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Legalization is Crushing Cartel Profits

Legalization is Crushing Cartel Profits

A new analysis suggests that marijuana seizures on the U.S.-Mexico border are decreasing, which could be an indication that state legalization is lessening the demand for illegally trafficked product.

Data was gathered from U.S. Customs and Border Protection (CBP), as well news reports regarding drug seizures, and compiled and analyzed by Logan Freedman. “A majority of these drug arrests are going to be large quantities of drugs,” Freedman said.

“So if someone was captured in, say New York City with under an ounce of marijuana, it’s not necessarily going to show up in this report, because it’s going to be misdemeanor crime. This is going to be large drugs coming into the U.S.”

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Cannabis is still by far the most commonly seized substance by CBP, as well as the drug responsible for greatest number of arrests, but the latter has decreased sharply over the past five years. Points of entry in Arizona are the most frequented along the U.S-Mexican border, and 60 percent of drug arrests are made in this area. But data from CBP indicates ports of entry in California slightly outpaces drug seizures at the border. Their data also suggests that less cannabis is entering the United States at the border, but there has been an increase in the amount of cocaine, methamphetamine and heroin moving from Mexico to the U.S.

This fluctuation can be a signal that America’s appetite for illicit drugs is changing, and cartels are taking notice. Drug cartels function similarly to any other business, driven by supply and demand. The U.S. is currently experiencing an opioid epidemic, and heroin in particular seems to be an alternative to those suffering from opioid addiction in need of a stronger high. It appears drug cartels are responding to that demand.

Freedman’s data also examined the rate of arrests per 100,000 people in each state. The highest rates of arrests also correspond to the CDC’s data on drug overdose deaths by state. Virginia, Delaware, New Jersey Massachusetts, Rhode Island, and Connecticut have been identified as having a particularly high rate of fatal drug overdoses, but they are also among the top ten states that have the highest rate of drug arrests. Comparing the data shows that arresting people for drug possession has little effect on fatal overdoses.

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Politicians and law enforcement have wide-ranging ideas on how best to combat this problem. The Trump Administration believes building a wall would both reduce the amount of drugs and people crossing the border, but the data shows that drug cartels have no problem trafficking their products through customs checkpoints. Attorney General Jeff Sessions recently announced his intention to return to the war on drugs, using techniques from past decades that have proven to do more harm than good. A bill circulating through Congress would give Sessions an unprecedented amount of power to revise how the government categorizes drugs with little oversight. Sponsors of the bill claim that the goal is not to arrest individuals for typical possession, but to break up large-scale drug operations.

It is unclear whether the administration’s purpose for fighting drugs actually pertains to preventing deaths and addiction. Prior to the 2016 presidential election, Trump made promises to curb the opioid epidemic, even rhetorically asking an audience, “What’s taking so long?” But it took six months for the president’s team charged with solving the opioid crisis to meet, and the consensus was that more law enforcement efforts were needed, rather than a focus on substance abuse treatment. Combined with his support of GOP health care bills that would cut public health services for addiction, it appears the answer to the opioid epidemic will not come from the federal government.

Marijuana Legalization Succeeding in Light of drug War’s Failures

Marijuana Legalization Succeeding in Light of drug War’s Failures

There is compelling evidence from multiple sources that legalization efforts in the United States are putting a dent in illegal marijuana originating from Mexico.

In figures provided by U.S. Customs and Border Protection, the seizure of marijuana at the border is at its lowest level in ten years. This figure is used as a general indicator of how much marijuana is crossing the U.S.-Mexican border.

To compound this evidence, the street price of marijuana has decreased sharply.

“Two or three years ago, a kilogram [2.2 pounds] of marijuana was worth $60 to $90,”

a Mexican marijuana grower told NPR.

“But now they’re paying us $30 to $40 a kilo. It’s a big difference. If the U.S. continues to legalize pot, they’ll run us into the ground.”

What’s more, customers are demanding higher quality as cannabis becomes more mainstream. In its 2015 National Drug Threat Assessment, the DEA has pointed towards quality as a deciding factor among the U.S. cannabis consumer.

“Mexican cartels are attempting to produce higher-quality marijuana to keep up with U.S. demand.” said the report.

“The quality of marijuana produced in Mexico and the Caribbean is thought to be inferior to the marijuana produced domestically in the United States or in Canada.”

While the instinct might be to look at Colorado, Washington and Oregon as indicators of these changes, California may hold the key to evaluating long term trends regarding reduction in illegal marijuana. The Golden State has been growing, consuming and selling cannabis far longer than any other state, (both legally and illegally) and the “Emerald Triangle” is the largest cannabis-producing region in the world. Based on research by the RAND corporation, exports from California to other states could cause a decrease in demand for illegal marijuana from Mexico, should interstate commerce between marijuana-friendly states become legal.

As with any business, supply and demand are at play in Mexico’s illegal drug industry. Methamphetamine  and cocaine from Mexico are increasing as Americans have a consistent appetite for these substances.

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American Cannabis is Hurting Mexican Drug Cartels

American Cannabis is Hurting Mexican Drug Cartels

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).

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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.

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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.

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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

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