Department of Revenue of Mont. v. Kurth Ranch, 511 U.S. 767, 7 (1994)

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Cite as: 511 U. S. 767 (1994)

Opinion of the Court

The third proceeding involved the assessment of the new tax on dangerous drugs. Despite difficulties the DOR had in applying the Act for the first time, it ultimately attempted to collect almost $900,000 in taxes on marijuana plants, harvested marijuana, hash tar and hash oil, interest, and penalties.10 The Kurths contested the assessments in administrative proceedings. Those proceedings were automatically stayed in September 1988, however, when the Kurths initiated the fourth legal proceeding triggered by the raid on their farm: a petition for bankruptcy under Chapter 11 of the Bankruptcy Code. See 11 U. S. C. 362(a).

In the bankruptcy proceedings, the Kurths objected to the DOR's proof of claim for unpaid drug taxes and challenged the constitutionality of the Montana tax. After a trial, the Bankruptcy Court held most of the assessment invalid as a matter of state law,11 but concluded that an assessment of $181,000 on 1,811 ounces of harvested marijuana was authorized by the Act. It held that assessment invalid under the Federal Constitution.

Relying primarily on United States v. Halper, 490 U. S. 435 (1989), the Bankruptcy Court decided that the assessment constituted a form of double jeopardy. The court rejected the State's argument that the tax was not a penalty because it was designed to recover law enforcement costs; as the court noted, the DOR "failed to introduce one scintilla of evidence as to cost of the above government programs or costs of law enforcement incurred to combat illegal drug

10 The precise figure appears to be $894,940.99. 145 B. R., at 68. The Court of Appeals' figure of "nearly $865,000," In re Kurth Ranch, 986 F. 2d 1308, 1310 (CA9 1993), apparently failed to take account of the $30,000 collected before computation of the final assessment. 145 B. R., at 68.

11 Specifically, the Bankruptcy Court held that the assessments on the live marijuana plants and the marijuana oil were "arbitrary" and "lacked any basis in fact." Id., at 69.

773

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