This sort of cash-grab seems to vary from city to city. The strange thing is that Chiang Mai tends to be more "by the book" than the rest of the country as it seemed to be a pet project for the new Prime Minister. It is really the only city that a lot of various "laws" are actually enforced such as the silly 2-5pm alcohol ban. This law technically exists nationwide, but this is the only city i have ever been in that it is widely enforced.
That being the case i was surprised to see so much police theft taking place. On the flip side it does make things like not having a license a lot easier. :P