90-1595 - Illegal Drug Stamp





Petitioner, : FINDINGS OF FACT,







Respondent. :



This matter came before the Utah State Tax Commission for a formal hearing on XXXXX. Paul F. Iwasaki, Presiding Officer, heard the matter for and on behalf of the Commission. Present and representing the Petitioner was XXXXX, Attorney at Law. Present and representing the Respondent was XXXXX, Assistant Attorney General.

Based upon the testimony and evidence presented at the hearing, the Tax Commission hereby makes its:


1. The tax in question is the illegal drug stamp tax.

2. The date in question is XXXXX.

3. On the above mentioned date, the Petitioner and two other individuals went to the XXXXX in XXXXX, Utah, to purchase marijuana from two other individuals. Unbeknownst to the trio, the two individuals from whom the marijuana was being purchased were undercover police officers.

4. Prior to their arrival at the hotel, the Petitioner gave $$$$$ to one of his colleagues. That individual was to go up into the hotel room and consummate the purchase. A short time later the Petitioner joined the others in the hotel room.

5. The agreement made with the undercover officers was that the Petitioner and his friends were to purchase XXXXX pounds of marijuana for $$$$$. The undercover officers were given the money and while they counted out the money, the Petitioner stood by the suitcase of marijuana and at one point picked up one of the bags of marijuana to examine it.

6. Prior to the transaction being consummated, one of the Petitioner's friends left the hotel to get yet another party who was to purchase another XXXXX pounds of marijuana for $$$$$. The arrangement was that the Petitioner was to leave with the marijuana after the transaction had been finalized.

7. Prior to the actual finalization and transfer of the marijuana, the Petitioner was placed under arrest by the undercover officers and removed from the scene.

8. Approximately one half of an hour later, the Petitioner's friend returned and purchased what he believed to be a separate XXXXX pounds of marijuana for $$$$$. Unbeknownst to the Petitioner or his friends, the undercover officers only had XXXXX pounds of marijuana total. Thus, the marijuana which was "sold" to the Petitioner was the same marijuana which was "sold" to his friend at the later time.

9. No drug stamps were affixed to the marijuana.

10. A tax deficiency in the amount of $$$$$ and a penalty in an equal amount were assessed against the Petitioner for having failed to affix the required drug stamps to the marijuana.

11. The Petitioner's friend was also assessed a tax deficiency in the amount of $$$$$ total for the failure to affix the required drug stamps to the marijuana. That individual settled the tax deficiency with the Collection Division in the amount of $$$$$.

12. As a result of the transaction of XXXXX, the Petitioner entered a plea of guilty to Possession of a Controlled Substance, a Class A Misdemeanor, in the Second Judicial Circuit Court.


A tax of $$$$$ per gram of XXXXX is imposed pursuant to the Illegal Drug Stamp Tax Act. (Utah Code Ann. 59-19-103.)

The evidence of tax paid is a stamp affixed to the controlled substance. (Utah Code Ann. 59-19-104.)

Failure to affix a stamp shall result in the assessment of a tax plus a 100% civil penalty. (Utah Code Ann. 59-19-106.)

A dealer may not possess any marijuana or controlled substance upon which a tax is imposed unless a tax has been paid on the marijuana or other controlled substance as evidenced by stamp or other official indicia. (Utah Code Ann. 59-19-104.)

"Dealer" means a person who, in violation of Utah law, manufactures, produces, ships, transports, or imports into Utah or in any manner acquires or possesses more than 42 1/2 grams of marijuana. (Utah Code Ann. 59-19-102.)


In the present case, the two issues to be decided by the Commission are: (1) under the facts of this case, was the Petitioner a "dealer" within the meaning of the Illegal Drug Stamp Tax Act; and (2) was the drug stamp tax deficiency properly assessed against the Petitioner after having already been assessed against another party?

Taking the issues in reverse order, the Tax Commission finds that a drug stamp tax deficiency may be assessed against any individual who unlawfully comes into possession of marijuana or other controlled substance regardless of how many others may have also been similarly assessed so long as the tax remains unpaid. Thus, in the present case, the fact that a party other than the Petitioner who also came into possession of the same marijuana which was sold to the Petitioner was assessed and paid a drug stamp tax deficiency does not bar assessment against the Petitioner.

Turning next to the first issue, the Tax Commission finds that under the facts of the present case, the Petitioner was a "dealer" within the meaning of the Illegal Drug Stamp Tax Act in that he unlawfully possessed more than XXXXX grams of marijuana.

Critical to the finding that the Petitioner unlawfully possessed the marijuana is the fact that the Petitioner entered a plea of XXXXX to the charge of Unlawful Possession of a Controlled Substance, a Class A Misdemeanor. By doing so, the Petitioner admitted each and every element of the offense, one of which was the fact that he possessed the controlled substance in question.

The Petitioner argued that his plea of XXXXX to the Unlawful Possession of a Controlled Substance charge was entered not because he was actually guilty of the offense, but that he entered the plea to avoid the risk of being prosecuted and convicted for a greater offense. Therefore, the Petitioner argued, the guilty plea should not be used against him as an admission for purposes of this Administrative proceeding.

The record of the proceeding before the Second Circuit Court wherein the Petitioner entered his plea of XXXXX does not support the Petitioner's claim. The tape recording made of that proceeding shows that no mention was made of the Petitioner's desire to maintain his XXXXX while pleading XXXXX to avoid a possible conviction on a greater offense.

Therefore, the Petitioner's plea must be considered as having been made knowingly and voluntarily with full knowledge of the possible consequences that would flow therefrom.

Based upon the foregoing, the Tax Commission affirms the determination of the Collection Division's assessment against the Petitioner for tax and penalties as applied pursuant to the Illegal Drug Stamp Tax Act. It is so ordered.

DATED this 13 day of March, 1991.


R. H. Hansen Roger O. Tew

Chairman Commissioner


Joe B. Pacheco G. Blaine Davis

Commissioner Commissioner