Court Opinion

ID: 9455768
Source: CourtListenerOpinion
Date Created: 2023-08-04 19:32:32.366984+00
Date Added: 2024-06-11T17:34:43.614913
License: Public Domain

OPINION ON PETITION FOR REHEARING
In this petition for rehearing two of the three original appellants, Levy and Monosson, again strenuously urge their contention that § 6 of the Marihuana Tax Act, Title 26 U.S.C. § 4742(a), is unconstitutional and void because it is not a true tax act but a regulatory act within the police powers reserved to the sev*213eral states by the Tenth Amendment. In support of their contention they rely primarily upon Nigro v. United States, 276 U.S. 332, 48 S.Ct. 388, 72 L.Ed. 600 (1928), wherein the Court construed § 2 of the Anti-Narcotics Act of 1914, 38 Stat. 785, commonly called the Harrison Narcotics Act, as amended by the Revenue Act of 1918, 40 Stat. 1057, 1130, as making it unlawful for “any person,” not just those persons required to register and pay a tax, to sell, etc. any of the narcotic drugs specified in § 1 of the Act except in pursuance of a written order of the transferee on a form issued by the Commissioner of Internal Revenue, and held that, as so construed, the Act was a genuine taxing act not open to attack on Tenth Amendment grounds.
The argument on behalf of the petitioners-appellants runs that the Court in Nigro clearly indicated that if the Harrison Narcotics Act were construed as applicable only to registered, and hence legal dealers, it would not be a constitutional exercise of the taxing power but an unconstitutional exercise of the powers reserved to the states by the Tenth Amendment. Then they say that the Marihuana Tax Act applies only to dealers operating legally under state law so that unlawful dealers need not register and pay a tax and that from this it follows that there is no reasonable relationship between the order form requirement of § 4742(a) and the obligation to pay the taxes imposed by § 4751 to § 4753 inclusive.
We find no merit in this argument. Whatever changes may have been wrought in the Harrison Narcotics Act of 1914 by its amendment in 1936, 49 Stat. 1745, the fact remains that § 4742 (a), like § 2 of the Harrison Narcotics Act of 1914 as it stood when construed by the Court in Nigro applies to “any person.” Indeed the Marihuana Tax Act is even more specific in its application to unlawful traffickers than the Harrison Narcotics Act as it read in 1928 when it was considered and construed by the Court in the. Nigro case, for in § 4742(a) the words “any person” are immediately followed by the words “whether or not required to pay a special tax and register under sections 4751 to 4753 inclusive.”
There is no merit in counsel for the petitioners’-appellants’ argument that the Court in the Buie case, reported sub nom. Minor v. United States, 396 U.S. 87, 90 S.Ct. 284, 24 L.Ed.2d 283 (1969), by approving in footnote 6 (pages 93, 94) regulations, 26 CFR §§ 152.22, 152.23, which limit registration to persons whose dealings in the drug are legal under state laws thereby held that the Marihuana Tax Act applied only to drug dealers selling lawfully under state law so that unlawful dealers did not need to register and pay a tax. The regulations referred to, as the text of the footnote indicates, only limit registration, and hence qualification, for the lower tax imposed on registered dealers. The regulations do not undertake to absolve unregistered dealers from payment of any tax whatsoever. The Marihuana Tax Act, like the Harrison Narcotics Act in 1928, applies to “any person” whether registered as a dealer or not. The difference between registered and unregistered dealers is that the latter must pay a higher tax. The Court pointed this out very clearly in the body of its opinion in Minor wherein at page 90, 90 S.Ct. at page 285 it said:
“Under the Marihuana Tax Act, 26 U.S.C. §§ 4751-4753, every person who sells, deals in, dispenses, or gives away marihuana must register with the Internal Revenue Service and pay a special occupational tax. The Act also imposes a tax on transfers of marihuana, to be paid by the transferee; the rate for those who have registered and paid the occupational tax is $1 per ounce; for those who have not or cannot register the rate is $100 per ounce.”
The petition for rehearing is denied.