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The NC Drug Tax is designed to ensnare and penalize people, especially those of color

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Marijuana Photo: Getty Images

Damned if you do, damned if you don’t: The tax is required, but nearly impossible to pay

Last week, I tried and failed to pay the North Carolina Drug Tax. Turns out, failure was inevitable: It’s virtually impossible to pay this tax. So why is it still law?

The NC Drug Tax (known more formally as the Unauthorized Substances Tax [2]) is a statutory relic from the height of the War on Drugs. Like most features of that deeply flawed and unsuccessful effort, the Drug Tax allows the state to systematically pillage resources from low-income communities and communities of color. 

Since its passage in 1989, the Drug Tax has legally required anyone who comes into possession of designated amounts of certain drugs to, within 48 hours, buy stamps from the North Carolina Department of Revenue and affix them to the drug’s packaging. Mind you, this won’t save anyone from criminal charges. The stamps, in theory, will only prevent someone from having the deeply unpleasant experience (which thousands of North Carolinians endure every year) of discovering, sometimes years after the fact, that they owe tens of thousands of dollars in back taxes, penalties, and interest on the unpaid stamp tax. 

Yet, not only has North Carolina failed consistently over the past three decades to actively inform the public of the tax’s existence, the state outright precludes people from purchasing the stamps at all. The state waits until an unsuspecting person is found with a couple ounces of marijuana, a handful of unprescribed pills, or maybe even a flask of moonshine. 

Then, regardless of whether that person is convicted of a crime, NCDOR starts charging them back taxes, penalties and interest. The state can then garnish that person’s wages, repossess her car, her home, her jewelry, any valuables at all, and auction off her belongings until her “debt” is paid in full. 

So, why would the state, the police, anyone in power, make buying the stamps easy or fair or, even, possible? They wouldn’t, right? 

In an effort to test this hypothesis, I stopped by my local NCDOR office last week. The Durham NCDOR shares a looming, glassy building at the edge of the Westgate Shopping Center with several other local government offices. The lobby was empty and silent but for the air conditioning blasting from the vents. After wandering around for a few minutes, I realized I had walked right past the NCDOR door, because, on a Monday afternoon during peak business hours, all of the lights were off and the blinds were closed. The door was locked. A poster on the door explained that I would need to go home, go on the NCDOR website, and request an appointment online. Fine—after all, we are still in a pandemic. But this was only hurdle Number One.

Once home, I logged onto the site [3]. Individuals who purchase stamps from NCDOR aren’t required to provide any identifying information, but to request an appointment, I had to provide my full name, address, phone number, email, the last four digits of my social security number, and my reason for visiting the NCDOR. If I actually had had drugs in my possession, this would have been where I gave up. Even though it is technically a misdemeanor for anyone from the NCDOR to give my information to law enforcement, why would I risk it? Nevertheless, I filled out the form. I selected “Unauthorized Substance Tax” from a drop-down list of reasons for my visit, and clicked ‘submit.’

A message popped up confirming my submission and informing me: “[NCDOR] personnel will contact you by phone within two business days.” It’s been six business days now, and not only have I not heard from any NCDOR, even two business days would have been too late. I would have already been in violation of the law. Remember, the stamp is required within 48 hours.

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Source: NC Department of Revenue website

Bottom line: North Carolina does not want you to follow the law. Only about 0.02% of the total revenue generated from the tax (approximately $35,000 [5] out of $175 million [6]) has come from people actually buying stamps. The state seems to have deemed entrapment a much more lucrative practice. The state collects about $6.5-$11.5 million [7] from this scheme every year, 75% which goes to the police departments responsible for reporting the drugs (yes, you read that correctly) and 25% goes to the state. 

This is a drop in the bucket for the state budget, but it is a devastating cost to the low-income communities. People are returning to their communities under the weight of Drug Tax debt that can range from the tens of thousands of dollars to as high as five million dollars [8]. This burden falls squarely on the shoulders of families of color, people suffering from substance abuse disorders, and neighborhoods that for decades have been segregated, economically isolated, and largely left to fend for themselves. 

The NC Drug Tax is a mechanism of extraction—nothing more, nothing less. It moves the limited resources that accumulate in these communities back into the pocket of law enforcement. While its few supporters argue that people can avoid this tax if only they proactively buy the stamps, this is patently untrue. The system is built to trap people in any way possible: behind bars, under the weight of insurmountable debt, or both. It’s well beyond time for state leaders to eradicate this outlandish and predatory fossil of a law, and to implement policies that promote redemption, health, and genuine social mobility in its place.

Isabel Shapiro is an intern with the NC Justice Center’s Fair Chance Criminal Justice Project.