In Tennessee, you still have to pay tax on drugs, despite the fact that it’s illegal to buy the drugs:
The so-called “crack tax” applies to controlled substances like marijuana and cocaine, and also illicit alcoholic beverages like moonshine. It allows someone to anonymously purchase stamps in person from the Department of Revenue based on the type and amount of the substance ($3.50 for a gram of marijuana, $50 for a gram of cocaine, etc.) with the understanding that doing so cannot be used against them in a criminal court. Posessing drugs is still illegal — the tax works completely outside the criminal justice system. A stamp cannot provide immunity from criminal prosecution, and a conviction of possession isn’t required for the Department of Revenue to assess the penalties.
The penalty for not having a stamp can exceed 10 times the original cost — and the Department of Revenue concedes that the tax was instituted with the expectation that most dealers won’t buy the stamp. “Dealers can do it either way,” says Assistant Commissioner for Operations Sam Chessor. “But in reality, the payoff for us is going to be on the back end, not the front end. “