“Marihuana” – as was the preferred spelling at the time – was deemed a controllable substance, on par with alcohol and cocaine, as early as the 1906, when the Food and Drug Act put conditions its sale. As with dangerous medicines and cigarettes, marijuana would have to be sold with clear warning labels. Legislators argued for its prohibition first on grounds that addicts would switch to it from the outlawed narcotics like cocaine, and then that the drug had habit-forming qualities. Banning the drug outright would have sparked a large fight nobody wanted, so Congress came up with a backdoor way of controlling the substance.

On this day, August 2, in 1937, Congress passed the Marihuana Tax of 1937. On its face it was a simple levy of one dollar on buyers, sellers, importers, growers, users and just about anyone else who handles marijuana in any way. But the meat of the act was in its administrative addendum.

The act called for strict record-keeping procedures on the growth, distribution and selling of marijuana, down to the end user. Doctors prescribing the drug had to report in sworn affidavits to the Federal Bureau of Narcotics the name and address of the patient, as well as their condition and the dosage prescribed. Given such broad Treasury Department oversight, and a stiff penalty for evasion ($2,000 and five years imprisonment), most marijuana handlers chose to exit the business.