State poised to repeal ‘struggle on medicine’ tax law | Boston

BOSTON — Beacon Hill leaders are quietly moving to do away with one of the last vestiges of the War on Drugs by repealing a seldom-used tax on illegal sales of marijuana and other substances that went up in smoke several decades ago.

The Controlled Substances Tax Act was deemed unconstitutional by the state Supreme Judicial Court in a 1998 ruling which determined that the law, which was aimed at drug dealers, amounted to a double jeopardy penalty.

While the tax has not been used in years since the court overturned it, it has remained on the books even as the state’s voters have moved to decriminalize marijuana use and legalize retail sales and cultivation of the drug.

Now, more than two decades later, the state is finally moving to repeal it.

Gov. Charlie Baker included the proposed repeal in an outside section of his preliminary budget, filed in January. The House of Representatives approved the repeal as part of its version of the spending package, finalized in April, and the Senate also included it in its budget plan, which will be debated next week.

The state Department of Revenue, which was authorized to collect the tax, cited the 1998 SJC ruling as the primary reason for seeking a repeal of the law.

On its website, the DOR points out that the controlled substance tax is not imposed on legal sales of marijuana from businesses licensed by the Cannabis Control Commission. Those sales are subject to cannabis retail taxes, which include a 10.75% state tax, the state’s 6.25% sales tax, and any local pot taxes.

The state’s controlled substances tax law was based on the federal Marihuana Tax Act of 1937, which was passed by Congress in response to concerns about use of the drug during the Great Depression.

The statute effectively criminalized marijuana, restricting possession of the drug to those who paid an ‘excise tax’ for authorized medical and industrial uses. During World War II, the federal government issued pot tax stamps issued to American farmers for the commercial cultivation of fiber hemp to aid the war effort.

The federal pot tax was deemed unconstitutional by the U.S. Supreme Court in a 1969 decision that led to Congress repealing the act a year later. In the ruling, justices decided that the law violated the Fifth Amendment because it required individuals who were seeking the pot tax stamps to incriminate themselves.

Massachusetts lawmakers approved the Controlled Substances Tax Act in 1993, along a raft of other laws toughening criminal penalties for drug possession and distribution in response to a nationwide scourge of crack and heroin addiction.

The law set a tax rate of $3.50 per gram or $99.20 per ounce of marijuana, cocaine and other controlled substances. The state Revenue Department printed postage-sized purple stamps that were meant to be affixed to drug packaging.

But the law was challenged several years later by an accused marijuana dealer who sued the state over a tax assessment he received after his conviction.

In it’s ruling, the SJC determined that the Fifth Amendment — which prevents multiple punishments for the same offense — restricts the ability of the state to assess the tax against defendants who already face criminal penalties and court fines for possession of marijuana or other controlled substances.

Justices pointed out that there is no evidence of any drug dealers had voluntarily paid the tax, and noted that it was only used twice since its was approved.

Law-enforcement groups say they have no gripe with the state finally moving to repeal the law, given the high court’s ruling.

“It’s not something that we’re concerned about,” said Mark Leahey, executive director of the Massachusetts Chiefs of Police Association. “It was deemed unconstitutional and they’re finally getting around to cleaning it up.”

Christian M. Wade covers the Massachusetts Statehouse for North of Boston. Media Group’s newspapers and websites. Email him at [email protected]