I don't know if the feds should be able to tax something that is illegal, but states can and have done so. When I was in the Air Force I received training at Keesler AFB in Biloxi, MS in late '59 and early '60. Mississippi was a dry state in those days. They left it up to the counties whether they wanted to sell liquor or not, but it still was illegal. The highest paid public employee in the country at that time was the guy who collected the taxes on the illegal booze. He worked on commission, which is why he made so much money. I don't think that condition exists any longer. I believe that it is still dry by counties, but no longer illegal by state lew.