United States v. Sanchez

340 U.S. 42 (1950)

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Nature of the Case

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Facts

In enacting the Marihuana Tax Act, Congress had two objectives: 'First, the development of a plan of taxation which will raise revenue and at the same time render extremely difficult the acquisition of marihuana by persons who desire it for illicit uses and, second, the development of an adequate means of publicizing dealings in marihuana in order to tax and control the traffic effectively.' The Code imposes a special tax ranging from $1 to $24 on 'every person who imports, manufactures, produces, compounds, sells, deals in, dispenses, prescribes, administers, or gives away marihuana.' For purposes of administration, §3231 requires such persons to register at the time of the payment of the tax with the Collector of the District in which their businesses are located. The Code then makes it unlawful for any person to transfer marihuana except in pursuance of a written order of the transferee on a blank form issued by the Secretary of the Treasury. § 2591. Section 2590 requires the transferee at the time he applies for the order form to pay a tax on such transfer of $1 per ounce or fraction thereof if he has paid the special tax and registered, § 2590 (a) (1), or $100 per ounce or fraction thereof if he has not paid the special tax and registered. § 2590 (a) (2). The transferor is also made liable for the tax so imposed, in the event the transfer is made without an order form and without the payment of the tax by the transferee. § 2590 (b). Defendants, in this case, are transferors. P brought suit to recover taxes and interest due under the Act. The district court granted Ds' motion to dismiss, holding that the tax was unconstitutional in that it levied a penalty, not a tax.