With nearly half of U.S. states having legalized some form of whole plant marijuana — recreational or medical — pot production is up. Way up. Despite the plant’s federal illegality, such dramatic changes in the production levels and trade dynamics of the United States are having a significant effect on the pot production and economics of trading partners like Mexico.
For decades, it has been understood that both Canada and Mexico imported literally hundreds of tons of cannabis into the U.S., primarily for the recreational black market. These imports, however, are down. Why?
American Pot Considered Best
Increased pot production in the U.S. is part of the equation; the superior quality of American herb is the other. To illustrate this shift, consider that well-heeled cannabis consumers in Mexico are beginning to request American strains from states like Colorado and California. Mexican cartels, acclimated to the flow of product from the south to the north, are actually beginning to import cannabis (and selling it for about four times the price of their regular stock).
It is estimated that, prior to the current wave of American legalization, only about 15-20 percent of the cannabis consumed in the U.S. was domestic. Today, according to the United Nations, the United States produces a third of the marijuana it consumes. In 2014, customs authorities in California seized 132,000 pounds of illegal cannabis entering the country. In 2009, only five years earlier, the amount seized was double. Cannabis from major production states like California and Colorado is displacing much of the pot that used to flow from Mexico.
To compensate for the lack of demand by American consumers for their product, Mexican cartels have increased production of heroin and methamphetamines. In fact, according to the Drug Enforcement Administration, nearly half of the heroin consumed in the U.S. comes from Mexico, a number that was only 14 percent as recently as 2009.
Mexican Farmers Abandoning Cannabis
In Sinaloa, a center of Mexican pot production, farmers are ripping out cannabis and planting green beans and tomatoes. A government program that subsidizes such crops has seen participation increase by 30 percent since 2013.
“In our town, [cannabis production] dropped because it’s no longer a profitable business,”
said Mario Valenzuela, mayor of Badiraguato, Mexico.
If California approves fully legal, regulated recreational marijuana in November 2016, Mexico will face even larger volumes of domestic herb against which it must fight for customers. With such a large amount of high-grade cannabis being sold in legitimate dispensaries and retail shops — the safe, legal way Americans like to shop for things — will Mexican cartels give up on cannabis imports?
Cartels can obviously continue to focus on hard drugs like heroin and meth and other lines of business, such as human slavery and prostitution. A lack of profits from cannabis production and sales certainly won’t put Mexican cartels out of business. However, the billions of dollars put into the hands of violent organized crime is now shifting to legal entrepreneurs, cultivators, and shop owners in states like Colorado, Oregon, Washington, and California. Along with this shift, tens of millions of tax dollars are entering municipal, county, and state coffers instead of fueling drug war violence and terrorism south of the border.
California’s Influence on Mexico
Some in Mexico are predicting that the effect of full legalization in California would be so dramatic as to force Mexico to also legalize the herb.
“If California legalizes, you can’t politically sustain prohibition in Mexico,”
said Jorge Javier Romero, president of the CUPIHD drug policy group in Mexico City.
As more states legalize at least medical cannabis, demand for high-quality domestic product will continue to surge, further marginalizing profits on cheap Mexican herb. While states like Ohio are planning closed markets that would, by law, rely only on cannabis produced in-state, full legalization in open-market states like California, Oregon, and Colorado may cause a serious and permanent shift in the profit centers of Mexican organized crime.
With full legalization inevitable in states like California and possible even at the federal level within the decade, Mexico’s drug cartels will continue to focus on highly addictive drugs, like heroin, while leveraging their other lines of business, like prostitution. Regardless of the effect on Mexico and its many violent cartels, the American economy will enjoy a rare boost that actually helps the little guy, not Wall Street.
photo credit: thecommonsenseshow.com