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Marijuana: Illegal but taxable in Texas

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It may be illegal to have marijuana in Texas -- but that isn't stopping the state from taxing it. A FOX 7 investigation has determined that not only are people paying the tax but the law has also created a loop-hole that can help drug dealers get out of jail.

The Texas Marihuna ( that's the spelling used by the state) Tax Stamps are printed with skull and cross bones as well as the iconic image of death. Like the stamps found on cigarettes and liquor, the tax is collected by the state Comptroller's office, but the purpose is entirely different.

"The intent was to create a new tool that prosecutors could use to stop the street trafficking of drugs," said Billy Clemons.

Clemons is City Manager for the town of Lorena. Back in 80's he was a member of the Texas House of Representatives, pictures from those days now decorate his walls.

"I actually got two sets," said Clemons as he held examples of the tax stamps he was given.

Clemons came up with the idea for the marijuana tax to help with the war on drugs by hitting offenders not only with a jail sentence but by also hitting them in the pocketbook.

"The point is, that, it's actually two different violations, it's not two violations for one crime," said Clemons.

According to the rules posted on the Texas Comptroller's website- the tax is due – "when a dealer imports, manufactures, produces, acquires and/or possesses a controlled substance."

As unlikely as it may sound, that drug dealers would pay the tax, since 2008, the tax stamp has actually generated just over $26,000. The names of those who have paid the tax are considered confidential, not for public release.

"I would think stamp collectors are buying them," said Clemons.

An agency spokesperson confirmed that suspicion telling me – it's believed the majority who get the stamp are not in the drug trade, but are simply everyday people who collect things like stamps and coins.

Clemons drafted his legislation with Al Capone in mind. History books tell how the notorious mobster was sent to prison for tax evasions, so he reasoned, if that was good enough for G-men to catch Capone why not do something similar to go after Texas drug dealers.

Growers and dealers are the intended targets but casual users are also required to pay up. The tax rate is set at $3.50 per gram. When calculated from the minimum amount of 4oz - a tax bill can start at about $400. Toss in a pound of pot and it hits almost $1,600.

It was reported, within the first five years of the law being on the books, the Comptroller's Office issued more than $2-million in tax delinquency notices. But an unexpected court ruling turned the tables on the Stamp, as a result an unexpected loophole has been created. It came from the Texas Court of Criminal Appeals. The 5 to 4 ruling in 1996, determined that locking people up on a drug charge and also charging them a tax penalty amounted to double jeopardy.

"It's double jeopardy, because the tax has nothing to do with anything but punishing people," said Tom Moran.

Moran was the lead defense attorney in the case and told said he hasn't thought about the tax since the court ruling. The Comptroller's office has stopped issuing assessment notices to people arrested on drug charges although the tax law remains on the books. Moran stopped just short of saying Texas has legalized Marijuana by default, but he agrees it has created a surprising loophole.

"It's provided an opportunity for people to pay their drug tax and avoid criminal prosecution or criminal punishment," said Moran.

If that didn't sink in- look at this- someone arrested with a pound of pot has a choice. Go to jail for up to 2 years with a court fine of up to $10-thousand -- or pay a $15-hundred tax bill and walk free.

So far- Moran's client is the only known offender released under the 1996 ruling -- but the door apparently is open for anyone. According to Moran the process to transform the marijuana tax stamp into a get out of jail card first requires getting someone to go to the Comptroller's office and pay the tax.

"Get a receipt, attach it to an application for a writ of Habeas Corpus for violation of the Double Jeopardy Clause and you can litigate, the Supreme court says you can litigate that pretrial. Post a bond and you can just walk out the door," Moran.

Billy Clemons doesn't like the idea his law could be a legal loophole for drug dealers. He would like a county prosecutor to enforce the tax - trigger a new court fight in order to establish a new standard.

"I think the reason it's not happening is because some Jurisdiction will have to pay that expense. And no one wants to pay that expense at the risk of not winning," said Clemons.

If overturning the ruling is not possible Clemons and Moran agree state lawmakers may have to stamp out the drug stamp.

"Just repeal the tax, the Legislature thought it was being cute when it passed this. Just stop being cute," said Moran.

Until something is done, tax stamps will continue to be sold and apparently the unintended loophole will remain open.

Tax stamps were also created for other illegal drugs like cocaine. Those rates are much higher. If you want to collect one, they can be purchased by calling 463-4400 and asking for an order form from the Comptroller's Revenue Accounting Department.

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