Final answer:
The statement is true; taxation and regulation provide incentives for law enforcement to deter illegal drug trade, whereas prohibition creates challenges for policing and encourages organized crime.
Step-by-step explanation:
The claim that an illicit market is easier to maintain under prohibition than under the tax code, because taxes create incentives for law enforcement and individuals to combat illegal drug trade, is True. Taxation and regulation of substances provide not only a source of revenue but also an incentive for law enforcement to ensure that taxes are collected, which can deter illegal trade. In contrast, during prohibition, law enforcement may lack the incentive to police activities rigorously, and this was evident during the era of the Volstead Act, where enforcing prohibition overwhelmed the police and led to corruption. Organized crime capitalized on the high demand and profitability of illegal alcohol, leading to increased criminal activity and wealth for gangsters like Al Capone.
After Prohibition ended and alcohol became regulated and taxed, crime syndicates shifted back to other illicit activities, such as drugs. In modern times, the legalization of drugs, such as marijuana in some states, has shown that regulation can decrease the incentive for illegal markets, as tax revenues are realized and law enforcement can focus on other areas.