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Cannabis Law

The Marihuana Tax Act of 1937

The Marihuana Tax Act of 1937 was the first major piece of federal legislation to regulate marijuana. 

The act ensured that marijuana cultivation remained illegal throughout most of the country for decades after its passage, as it served to criminalize growing or selling any plant without paying taxes or following other regulations set down by law. 

It is considered one of the most important pieces of legislation in US history when it comes to drug policy.

Before this act was passed, Americans regularly used marijuana for insomnia, inflammation, migraines, and stomach aches. 

There was no such thing as regulations until the early 20th century. That would soon change with the Pure Food and Drug Act’s implementation that was signed into law by President Theodore Roosevelt on June 30, 1906. The intentions were to ensure accurate labeling and to improve the health and safety of food. However, it helped lay the groundwork for a series of prohibitions leading up to the Marijuana Tax Act. 

What is the Marihuana Tax Act?

On August 2, 1937, the United States enacted the Marijuana Tax Act (also known as H.R. 6385). 

It was drafted by Harry Anslinger the head of the Federal Bureau of Narcotics (FBN) and an infamous anti-cannabis prohibitionist.

Some say that the tax act was brought about since the hemp industry was threatening traditional textile and paper industries. Hemp was a cheap substitute for paper gulp which was used for newspaper production, and it could also be used to make clothing and fabrics. Andrew Mellon, Randolph Hearst, and The Du Pont family found hemp as a threat due to the invested interest in the newspaper industry.  

The tax act implemented a host of taxes, restrictions, and regulations that made it almost impossible to purchase or sell weed. 

In the beginning, the act was solely focused on taxation and did not criminalize the use or possession of marijuana. 

The Marihuana Tax Act was redrafted as H.R. 6906 and remained in effect until 1970. 

What did the Marihuana Tax Act do?

The act levied a tax equaling roughly 1 dollar per ounce on all cultivators, producers, and distributors of cannabis. 

This law also required that all forms of cannabis be registered with the government – including hemp.  

Under the act, selling marijuana is illegal unless there is a written order of transferee between the buyer and seller. Also, there is a transfer tax to be paid upon transferring of marijuana from the buyer to seller. There is also an order form that must be issued, and it must carry the name and address of both the buyer and the seller, as well as the amount of marijuana to be purchased.

When the act went into law on October 1, 1937, arrests soon followed.  

Moses Baca was the first victim of the federal government’s war on drugs. He was arrested for the possession of quarter-pound marijuana in a drawer inside his rooming house. 

Samuel Caldwell was arrested for dealing marijuana. 

Both Baca and Caldwell were the first people to be convicted for not paying a marijuana tax. Baca was sentenced to 18 months and Caldwell got 4 years. 

The creation of the tax act also legitimized the use of the term marijuana as a label for hemp and cannabis plants and products in the US and around the world

Why was it repealed?

In 1967 the Commission on Law Enforcement and Administration of Justice stated,

“The Act raises an insignificant amount of revenue and exposes an insignificant number of marijuana transactions to public view, since only a handful of people are registered under the Act. It has become, in effect, solely a criminal law, imposing sanctions upon persons who sell, acquire, or possess marijuana.”

In 1970 Congress repealed the act stating it was unconstitutional. This was brought on by the ruling from the 1969 case Leary v. United States which was heard by the Supreme Court. It was determined that the tax act was a violation of the Fifth Amendment since a person seeking the tax stamp would have to incriminate themselves.   

The Marihuana Tax Act of 1937 was created to slow the hemp industry down and was found to be unconstitutional and seeped in racism. While it may seem like a different world, there are parallels between the past and present we should all take note of. With more understanding comes less fear-based legislation that restricts freedom without any real scientific evidence or facts behind them. 

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