The Marihuana Tax Act of 1937

On August 2, 1937, the Marihuana Tax Act of 1937 was passed essentially rendering marijuana and all its by-products illegal. An excerpt from the article:

"The Marijuana Tax Act of 1937: Regulation or Prohibition?
Most people think of the Marihuana Tax Act as the law that began prohibition on cannabis in the United States. Technically, however, the act gave the federal government the power to regulate marijuana.

There was a legal strategy behind regulation. Unlike outright prohibiting marijuana, placing a tax on it was more difficult to challenge in court. And from that perspective, the strategy worked. The Marihuana Tax Act stood from 1937 until 1969.

But regulation and taxation; that sounds a lot like arguments made today in favor of federally legalizing cannabis. So what did the act really do? And why do people consider it to be the birth of cannabis prohibition in the United States?

On The Eve of the Marihuana Tax Act of 1937…
The truth is that the United States federal government began regulating and restricting the sale of cannabis as a drug more than 30 years ahead of the Tax Act, starting in 1906. Local laws had regulated cannabis as far back as 1860.

But by the mid-1930s, the popularity of cannabis was on the rise. On top of that, industrial hemp production was experiencing something of a resurgence.

The hemp point is worth mentioning because of a popular theory about the Tax Act. This theory holds that the Tax Act was an effort to subvert the reemergence of the hemp industry, orchestrated at the highest levels by some of America’s most prominent businessmen.

So let’s introduce a few characters into the story. Enter Andrew Mellon, William Randolph Hearst, and the DuPont family. Each had reason to fear competition from the burgeoning hemp industry and financial incentive to halt its expansion.

Hearst was a logging and timber tycoon. Hemp was quickly becoming a much cheaper substitute for paper pulp, especially during the Great Depression.

The DuPont family had just developed nylon, a fiber in direct competition with hemp-based textiles. (To this day, the DuPont family denies this connection. They say they were up against silk and rayon, not hemp.)

And Andrew Mellon was at the time the wealthiest individual in the US. He also happened to be Secretary of the Treasury and have extensive investments in DuPont.

So that was the situation leading up to the Marihuana Tax Act of 1937. It was one in which powerful forces appeared in league to make sure that if marijuana was going to be a cash crop of the future, the wealthy had better get their cut. Sound familiar?

What The Marihuana Tax Act of 1937 Did and Didn’t Do
The Tax Act wasn’t a straight-up prohibition on marijuana. What it did was impose a bevy of exorbitant taxes, regulations and restrictions on the commerce in marijuana from top to bottom.

It takes only a few minutes to read through the Marihuana Tax Act, which spans just six pages. But here’s the tl;dr version.

SEC. 2. (a) Every person who imports, manufactures, produces, compounds, sells, deals in, dispenses, prescribes, administers, or gives away marihuana shall […] pay the following special taxes respectively:

What follows is a five-item list of special costs for anyone and everyone involved with marijuana. And it’s not just importers, growers, manufacturers, producers. Physicians, dentists, vets, and other healthcare professionals, who had up to that point been pioneering the study and use of cannabis as medicine, now had to pay up.

The problem was that these special taxes were so high and so comprehensive, with so few exemptions, that most of the people involved in the commerce of cannabis would not be able to pay them. And if you didn’t pay your weed taxes, the Marihuana Tax Act made you a criminal.

SEC. 4. (a) It shall be unlawful for any person required to register and pay the special tax under the provisions of section 2 to import, manufacture, produce, compound, sell, deal in, dispense, distribute, prescribe, administer, or give away marihuana without having so registered and paid such tax."