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Liberal Drug Policy Does Little to Combat Cartels

Rumors of the strength and size of the legal marijuana trade have been greatly exaggerated. Proponents (or those looking to jump on the bandwagon) claim that the legal weed industry will produce more jobs than manufacturing and, in the United States, surpass $20 billion in revenue within the next four to five years. This is quite the jump from current North American revenues of $7 billion, though less than half of the estimated $50 billion illegal black market and cartel trade between Mexico, the United States, and Canada. The most ambitious claim, however, seems to be the claim that the legal marijuana industry will cut into those cartel profits and ultimately put them out of business, thus reducing violence in Mexico and along the Mexico-U.S. border. Converting a black market industry into something above board will certainly challenge the way of life for the drug cartels that traffic weed across borders, and they will likely just turn to other sources of income. Ultimately, the solution for reducing the power of the cartels and lessening the violence will likely have to come from inside Mexico, not from laxed drug laws passed in the United States.

Image courtesy of Pixabay, © 2017.

The legal (and illegal) marijuana industry in the United States is relatively benign, at least compared to the industry in Mexico, with the “green rush” that began when California legalized medicinal use drawing people from a wide variety of industries into the verdant fold. According to one recent report, between 165,000 and 235,000 people are working in jobs related to legal cannabis, with estimates that there will be over 250,000 such jobs by 2020. Entrepreneurs and tech investors have set up shop working on delivery services (Uber of marijuana), online retail outlets, cash management software, growing systems, and other pot-related initiatives. There are cannabis venture capital firms with clever names like “Emerald Ocean” and “Green Growth Investments” who attend annual conferences and expos aimed at promoting “serious business discussions” for business leaders and investors, as well as mom-and-pop owned boutique shops. Migrant workers, including Hmong families who often used to grow opium in Laos before the diaspora, come from all over the world to grow marijuana in California, Colorado, and other states that allow legal growth for recreational or medicinal purposes. Business, in short, seems to be booming, with revenues up 30% over 2015 levels, over 20% of Americans living in states with medical or recreational marijuana, and massive grow facilities popping up from California to Massachusetts.

The industry in Mexico, which is now also moving towards legality, is a stark contrast to the budding industry in the United States. Deadly clashes between gangs and police, rival cartels, reporters, and civilians are common in areas controlled by the various cartels—with a record number of homicides in just the last couple months. Estimates indicate that Mexican drug cartels bring in somewhere between $20 and $30 billion a year from drug sales in the United States, and some of that income is then spent on smuggling in firearms and other weapons used in clashes along the border and across the country. Of course, it is not just marijuana that the cartels trade: it’s also cocaine, heroin, meth, MDMA, and humans. Marijuana is a key source of income, though, leading optimists to suggest that legalizing the drug in the United States, the primary point of sale for the cartels, is reducing their profits in a way that the War on Drugs has not.

Certainly, legalizing marijuana in the United States has increased competition north of the border, with the tech entrepreneurs, corporations, and small-time growers rushing to get into the business. This has, in turn, reduced the prices paid to illegal farmers in Mexico and led to a decline in production and, therefore, trafficking of the drug. With May and June of this year having seen record levels of cartel-related violence, however, this decline in pot smuggling does not seem to have had the intended effect. Instead, cartels seem to be turning to other drugs, like opium and heroin, to make up for this loss in profits. These drugs come into the United States from all over the world—including South America and Asia—but Drug Enforcement Agency (DEA) reports suggest that Mexico is the primary supplier of heroin, cocaine, and methamphetamine, followed by Colombia.

The legal marijuana industry is poised to expand in North America as Canada moves toward full legalization and as more U.S. states debate decriminalization, medical legalization, and recreational legalization. The rest of the world, too, is joining the bandwagon: places like the Netherlands and Christiania—a sort of enclave inside Copenhagen with its own flag and currency—have long had liberal drug policies, but now Israel is trying to get into the industry, Colombia is producing marijuana for Canada’s medicinal industry, and even the Philippines is considering legalizing medicinal use. No amount of liberal drug policies is going to dramatically reduce cartel-related violence, though, since the cartels will simply turn to other sources of profit, such as heroin, meth, human trafficking, and any other industry that ends up bringing in cash. Systemic issues within Mexico, particularly economic and political corruption, have to be dealt with before the cartels will truly be wounded, and those issues will have to be addressed by Mexico itself.


Michelle Bovée

Michelle Bovee is a Market Intelligence manager at MAGNA Global, where she focuses on global advertising revenues and media cost trends, particularly in Western and Northern Europe. She graduated from the London School of Economics with a Master's degree in International Relations in 2013 and is currently living in New York City. You can connect with her on Twitter @boveemc.
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1 Comment

  1. Laura on July 19, 2017 at 2:02 am

    Michelle, I commend you on your thorough analysis presented above. Although I agree that liberal marijuana policy in the U.S. will drive cartels to increase their production and distribution of other drugs (heroin, cocaine, meth, ecstasy), I would like to challenge your conclusions. First, in your article, you claim that liberal policies will do little to combat Mexican cartels, but how liberal are these policies? As far as I’m concerned, drug use, possession, distribution, etc in the U.S. are still treated as criminal issues rather than health issues. This is precisely why U.S. incarceration rates are so high: jail time is the only well-funded way to deal with drugs in the United States (read:

    What do you think would happen if instead of sending people to jail, we began to offer addicts treatment? Would that kind of policy make a difference? Could it possibly lower the U.S.’s demand for drugs and slash cartel profits? How about addressing some of the structural problems that exist in the U.S., particularly in rural America, such as fixing a sluggish economy so that people don’t turn to drugs in the first place. I would urgently recommend for you to read Methland by Nick Reding, as it demonstrates how a lack of employment has driven thousands of Americans to consume drugs AND to enter the drug industry.

    Second, in your conclusion, you state: “systemic issues within Mexico, particularly economic and political corruption, have to be dealt with before the cartels will truly be wounded, and those issues will have to be addressed by Mexico itself.” I am not sure how you intended for readers to interpret this, but it seems like you are leaving it all to Mexico to solve the issue; however, drug trafficking is not just a Mexican issue. It is a double sided issue: one of supply and demand, producer and consumer. Without the drug addict, the narco cannot exist so rather than leaving it all up to Mexico, why don’t we urge the U.S. to start treating its addicts? To truly win against drug cartels we need to stop demonizing addicts and start working together and accept that both Mexico and the U.S. have work to do.

    Once again, thank you for your thought-provoking article. I look forward to reading more of your articles!

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