BILL REQ. #:  H-3220.1 

Prefiled 1/5/2006. Read first time 01/09/2006.   Referred to Committee on Criminal Justice & Corrections.

     AN ACT Relating to excise taxation of illegal drugs and alcohol; adding a new chapter to Title 82 RCW; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The purpose of this chapter is to impose an excise tax to generate revenue for state and local law enforcement agencies for use by those agencies to investigate, combat, prevent, and reduce drug crimes, and for the general fund. Nothing in this chapter in any manner provides immunity from criminal prosecution for a person who possesses an illegal substance.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Controlled substance" means a controlled substance as defined in RCW 69.50.101, but does not include a low street-value drug.
     (2) "Dealer" means any of the following:
     (a) A person who actually or constructively possesses more than forty-two and one-half grams of marijuana, seven or more grams of any other unauthorized substance that is sold by weight, or ten or more dosage units of any other unauthorized substance that is not sold by weight; or
     (b) A person who possesses an illicit alcoholic beverage for sale in violation of Title 66 RCW.
     (3) "Illicit alcoholic beverage" means liquor, as defined in RCW 66.04.010, not authorized by the liquor control board. "Illicit alcoholic beverage" includes, but is not limited to, products known as "bootleg liquor," "moonshine," "nontax-paid liquor," and "white liquor."
     (4) "Local law enforcement agency" means a municipal police department or a sheriff's office.
     (5) "Low street-value drug" means any of the following controlled substances:
     (a) A hallucinogenic substance described in RCW 69.50.204;
     (b) A stimulant described in RCW 69.50.204;
     (c) An anabolic steroid as defined in RCW 69.50.208;
     (d) A depressant described in RCW 69.50.210; or
     (e) A controlled substance described in RCW 69.50.212.
     (6) "Marijuana" means all parts of the plant of the genus cannabis, whether growing or not; the seeds of this plant; the resin extracted from any part of this plant; and every compound, salt, derivative, mixture, or preparation of this plant, its seeds, or its resin.
     (7) "Possess" and "possession" include active or constructive possession.
     (8) "State law enforcement agency" means any state agency, force, department, or unit responsible for enforcing criminal laws.
     (9) "Unauthorized substance" means a controlled substance, a low street-value drug, or an illicit alcoholic beverage.

NEW SECTION.  Sec. 3   (1) An excise tax is imposed on unauthorized substances possessed by dealers, at the following rates:
     (a) Forty cents for each gram, or fraction thereof, of harvested marijuana stems and stalks that have been separated from and are not mixed with any other parts of the marijuana plant;
     (b) Three dollars and fifty cents for each gram, or fraction thereof, of marijuana, other than separated stems and stalks taxed under (a) of this subsection;
     (c) Fifty dollars for each gram, or fraction thereof, of cocaine;
     (d) Two hundred dollars for each gram, or fraction thereof, of any other controlled substance or low street-value drug that is sold by weight;
     (e) Fifty dollars for each ten dosage units, or fraction thereof, of any low street-value drug that is not sold by weight; or
     (f) Two hundred dollars for each ten dosage units, or fraction thereof, of any other controlled substance that is not sold by weight.
     (2) A quantity of marijuana or other unauthorized substance is measured by the weight of the substance whether pure, impure, or dilute, or by the number of dosage units in the dealer's possession when the substance is not sold by weight. A quantity of an unauthorized substance is dilute if it consists of a detectable quantity of pure controlled substance and any excipients or fillers.
     (3) An excise tax is imposed on illicit alcoholic beverages possessed by a dealer at the following rates:
     (a) Thirty-one dollars and seventy cents for each gallon, or fraction thereof, of illicit alcoholic beverages sold by the drink; or
     (b) Twelve dollars and eighty cents for each gallon, or fraction thereof, of illicit alcoholic beverages not sold by the drink.

NEW SECTION.  Sec. 4   (1) The tax imposed in this chapter does not apply to a substance in the possession of a dealer who is authorized by law to possess the substance. This exemption applies only during the time the dealer's possession of the substance is authorized by law.
     (2) The tax imposed in this chapter does not apply to the following marijuana:
     (a) Harvested mature marijuana stalks when separated from and not mixed with any other parts of the marijuana plant;
     (b) Fiber or any other product of marijuana stalks described in (a) of this subsection, except resin extracted from the stalks;
     (c) Marijuana seeds that have been sterilized and are incapable of germination; or
     (d) Roots of the marijuana plant.

NEW SECTION.  Sec. 5   (1) The department shall issue stamps to affix to unauthorized substances to indicate payment of the tax required by this chapter. Dealers shall report the taxes payable under this chapter at the time and on the form prescribed by the department. Dealers are not required to give their name, address, social security number, or other identifying information on the form. Upon payment of the tax, the department shall issue stamps in an amount equal to the amount of the tax paid. Taxes may be paid and stamps may be issued either by mail or in person.
     (2) Every local law enforcement agency and every state law enforcement agency must report to the department within forty-eight hours after seizing an unauthorized substance, or making an arrest of an individual in possession of an unauthorized substance, listed in this subsection (2) upon which a stamp has not been affixed. The report must be in the manner required by the department and must include the time and place of the arrest or seizure, the amount, location, and kind of substance, the identification of any individual in possession of the substance and the individual's social security number, and any other information required by the department. The report must be made when the arrest or seizure involves any of the following unauthorized substances upon which a stamp has not been affixed as required by this chapter:
     (a) More than forty-two and one-half grams of marijuana;
     (b) Any illicit alcoholic beverage;
     (c) Seven or more grams of any other unauthorized substance that is sold by weight; or
     (d) Ten or more dosage units of any other unauthorized substance that is not sold by weight.

NEW SECTION.  Sec. 6   The tax imposed by this chapter is payable by any dealer who possesses an unauthorized substance in this state upon which the tax has not been paid as evidenced by a stamp issued by the department. The tax is payable within forty-eight hours after the dealer acquires possession of a nontax-paid unauthorized substance, exclusive of Saturdays, Sundays, and legal holidays of this state, in which case the tax is payable on the next working day. If the tax is not paid within forty-eight hours, the tax will become delinquent and will accrue penalty and interest under chapter 82.32 RCW. Upon payment of the tax, the dealer shall permanently affix the appropriate stamps to the unauthorized substance. Once the tax due on an unauthorized substance has been paid, no additional tax is due under this chapter even though the unauthorized substance may be possessed by other dealers. If a dealer is found in possession of a substance taxable under this chapter that does not have the appropriate tax stamp affixed, it shall be presumed the dealer has been in possession of the substance for longer than forty-eight hours, exclusive of Saturdays, Sundays, and legal holidays of this state.

NEW SECTION.  Sec. 7   An assessment against a dealer who possesses an unauthorized substance to which a stamp has not been affixed as required by this chapter shall be made as provided in this section. The department shall immediately assess tax, applicable penalty, and interest based on any information brought to the attention of the department that a person is liable for unpaid tax under this chapter. The tax shall be assessed in the same manner as any other excise tax assessment under chapter 82.32 RCW, except when the provisions of this chapter specify otherwise. The department shall notify the dealer in writing of the amount of the tax, penalty, and interest due, and demand its immediate payment. The notice of assessment and demand for payment shall be either mailed to the dealer at the dealer's last known address or served on the dealer in person. If the dealer does not pay the tax, penalty, and interest immediately upon receipt of the notice and demand, the department shall collect the assessment, including penalty and interest, under chapter 82.32 RCW. Unless the dealer obtains a stay of collection under RCW 82.32.200, the department shall treat the assessment as a jeopardy assessment and immediately proceed with collection actions.

NEW SECTION.  Sec. 8   Information obtained under this chapter is confidential and, unless independently obtained, may not be used in a criminal prosecution other than a prosecution for a violation of this chapter. Stamps issued under this chapter may not be used in a criminal prosecution other than a prosecution for a violation of this chapter. This section does not prohibit the department from publishing statistics under RCW 82.32.330(3)(e).

NEW SECTION.  Sec. 9   (1) The unauthorized substances tax account is created in the state treasury. All receipts from the tax imposed under this chapter must be deposited in the account. Money in the account may be spent only after appropriation. Expenditures from the account may be used as provided in this section.
     (2) Proceeds from the tax shall be applied first to costs of storing and disposing of the assets seized in payment of the assessment under this chapter, which costs shall be added to and become part of the assessment. From the remaining proceeds, seventy-five percent of the tax proceeds that were collected by assessment shall be distributed to the state or local law enforcement agency that conducted the investigation of a dealer that led to the assessment. These proceeds are to be used by the agency solely for the purpose of investigating, combating, preventing, and reducing drug crimes. If more than one state or local law enforcement agency conducted the investigation, the department shall determine the equitable share for each agency based on the contribution each agency made to the investigation. The department's determination of the equitable share for each agency shall be final, and shall not be subject to review in an administrative or judicial proceeding. After this distribution, the legislature may transfer the balance of tax proceeds to the general fund or appropriate this balance for any purpose.

NEW SECTION.  Sec. 10   The provisions of this chapter shall not be construed to confer any immunity from criminal prosecution or conviction for a violation of chapter 69.50 RCW upon any person who voluntarily pays the tax imposed by this chapter or who otherwise complies with the provisions of this chapter.

NEW SECTION.  Sec. 11   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION.  Sec. 12   This act takes effect July 1, 2006.

NEW SECTION.  Sec. 13   Sections 1 through 12 of this act constitute a new chapter in Title 82 RCW.