Frequently in Henderson City Council and Council committee discussion the use of Federal Drug Asset Forfeiture assets is discussed by members of City Government.
There are three types of drug asset forfeiture funds that are available.
Federal Drug Asset Forfeiture funds are seized as part of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. These funds have restrictions placed upon them such that the funds may not supplant general funds and must be used for direct law enforcement activities.
There are also State Drug and Crime Asset Forfeiture funds available as part of the North Carolina RICO statutes. These funds have restrictions against supplanting similar to those of federal drug asset forfeiture funds.
Also in existence in North Carolina is a State Unauthorized Substance Tax. This tax is levied by the state Department of Revenue.
Essentially, if a suspect has a significant quantity of drugs, he or she must pay a tax to the state for the possession of the substance. Possession without a tax stamp makes their property subject to seizure.
The process is described here.
The fund mandates that the money be returned to law enforcement, and there is no known restriction given on its use.
This report by the Reason Foundation explains in detail the evolution of the taxation by both the federal government and state governments of illegal substances.