Recently, 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 N.C. Drug Tax (known more formally as the Unauthorized Substances Tax) 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. 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. 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.

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 out of $175 million) 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 from this scheme every year, 75 percent which goes to the police departments responsible for reporting the drugs (yes, you read that correctly) and 25 percent 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 $5 million. 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 N.C. 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.

(10) comments

David Collins

Everybody pays any taxes if they are on medications . That is equality in action . Anybody notice that medical insurance industry , private , State and Federal , have quietly cut back on what drugs they will cover . A $20copay turns into a $200copay . All this and they appear to be falling all over themselves to pay for all manner of useless , cheaply made and ridiculously overpriced home medical devices . Note , before you buy the next great thing , read the fine print CAREFULLY . Don’t understand , don’t buy . Get someone that can read and comprehend to explain it to you . Forget any on-line ratings , most are fake , they are there to sell the product .


Who would have thought that folks who have illegal drugs would not want to pay taxes on said drugs? So the illegal drug tax hurts the poor? Get a life!


The point is it is an administrative punishment, in addition to criminal punishment. A relic of " the war on drugs"

And since the poor and minorities tend to get harsher sentences then the wealthy and the white it just adds to the burden....

(Edited by staff.)

David Collins

Perhaps the poor and minorities are the most visible offenders , therefore are first in line for a trip to the grey bar inn . At least they are first in something . That is a start .


Yep, folks in NC are supposed to pay taxes on illegal drugs. A substance tax is an excise tax on controlled substances like marijuana, cocaine, etc.

The state actually has a special program where people can anonymously buy stamps for their illegal drugs and NCDR won’t call the police if you pay the tax.


Not the most visible. The most targeted. ..

(Edited by staff.)

David Collins

Everyone has their own opinion but then why are there so many of them from certain areas . Birds of a feather engaged in flocking ?


Political Power per se has moved up to incompetent government and administration thereof. Money is too easy and it's worth is questionable Cannot eat "Full Faith". Power is the future. Remember the Graduate movie? The future is in plastics did not work out. Move on


Although they sound similar "tax avoidance" and "tax evasion" are radically different. Tax avoidance lowers your tax bill by structuring your transactions so that you reap the largest tax benefits. Tax avoidance is completely legal—and extremely wise.

Tax evasion, on the other hand, is an attempt to reduce your tax liability by deceit, subterfuge, or concealment. Tax evasion is a crime.


This topic is now closed.

Welcome to the discussion.

As a privately owned web site, we reserve the right to edit or remove comments that contain spam, advertising, vulgarity, threats of violence, racism, anti-Semitism, or personal/abusive/condescending attacks on other users or goading them. The same applies to trolling, the use of multiple aliases, or just generally being a jerk. Enforcement of this policy is at the sole discretion of the site administrators and repeat offenders may be blocked or permanently banned without warning.