Court: Taxing Illegal Drugs Is Unconstitutional

Sophie Moery

Court: Taxing Illegal Drugs Is Unconstitutional

NASHVILLE, Tenn. - The Tennessee Court of Appeals ruled Friday that the state's tax on illicit drugs, known as the crack tax, is unconstitutional.

In 2006, the state collected $1.8 million from the tax.

The court ruled that the state can't require a tax on items the state considers illegal such as cocaine, moonshine and crack.

Drug dealers, for example, buy a tax stamp to put on their illegal drugs. If they're caught, authorities confiscate the dope. If the owners haven't bought a stamp they receive a bill from the state.

"The tax is levied plus penalty and interest upon that," said Sophie Moery, spokeswoman the Tennessee Department of Revenue.

The ruling Friday upheld a lower court's decision, which could affect the local war on drugs.

"The tax really serves a great benefit to local law enforcement agencies as they do receive the majority of those funds," Moery said.

The state plans to appeal and continue to collect drug taxes until everything is hammered out in court.

Since drug taxing started in 2005, state has collected more than $6 million. Much of the money came from confiscated property.

The state has 60 days to appeal the decision. If the decision is upheld the state won't have to pay the money back, but it won't enforce tax collection on illegal drugs anymore.

About 22 other states have similar drug collection laws. Tennessee's plan is modeled after laws in North Carolina.