The Marihuana Tax Act of 1937: How Federal Prohibition Began

By James Buddsey · Updated October 16, 2026

The Marihuana Tax Act of 1937 was the first federal law to restrict cannabis nationwide: signed by President Franklin D. Roosevelt on August 2, 1937 and effective October 1, 1937, it did not ban marijuana outright but required everyone who handled it to register and pay a tax, with penalties of up to $2,000 and five years in prison. In practice the paperwork and taxes made legal trade almost impossible. The Supreme Court gutted the law in 1969, and Congress replaced it with the Controlled Substances Act in 1970.

This site marked the law’s 75th anniversary in 2012. The anniversary that matters now is closer to its 90th, and the law it created still shapes cannabis policy: the idea that marijuana belongs in the same federal box as heroin started here. This is how the 1937 Act came about, what it actually said, and what replaced it. For the broader timeline, see our history of marijuana in America.

The Marihuana Tax Act at a Glance

Why Congress Used a Tax Instead of a Ban

In 1937 Congress did not believe it had clear constitutional power to ban a plant that people grew and used within one state. It did have the power to tax. The model was the Harrison Narcotics Tax Act of 1914, which had controlled opium and coca products through registration and taxes rather than a direct ban.

So the Marihuana Tax Act made cannabis legal on paper but surrounded it with requirements. Anyone who sold, dispensed or gave away marijuana had to register with the Internal Revenue Service and pay an annual occupational tax. Every transfer required a written order form carrying the names and addresses of both buyer and seller, with one copy kept by the IRS and all copies open to federal and state police, according to USLegal’s summary of the statute. A transfer to a registered buyer cost $1 an ounce. A transfer to someone unregistered cost $100 an ounce, a punishing sum in the middle of the Depression.

The penalties for getting any of that wrong, up to $2,000 and five years, were the real point. Doctors and pharmacists could still prescribe cannabis, but most stopped rather than deal with the forms and the risk.

Harry Anslinger and the Campaign for the Law

The Act’s chief promoter was Harry J. Anslinger, the first commissioner of the Federal Bureau of Narcotics, who served from August 1930 to August 1962, an unprecedented 32 years, according to his biography. Anslinger told Congress that marijuana caused violent crime and insanity, and he kept a file of lurid police stories to prove it. The best known, the 1933 Victor Licata axe murders in Florida, was later attributed by researchers to severe mental illness diagnosed long before, not cannabis. Anslinger also used openly racist language about marijuana users, as documented in his biography.

The campaign drew on fear of Mexican immigrants, who had arrived in large numbers during the Mexican Revolution of the 1910s and were associated with smoking “marihuana,” the Spanish spelling that gave the law its name. By the mid-1930s every state regulated cannabis in some form, and 35 states had adopted the Uniform State Narcotic Drug Act, according to the legal history of cannabis in the United States. Films such as Reefer Madness (1936) and magazine features carried the same message to the public.

Who Opposed It: The American Medical Association

The most important opponent was the medical profession. Dr. William C. Woodward, legislative counsel for the American Medical Association, testified against the bill. The AMA argued that it would burden doctors and pharmacists, that the evidence of harm had not been presented, and that if cannabis needed control, it could be added to the existing Harrison Act, according to the record of the hearings. Congress passed the bill anyway.

What About Hearst and DuPont?

A popular theory holds that newspaper owner William Randolph Hearst, Treasury Secretary Andrew Mellon and the DuPont company pushed the law to kill hemp as a competitor to wood pulp paper and synthetic fibers. Hearst’s papers did run sensational anti-marijuana stories. But the evidence of a coordinated industrial plot is thin, and DuPont has said nylon was developed to compete with silk and rayon, not hemp, as the Act’s history notes. Most historians put more weight on Anslinger’s bureau, racial politics and the moral panic of the era. Hemp did not disappear in 1937, either: during World War II the federal government urged farmers to grow it for the war effort, and commercial hemp was still grown in Wisconsin until 1957, according to the legal history of cannabis in the U.S.

The First Arrests

Enforcement began almost immediately. Shortly after the law took effect, Denver police and federal agents arrested Moses Baca for possession and Samuel Caldwell for selling. Baca received 18 months and Caldwell four years in Leavenworth federal prison, according to the history of the Act and the Living New Deal. They were the first people convicted under the federal law.

Pushback: The La Guardia Committee

New York Mayor Fiorello La Guardia appointed a commission in 1938 to study marijuana in the city. Its 1944 report found little support for Anslinger’s claims about addiction, violent crime and marijuana as a gateway to other drugs. Anslinger attacked the report, and federal policy did not change. Instead it got harsher: according to the legal history of cannabis in the U.S., the Boggs Act of 1951 added mandatory minimum sentences for drug offenses, and the Narcotics Control Act of 1956 raised them again.

How the Tax Act Ended: Leary v. United States

The law’s design contained its own flaw. To comply, a person had to register and pay a tax on marijuana, which meant admitting to activity that was a crime under many state laws. Psychologist Timothy Leary, arrested on December 22, 1965 at the international bridge in Laredo, Texas, after customs inspectors found marijuana as his party returned from Mexico, challenged his conviction on that ground. In Leary v. United States, decided May 19, 1969, the Supreme Court unanimously agreed that the Act’s requirements violated the Fifth Amendment privilege against self-incrimination.

Congress responded with the Comprehensive Drug Abuse Prevention and Control Act of 1970, whose Title II is the Controlled Substances Act. It repealed the 1937 Act and placed marijuana in Schedule I, the category for drugs with a high potential for abuse and no accepted medical use. Prohibition was no longer a tax; it was a direct federal ban. That is the start of the modern war on drugs.

Where Federal Law Stands in 2026

Eighty-nine years after the Tax Act, federal law is finally shifting. In April 2026 a Justice Department and DEA final order moved FDA-approved marijuana products and marijuana held under a state medical marijuana license to Schedule III. Adult-use and unlicensed marijuana remain in Schedule I. A DEA hearing on moving all marijuana to Schedule III ran from June 29 to July 15, 2026, and the proceeding was stayed on September 29, 2026, with no decision as of mid-October. Our federal marijuana law guide tracks the details, and our cannabis laws hub covers every state.

Marihuana Tax Act FAQ

For adults 21+ in legal states. General information, not legal advice.