Frequently Asked Questions
Alcoholic Beverage Control - Drug tax
Where do I purchase drug tax stamps?
The only location you can purchase drug tax stamp(s) at is the following
location:
Topeka Assistance Center
Docking State Office Building
1st Floor, Room 150
915 Harrison
Topeka, KS 66612-1588
Phone: 785-368-8222
Or 788-526-7738 (Toll Free)
When can I purchase drug tax stamps?
The Topeka Assistance Center is open Monday through Friday from
8:00 a.m. to
5:00 p.m.
What methods of payment are accepted
for purchasing drug tax stamps?
Only cash, money order, or a cashier's check can be used to purchase
drug tax stamps. No personal checks are allowed.
How much do drug tax stamps cost?
Drug tax stamps can be purchased in denominations and multiples
of $10, $50, $100, $500, and $1000.
What is the minimum purchase required
for purchasing drug tax stamps?
There is no minimum purchase requirement.
Why tax illegal drugs?
There are two reasons why illegal drugs are taxed:
- Taxing the Underground Economy - The fact that the business of dealing marijuana and controlled substances is illegal does not exempt it from taxation. Legitimate business transactions are taxed. Dealing drugs is a large part of a previously untaxed underground economy.
- Providing a Source of Revenue - 25% of drug tax collections are allocated to the State's General Fund.
Who is liable for the drug tax?
An individual is classified as a drug dealer and is liable for
the payment of drug taxes if he/she manufactures, produces, ships,
transports, or imports into Kansas or possesses:
- more than 28 grams of marijuana (processed or marijuana plants)or
- 1 gram of controlled substance or 10 or more dosage unites of a controlled substance (K.S.A. 79-5201)
How is tax paid?
Drug dealers, as defined above, are required by law to purchase
tax stamps from the Department of Revenue's Business Tax Bureau
(K.S.A. 79-5204). In order to protect against any possible violation
of the self-incrimination constitutional protection, a dealer is
not required to give his/her name or address when purchasing stamps
and the Business Tax Bureau is prohibited from sharing any information
relating to the purchase of drug tax stamps with law enforcement
or anyone else. The stamps must be affixed to the drugs when they
are seized to prevent tax liability. Payment of the drug tax (the
purchase and affixation of stamps) is due immediately upon acquisition
or possession by the dealer. The stamps are valid for 3 months from
the date of issuance. If drugs are seized without stamps or the
stamps which are affixed have expired, the possessor is liable for
payment for the tax as well as a penalty of 100% of the assessment.
For example:
Drug tax assessment: 10
grams of cocaine x $200 per gram = $2,000
Penalty: $2,000 x 100% = $2,000
Total Liability: $2,000 + $2,000 = $4,000
What are the tax rates for marijuana?
Pursuant to K.S.A. 79-5202, the tax rates are:
- Processed $3.50 per gram
- Wet Plant $0.40 per gram
- Dry Plant $0.90 per gram
What are the tax rates for controlled
substances?
Pursuant to K.S.A. 79-5202, the tax rates are:
- If customarily sold by weight (cocaine, methamphetamine, etc.) $200 per gram
- If customarily sold by Dosage Unit (pills, etc.) $2,000 per 50 units
What happens to a drug dealer not
possessing drug tax stamps?
There are both criminal and civil penalties.
Criminal Penalties:
- Failure to pay the drug tax is a felony punishable of up to five years and/or a fine of up to $10,000.
Civil Penalties:
- Failing to affix tax stamps to illegal drugs may result in the issuance of a jeopardy tax assessment and tax warrant by the Department of Revenue against the drug dealer based upon the amount of the drugs seized pursuant to K.S.A. 79-5205 and K.S.A. 79-3229. The fact that the assessment is a "jeopardy assessment" allows for the initiation of collection activities immediately. Execution of the tax warrant may involve the seizing and selling of the drug dealer's property to satisfy the drug tax liability. In other words, the drug dealer subjects his/her property to possible seizure by failing to purchase the necessary drug tax stamps. In addition, the tax warrant, once filed by the clerk of the district court, serves as a lien against the drug taxpayer's real estate. This prevents the drug dealer from selling his/her real estate without first satisfying the drug tax liability. Laws exempting personal property from seizure do not apply to seizure pursuant to drug tax warrants.
Does purchasing drug tax stamps
make possession of drugs legal?
No. Purchasing drug tax stamps prevents criminal prosecution for
the charge of failure to affix the stamps on the drugs and prevents
the Department of revenue from assessing the 100% penalty for possession
of illegal drugs without tax stamps.
Does the drug dealer have an opportunity
to be heard?
Yes. The drug dealer has 15 days from the date of assessment to
request a hearing before the Director of Taxation to determine the
validity of the assessment pursuant to K.S.A. 79-5205. The assessment
is statutorily presumed to be valid and correctly determined. The
burden is on the taxpayer to prove otherwise.
The criminal prosecution for failure to pay the drug tax and the civil tax assessment are separate actions. What occurs with the criminal case, for instance, does not necessarily affect the Department of Revenue's tax assessment.
Who administers and enforces the
Drug Tax Law?
The local district or county attorney handles the criminal prosecution
for failure to affix drug tax stamps.
The Department of Revenue's Investigation and Criminal Enforcement (ICE Unit), organizationally placed within the Alcoholic Beverage Control Division, is responsible for administering the tax on illegal drugs. After receiving information from the law enforcement community, the ICE Unit represents the Director of Taxation in issuing assessment notices and tax warrants, The ICE Unit assists local law enforcement in identifying assets of drug dealers for satisfaction of drug tax liability. The county sheriff's departments perform execution of the tax warrants, which may include seizure and storage of property.
Is the tax on illegal drug unique
to Kansas?
No. Kansas was one of the first states to enact a tax on illegal drugs. There are roughly 10 states that continue to impose a tax on illegal drugs.
What do I need to do with the drug
tax stamp once I receive it?
Permanently affix the stamp to the marijuana and/or controlled substance immediately after receiving the substance.
Can I reuse my stamps?
No.
How long are drug tax stamps valid?
Drug tax stamps expire three (3) months after the date of issuance.
Do I have to provide my name and
address when purchasing drug tax stamps?
No. KDOR sells drug tax stamps without asking for any identification, demographic information, e.g. name, social security number. KDOR associates cannot share any information relating to drug tax stamp purchases with anyone, including law enforcement agencies.
Can I purchase drug tax stamps
through the mail?
Yes. The purchaser will need to provide their mailing address in order for the Department to send the drug tax stamps.