I've said in another thread somewhere that I think he goes into fight drive over his tug. I've had him for 3 weeks, and I'm not sure what the previous owner taught him. I've been playing tug in prey with some big strong dogs over the years, my last American Bulldog, 2 Pitbulls, 2 Great Dane's, a Rottweiler, a Bull Mastiff, and even a Norwegian Elkhound. Usually they pull, and they thrash a bit, jerk backwards, their eyes close slighly, they look more relaxed, low, long deep growls. This guy on the other hand... His eyes are WIDE open, his body trembles, he's super tense, and intense, he thrashes violently, and his growling is higher pitched and shorter. Same body language you would see in a dog fight. I don't get the feeling he's having fun. Holding the tug still makes him think he's wearing me out and he tries harder. He will let go if I grab the tug with my right hand and his collar with my left hand. This is so he physically cant pull it because I'm holding him, i pull the collar towards his ears and calmly say "drop it" over and over. After 20 seconds or so he relaxes his grip a bit, then his jaw opens and closes like he's trying to let go but cant, then it finally comes out. He has never ONCE let go because he was bored, or distracted. It's a whole different issue for another day.

It just doesn't make a great reward for marker training considering.

I forgot to mention, there is another way to get him to drop it. Let him win. He'll drop it instantly and dare me to pick it up. I can put him in a sit/stay with my hand towards his face, and slide it away with my foot so I can safely grab it. I haven't had him long and I don't like the dominance that goes along with letting him win.

I've personally seen a dog that lost at the Schutzhund Nationals because it refused to out. The dog was shocked with cattle prods, choked, beat with a leather gauntlet, hung, etc, etc. This dog LOVED a serious fight. I've always said you don't pick a fight with a dog that loves to fight.
The dog was sold to someone at the club I belonged to. The TD/helper had the dog on a sleeve for almost 20 mins. No corrections, no commands. They just stood there. When the dog finally outed it was rewarded with another bite.
It progressed a bit at a time but withing a few weeks the dog was outing clean.
Past experiences may hang in there a while but there is no reason a dog can't relearn.

 Quote: John Stowe

This is so he physically cant pull it because I'm holding him, i pull the collar towards his ears and calmly say "drop it" over and over. After 20 seconds or so he relaxes his grip a bit, then his jaw opens and closes like he's trying to let go but cant, then it finally comes out. He has never ONCE let go because he was bored, or distracted. It's a whole different issue for another day.

If the dog likes to tug and you don't teach him rules for tug you're going to have a fight on your hands eventually.

I wouldn't repeat any command. Just freeze the tug until he lets go. He will let go eventually.

Maybe all tug objects should be put up for awhile?

Maybe teach a retrieve with a deliver to hand to establish a pattern of giving objects to you and lessen his feelings of possession?

Just thinking out loud here.

I have a fight on my hands now! I'm taking a break from it until I correct some of his other more urgent behaviors. He's been improving very very quickly though.

I may be way off base but I personally wouldn't say "drop it" over and over, that's just teaching him he can ignore the command. I'd say it once, then not let go until he releases it, then praise the heck out of him for releasing (carefully hiding any frustration on your part). Just remember, there is no magic bullet all of this stuff takes time.