If its not legal then how to your perceive its happening?
You're trying to tell me that when a vendor buys from a manufacturer there is no state tax on what they buy?
Exactly. Good boy. 
Full disclosure: The only exception is if the vendor smokes them.
Ray, if there is no tax on the vendor when they buy from the manufacturer then I cannot see how there is a double tax.
I'm still not sure that you have that correct but I'll give you the benefit of the doubt since you are trained, at least somewhat, in this area.
I will tell you that waiting for years before you go after this type of tax is, in my view, not ethical, or right, no matter how legal it is.