Did Kentucky's 1995 marijuana tax violate double jeopardy after a drug prosecution?

Plain-English summary

In 1995, Kentucky's Attorney General concluded that the state's marijuana and controlled substances tax did not violate the federal ban on double jeopardy. The opinion compared Kentucky's proposed tax with the Montana drug tax the U.S. Supreme Court had rejected in Department of Revenue of Montana v Kurth Ranch. In the AG's view, Kentucky tax liability stood apart from a criminal prosecution, while the Montana tax had been imposed after arrest and punishment for the same conduct.

The Kentucky tax worked through stamps purchased from the Revenue Cabinet. The AG emphasized that stamp purchasers' identities were confidential, possession of stamps could not be used against a person in a prosecution, and a failed or absent prosecution did not remove the tax liability. Those were the features on which the opinion based its constitutional conclusion.

Currency note

This opinion was issued in 1995. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Historical summary

Revenue officials assessing the tax

The AG saw Kentucky's stamp tax as an independent tax obligation. It applied to possession of or commerce in marijuana and controlled substances even if no prosecution occurred or a prosecution failed. A person could purchase stamps before any criminal case, and the statute protected the purchaser's identity and barred use of the stamps as evidence against the person.

People facing drug charges and tax assessment

The opinion distinguished Kurth Ranch on timing and connection to prosecution. Montana's tax was payable only after an arrest for a drug offense, and the AG described it as conditioned on criminal conduct. The AG said Kentucky's liability did not turn on that kind of criminal process, so the Montana ruling did not make Kentucky's tax unconstitutional in its analysis.

Scope of the conclusion

The request asked whether the Kentucky tax violated the Fifth Amendment's double jeopardy protection. The AG answered that question for the statutory structure described in 1995. It did not resolve any named taxpayer's assessment or prosecution.

Common questions

Did the AG think Kentucky's 1995 marijuana tax was a second criminal punishment?

No. The AG said the tax operated independently of a prosecution and concluded that it did not violate double jeopardy.

Why did the AG distinguish Montana's drug tax?

The opinion said Montana assessed its tax only after a drug arrest and after punishment for the same conduct. Kentucky's tax could be owed or paid without a prosecution, and a failed prosecution did not cancel it.

Could purchasing Kentucky tax stamps be used as evidence in a criminal case under the law the AG examined?

The opinion said possession of tax stamps could not be used against a person in a criminal prosecution and that purchasers' identities were confidential.

Did the AG decide that every possible drug tax assessment was valid?

No. It evaluated the tax's statutory design against a double jeopardy challenge, without deciding an individual assessment.

Background and statutory framework

The opinion examined Kentucky's marijuana and controlled substances tax in KRS 138.870–.889 against the U.S. Supreme Court's reasoning in Department of Revenue of Montana v Kurth Ranch. It described the Montana tax as conditioned on arrest and imposed after criminal punishment. It described Kentucky's stamp tax as payable independently and unaffected by the result of a prosecution. The source's reporter citation for Kurth Ranch has a blank page after "511 US"; the original text below preserves that citation as printed.

Citations and references

• KRS 138.870–.889: Kentucky marijuana and controlled substances tax provisions examined by the AG.
• Department of Revenue of Montana v Kurth Ranch: U.S. Supreme Court decision the opinion distinguished.

Source

• Landing page: https://www.ag.ky.gov/Resources/Opinions/Opinions/OAG95-013.htm

Original opinion text

OAG 95-13

March 31, 1995

Subject: Proposed Drug Tax

Written by: Ross T. Carter

Requested by: Kim Burse, Secretary, Revenue Cabinet

Syllabus: The Kentucky marijuana and controlled substances tax is not unconstitutional under the double jeopardy clause of the U. S. Constitution.

Statutes construed: KRS 138.870–.889

Opinion of the Attorney General

The question presented is whether the marijuana and controlled substances tax constitutes double jeopardy that is prohibited by the fifth amendment. We conclude that the tax is legal and does not violate the fifth amendment.

The question arises because the U.S. Supreme Court recently held a Montana illegal drug tax unconstitutional. Department of Revenue of Montana v Kurth Ranch, 511 US , 128 L Ed 2d 767, 114 S Ct 1937 (1994). We are asked to evaluate the Kentucky tax in light of the principles adopted in the Kurth Ranch case.

The Kurth Ranch case

The Montana Dangerous Drug Tax Act imposed a steep tax on possession and storage of dangerous drugs. Several features of the tax made it appear intertwined with the state's traditional criminal laws: the tax was payable only after a taxpayer was arrested for a drug-related crime, the tax return was filled out by law enforcement authorities, and the tax res was confiscated and destroyed. These features conditioned liability for the tax on the commission of a crime.

Kurth Ranch, convicted in state court of drug dealing and assessed a tax of almost $900,000, sought to have the assessment overturned on the grounds that the tax constituted double jeopardy by punishing conduct that had already been punished by the traditional drug laws. The U.S. Supreme Court agreed. The case implicated the following well-established points of constitutional law:

A person convicted of a crime may be subjected to an additional civil penalty only if the penalty is remedial rather than a deterrent or retribution.

A civil penalty may be remedial in character if it merely reimburses the government for the cost of terminating the criminal conduct.

Neither a high rate of tax nor an obvious deterrent purpose automatically marks a tax as a form of punishment.

The Court found that the Montana tax was absolutely conditioned on commission of a crime. The only persons subject to the tax were persons who had been arrested for possession of or commerce in the taxable items. Because of this feature, Montana's only justification for the tax was that it was a remedial measure intended to reimburse the state for the cost associated with enforcement of the drug laws. Montana could not prevail in this argument because it offered absolutely no evidence regarding its enforcement costs (perhaps acknowledging that the cost was nowhere near the $900,000 tax assessment).

The Kurth Ranch case invoked only the analysis applicable to civil penalties that are conditioned on the commission of a crime. Indeed, the first sentence of the Court's opinion says, “This case presents the question whether a tax on the possession of illegal drugs assessed after the State has imposed a criminal penalty for the same conduct may violate the constitutional prohibition against successive punishments for the same offense.” The Court flatly stated that in other cases, where the penalty is not imposed on the same conduct already punished as a crime, the result would be entirely different. “Montana no doubt could collect its tax on the possession of marijuana, for example, if it had not previously punished the taxpayer for the same offense, or, indeed, if it had assessed the tax in the same proceeding that resulted in conviction.” Id., 128 L Ed 2d at 778.

The Kentucky tax

Kentucky has done exactly what the Supreme Court said Montana could have done: impose the tax on conduct not previously punished as a crime. The features of Kentucky's tax are:

It is imposed on possession of or commerce in marijuana and controlled substances.

The tax is payable by purchasing stamps from the Revenue Cabinet in the face amount of the tax imposed. The stamps must be affixed to the taxable items.

The identity of persons obtaining tax stamps is kept confidential.

If the state fails to convict persons subject to the tax, the tax assessment is not rendered invalid.

Possession of tax stamps may not be used against a person in a criminal prosecution.

The General Assembly has succeeded in establishing liability for the tax as a distinct and independent sphere of activity that is not connected in any material respect with a criminal prosecution. A person may be liable for the tax even if no prosecution is undertaken, or if a prosecution is unsuccessful. In fact, it is entirely possible for a person to obtain the stamps and pay the tax without heightening the risk of prosecution. For this reason the holding in the Kurth Ranch case is totally inapplicable to the Kentucky tax.

We therefore conclude that the marijuana and controlled substances tax is not unconstitutional.

Chris Gorman

Attorney General

Ross T. Carter

Director

Division of Civil and Environmental Law