substances is an unlawful act and an unlawful act cannot be considered a "privilege."

Lawsuit follows: What is a privilege in these United States is the right to sue, and that's exactly what previously-taxed Tennessee drug owners did following the state's high court decision.

Steven Waters was taxed more than $55,000 when he was caught buying a kilo of cocaine. Waters now is the lead plaintiff in the class-action suit that seeks to recover the $10.4 million that the state has collected since 2005 under the now overturned tax.

Waters has reason to be optimistic about his effort to get back the illegally collected Tennessee drug tax money for himself and hundreds of others. He's the guy who successfully challenged the constitutionality of the tax.

Is this a great country, or what?

Counterintuitive California: All this Tennessee drug dealing -- well not literal drug dealing, but then you know what I'm talking about -- makes the latest drug tax discussion out in California look almost quaint.

A group of Golden State residents are demanding a new tax that could raise millions for their cash-strapped treasury. They want to pay a marijuana tax.

Of course, as part of their willingness to pay the tax, they want the drug legalized for all, not just medical, users.

An estimated $14 billion worth of marijuana is sold illegally in California. Making it legal and taxing it at $50 dollars an ounce would bring in approximately $1.4 billion a year.

"I thought it was high time, no pun intended, that this was on the table," said Assemblyman Tom Ammiano (D-San Francisco), who discussed his support of the legalize-and-tax marijuana idea in the video below.

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