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IN THE UNITED STATES DISTRICT COURT
Petitioner Christopher F. Padavich seeks a writ of habeas corpus pursuant to 28 U.S.C. § 2254. The parties have filed briefs on the merits of the case, as has amicus curiae, and the matter is ready for ruling. The court denies the petition.
In its order of November 15, 1996, the court discussed the proceedings of petitioner's state court conviction, and that discussion need not be repeated here. Petitioner argues his conviction for possession of marijuana with intent to deliver and for failure to affix a drug tax stamp violate the Double Jeopardy Clause because they occurred after he was assessed a tax for failure to affix a drug tax stamp. See Iowa Code Ch. 453B (1993). Petitioner also argues his trial and appellate counsel rendered ineffective assistance of counsel by not raising the double jeopardy challenge in state court. This court ruled it would be futile for petitioner to pursue his double jeopardy claim in state court and ordered further briefs on the merits of the double jeopardy issue.
Iowa's Drug Tax
The relevant version of Iowa's drug tax stamp act provides as follows:
Iowa Code § 453B.3 (1993). A "dealer" is
Iowa Code § 453B.1(3). Persons who lawfully possess marijuana are not
required to pay the tax or affix stamps. Iowa Code § 453B.6. The tax rate is
$5 per gram of marijuana, or about $140 per ounce. Iowa Code § 453B.7. A
dealer who fails to pay the tax is subject to a penalty in the amount of the tax.
Iowa Code § 453B.12. The department of revenue and finance "shall not reveal
any information obtained from a dealer; nor shall information obtained from a dealer be
used against the dealer in any criminal proceeding, unless the information is
independently obtained, except in connection with a proceeding" under the tax act.
Iowa Code § 453B.10. Tax revenue goes to "the general fund of the
state." Iowa Code § 453B.2.
Iowa Admin. Code § 701-91.2(421A) (1991).
At issue in this case is the Double
Jeopardy Clause protection against multiple punishments for the same offense. See
North Carolina v. Pearce, 395 U.S. 711, 717 (1969). In Department of
Revenue of Montana v. Kurth Ranch, 114 S. Ct. 1937, 1945 (1994), the United States
Supreme Court considered whether Montana's 1987 tax on possession of unlawful drugs had
"punitive characteristics that subject[ed] it to the constraints of the Double
Jeopardy Clause." Montana imposed a tax of the greater of $100 per ounce or 10
percent of the market value on the possession of marijuana. Id. at 1941.
The law required collection of the tax "only after any state or federal fines
or forfeitures ha[d] been satisfied." Id. Tax funds were allocated
"to support 'youth evaluation' and 'chemical abuse' programs and 'to enforce the drug
laws.'" Id. Law enforcement officers were required to report each
person subject to the tax to the department of revenue. Id. n.5. Under
administrative rules, taxpayers had to file a return within 72 hours of their arrest.
Id. at 1941. Officers completed a dangerous drug information report at
the time of arrest, and if the taxpayer refused to sign the report, the officer was
required to file it within 72 hours of arrest. Id. at 1942. The
Supreme Court stated that under the law, "[t]axpayer ha[d] no obligation to file a
return or to pay any tax unless and until he [wa]s arrested." Id.
1In Kurth Ranch, the market value of lower-value "shake" was $200 per pound. Kurth Ranch, 114 S. Ct. at 1943 n.12. The Supreme Court called the $1600 per pound tax "unrivaled" compared to similar taxes on legal goods and services. Id. at 1246 n.17. The dissent pointed out the market value of marijuana "bud" was $2000 per pound. Id. at 1952 n.4 (Rehnquist, C.J., diss.).
a crime were subject to the tax. Id. (footnote omitted). The Court distinguished Montana's tax from a valid federal tax imposing liability on a transferor when a transferee failed to pay a special tax and register before a transfer of marijuana. Id. at n.20 (citing United States v. Sanchez, 340 U.S. 42, 45 (1950)).2 The Court further explained the Montana tax was on forbidden conduct, and consequently it lost any revenue-raising justification because the sovereign imposing the tax could obtain the same revenue-raising objective by increasing the criminal fine for the activity. Id. at 1947. The Court also distinguished cases in which different sovereigns, as opposed to the same sovereign, imposed taxes on unlawful activities. Id. at n.22.
2The law in Sanchez required "every person who imports, manufactures, produces, compounds, sells, deals in, dispenses, prescribes, administers, or gives away marihuana" to pay a special tax of between $1 and $24 and register. Sanchez, 340 U.S. at 43. Transferees were obliged to complete a government-issued order form before a transfer of marijuana. If the transferee paid the special tax and registered, the tax on the transfer was $1 per ounce. If the transferee did not pay the special tax and register, the tax was $100 per ounce. The transferor was liable for the tax if the transferee did not pay the tax and complete an order form. Id. at 44. The Court upheld the $100 tax even though it appeared to be a regulatory and punitive measure. The Court held a collateral regulatory or deterrent purpose was not enough to render a tax invalid, even if the revenue raised "is obviously negligible." Id. The Court also held the tax on transferees was not conditioned on the commission of a crime but rather on transfer of marijuana to someone who had not paid the special tax and registered. Because the transferor's liability was tied to the transferee's failure to pay the tax, liability did not rest on a criminal act. Id. at 45.
Second, the Court found it unusual that the tax was a species of property tax on possession and storage of goods, yet it covered goods the taxpayer neither owned nor possessed when the tax was imposed, and in fact, was a tax on goods the taxpayer never lawfully possessed. Id. at 1948. The Court held the law had attributes indicative of a punitive intent and concluded that "[t]aken as a whole, [Montana's] drug tax is a concoction of anomalies, too far-removed in crucial respects from a standard tax assessment to escape characterization as punishment for the purpose of Double Jeopardy analysis." Id. (footnote omitted).
In light of Kurth Ranch, the Iowa
Supreme Court held Iowa's drug tax law does not constitute punishment for double jeopardy
purposes. State v. Lange, 531 N.W.2d 108, 117 (Iowa 1995). The Iowa
court focused on the two "unusual features" of the Montana law and concluded
Iowa's law has neither feature and therefore is not punishment for double jeopardy
purposes. First, the court pointed out there is no tax liability unless a dealer
possesses at least forty-two and one-half grams of marijuana, therefore someone may
illegally possess marijuana and not be subject to the tax. Id. at 116.
Additionally, the revenue and finance department must assess and collect the tax in the
same manner as all delinquent income taxes upon learning the stamp was required but not
purchased. Id. Therefore, the court reasoned, the tax is "not
conditioned on the commission of a crime [or] exacted only after the taxpayer is
Petitioner and amicus argue the Iowa
drug tax law is, in effect, no different than Montana's, and they argue other courts have
examined laws similar to Iowa's and have found them to be punishment for double jeopardy
purposes. Amicus further argues that in analyzing whether Iowa's drug tax law is
punishment, the court must look at it as a whole and not just determine whether it has the
two features singled out in Kurth Ranch, and amicus argues the Iowa law has
additional punitive features not present in the Montana law. Respondent relies on
the analysis in Lange to support its position that the tax does not implicate the
Double Jeopardy Clause.
Looking at Iowa's drug tax law on the
whole, the court concludes it does not have punitive attributes that subject it to the
Double Jeopardy Clause. Although the Iowa tax and penalty for nonpayment is high,
these factors are not dispositive. In addition, although the Iowa Supreme Court
recognized that a goal of the law "is to deter the sale of controlled substances and
to make law breaking less profitable," and that "the amount of revenue to be
realized [from the tax] is probably negligible," Gallup, 500 N.W.2d at 445,
these factors also are not dispositive of the question whether the tax is punitive for
double jeopardy purposes.
Petitioner's tax assessment was not
punishment for purposes of the Double Jeopardy Clause. Consequently, petitioner's
rights under the Double Jeopardy Clause were not violated when he later was convicted for
possession with intent to deliver marijuana and for failure to affix a drug tax stamp.
Petitioner's remaining arguments are without merit.
RONALD E. LONGSTAFF, Judge
IN THE UNITED STATES DISTRICT COURT
Pursuant to 28 U.S.C. § 2253,
petitioner filed a motion for a certificate of probable cause on December 23, 1997.
Petitioner appeals the decision by this court denying him habeas corpus relief.
Certification of probable cause is not appropriate merely upon a petitioner's
showing of good faith or an absence of frivolity. Barefoot V. Estelle, 463
U.S. 880, 894 (1983). "Instead, the petitioner must make a substantial showing
that a federal right has been denied, which requires a showing that the issues are
debatable among reasonable jurists, a court could resolve the issues differently, or the
issues deserve further proceedings." Flieger V. Delo, 16 F.3d 878,
882-83 (8th Cir.), cert. denied, 115 S. Ct. 355 (1994).
RONALD E. LONGSTAFF, Judge
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