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The Marihuana Tax Act of 1937 and Its Ramifications

Posted: May 28, 2021 in Blog

The Marihuana Tax Act of 1937 and Its Ramifications

Cannabis was an ingredient widely used in medicines in the US from the middle of the 19th century until the passage of the Marihuana Tax Act of 1937. This legislation did not make cannabis use illegal as such, but it did enact severe restrictions on consumers, doctors and distributors. Some experts believe that the objective of the Act was to destroy the commercial hemp industry. In this article I will explain what restrictions the Act imposed on cannabis and hemp, what led to its passage, who was responsible for the passage of the Act and how it spearheaded further laws that made cannabis and hemp federally illegal.

By the late 1930s, there was a global movement to prohibit cannabis. There was pressure on US federal government officials to regulate its use. Instead of passing legislation that would prohibit cannabis use outright, the Act was designed to discourage usage by imposing high taxes, severe penalties and strong restrictions. It was a pivotal moment in the establishment of US cannabis policy which ultimately led to federal cannabis prohibition.

Provisions of the Marihuana Tax Act of 1937

Tax Levy

Anyone using cannabis in any form was subject to pay a $1 tax stamp, valid for one year. This included not only consumers, growers and distributors but also researchers, doctors, dentists and veterinarians.

Transfer Tax

This was an additional $24/year transfer tax from buyers to sellers imposed on manufacturers, importers and compounders.

Administrative and Penalty Provisions

Regulation No. 1 subjected users to the possibility of inspections by police, the imposition of sworn statements and the levying of fines for any failure to adhere to the rules, including neglecting to complete the appropriate required forms.

The penalty for evading the payment of the tax was five years in prison, a $2,000 fine or both. In a later version of the legislation, the sale of a joint to a minor was punishable by life in prison.

New Provisions For Prescribing Doctors

Prior to the Act, there was little, if any, regulation of medical cannabis use. It placed an enormous burden on doctors wishing to

prescribe cannabis to their patients. Not only were they forced to purchase the tax stamp, but they were required to submit forms to the Federal Bureau of Narcotics with the name and address of the patient, their medical condition, the recommended dosage of cannabis and the dates on which the medicine was prescribed. Imprisonment and a large fine for both patient and doctor could result if these stringent regulations were not followed.

American Medical Association (AMA) Legal Counsel Advocates For Cannabis Regulation

Dr. William C. Woodward, the AMA legal counsel and one of the country’s foremost authorities on public health, advocated for cannabis regulation over prohibition which was clearly the intention of the Act. He even criticized the name of the legislation as deliberately misleading for both the medical profession and the public. He made a point of using the term “cannabis” rather than “marihuana” when describing the plant and its products. He also felt it necessary to dispel the myth that the medical use of cannabis could lead to cannabis addiction.

Despite Dr. Woodward’s endorsement, for the majority of doctors and other health professionals, growers and users, the Act put an end to cannabis usage in the US. It was viewed as too risky with too high a price to be paid to continue any association with the medicine. Scientific research for medical uses of cannabis was terminated almost immediately.

What Led To The Passage of the Marihuana Tax Act?

A wave of Mexican immigrants crossed the border into the US in the early part of the 20th century, fleeing the political turmoil in their home country. They brought cannabis with them which alarmed groups of citizens and law enforcement officials who blamed them unjustly for perpetrating serious crimes under the influence of the plant. This was racism, plain and simple, as a way for US government officials to tie cannabis use to Mexican immigration, making them scapegoats.

The 1929 Great Depression Plays A Role

The 1929 stock market crash propelled millions of Americans into unemployment and poverty, providing a perfect breeding ground for xenophobia. Mexican immigrants were depicted as a threat, responsible for crime. Fear mongering “patriotic organizations” insinuated that there would be an explosion of interracial marriages. The association of Mexican immigrants with cannabis became known as the Mexican Menace.

Who Was Responsible For The Passage of the Act?

In the 1930s, several US states and some countries banned cannabis. The changing political climate of public sentiment against cannabis use led Harry Anslinger, the first Commissioner of the newly established Federal Bureau of Narcotics (FBN), to implement an anti-cannabis platform. His thinly veiled racism towards Mexican immigrants played a pivotal role in his depiction of cannabis as a “social menace that needed to be brought under control.”

Meanwhile, commercial sales of hemp oil, fiber and seeds had become a booming industry in the US. This was a huge threat to the paper pulp industry which was a monopoly owned by newspaper magnate, William Randolph Hearst, financier Andrew Mellon and the DuPont family. Hearst used his newspapers as a vehicle to amplify melodramatic propaganda about the cannabis plant. He was successful in stoking hysteria by calling it the “murder drug,” claiming that those who smoked it in India would run through the streets, hacking people to pieces.

US Hemp Production Becomes Illegal

Industrial hemp was also subject to taxation by the Act. The end result was that hemp production in the US was no longer financially viable, killing it as a commercial industry.

The Marihuana Tax Act of 1937 was the first step in creating legislation that led to making both hemp and cannabis federally illegal. It was followed by the Boggs Act of 1951 and the Controlled Substances Act of 1970 which still exists today.

Sources:, What is the Marihuana Tax Act of 1937?, Medical Cannabis: History, Pharmacology, And Implications for the Acute Care Setting, Pharmacy & Therapeutics, March 2017

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