While Kansas says dealers must pay taxes on illegal drugs, few take them up on it

Kansas drug dealers are required by law to pay taxes on their illegal products, but a records request reveals very little use of the drug tax stamp program.

So far this year, the Kansas Department of Revenue collected 14 drug stamps valued at $10. Last year, it collected the same number of $10 drug tax stamps, plus one $50 stamp.

Drug tax stamps were implemented in 1987, and by statute, it requires anyone in possession of illegal drugs exceeding a certain threshold to purchase the stamps as an excise tax. It must then be affixed to whatever container the drugs are in.

“The fact that dealing with and possessing marijuana and controlled substances is illegal does not exempt it from taxation. Therefore, drug dealers and people who possess marijuana and controlled substances are required by law to purchase drug tax stamps equal to the value of the illegal drugs in their possession,” says the Kansas DOR’s page on drug tax stamps.

The DOR says the stamps may be purchased anonymously at its Taxpayer Assistance Center in Topeka, and that it is prohibited from sharing information about stamp purchases with law enforcement.

Do drug dealers actually purchase the stamps?

The 14 $10 stamps this year would only cover about an ounce and a half of marijuana. The Department of Revenue didn’t confirm whether multiple people purchased the stamp.

Marijuana is taxed at a rate of $3.50 per gram with a minimum threshold of an ounce to be considered a dealer. That means a dealer would have to pay $98 to the state per ounce of marijuana.

There no thresholds for domestic marijuana plants, and are taxed at 40 cents per gram for still living “wet” plants and 90 cents per gram of dried whole plants. A single marijuana plant would likely exceed the total $140 in drug stamps issued so far this year.

The $10 stamp would also only account for one-20th of a gram in controlled substances sold by weight, which would be for such drugs as cocaine or crystal meth.

Dealers don't use them, but it's used against them

With only a handful of purchases, and at price points that put the buyer well below the needed cost for tax on dealer-level amounts of drugs, it appears that few drug dealers preemptively pay taxes on drug deals.

“It is safe to say, very rarely do illegal dealers have the tax stamp,” said Washburn University law professor John Francis.

But if convicted for not affixing a drug tax stamp to illegal drugs, the state can fine up to double of what the stamps would have cost. Law enforcement officials previously told The Capital-Journal that the financial hit is a valuable tool in deterring drug dealers from reoffending.

The Kansas Supreme Court narrowed the law in 2013 to only apply to people who are convicted with an intent to distribute, rather than a simple possession charge. That came up earlier this month when the Kansas Appellate Court overturned a conviction for both possession and possession without a drug tax stamp in Kansas v. Jones.

A key fact here is that she didn't meet the definition of dealer,” Francis said. “The way the state charged Jones and the underlying evidence they find Jones's conviction arose out of the same conduct as there was only one impulse to personally use the marijuana.”

This article originally appeared on Topeka Capital-Journal: While Kansas says dealers must pay taxes on illegal drugs, few take them up on it