oh, that's an old trick. you just don't tax it at the point of sale-- you issue tax stamps. (sorry-- tennessee was the state i was thinking of, though that blurb also links to an article about a similar scheme in indiana.)

just because it's illegal to possess something doesn't mean it can't also be separately illegal to possess it without having paid the proper tax, because laws don't have to, you know, make sense. (and apparently, like civil forfeiture, taxation is magically "not punishment," so it can come on top of whatever fines or sentence you might get-- or even be assessed if you're acquitted. it is a thing of beauty.)