• Connect with us on Linkedin

Study: US Marijuana Legalization Could Cut Cartel Profits By 30%

Pro-legalization pamphlets in Colorado Pro-legalization pamphlets in Colorado

A new study suggests that Mexico's drug cartels could take big hits to their pocketbooks if ballot initiatives to legalize marijuana in parts of the United States are approved by voters, but the overall effect on the country's security situation would likely be limited. 

Linkedin
Google +

The study (.pdf), released on October 31 by the Mexican Institute of Competitiveness (IMCO), found that Mexican drug cartels could see their revenue from drug sales in three states drop by 22 to 30 percent if current ballot initiatives on marijuana legalization are passed. 

On November 6, residents of Colorado, Oregon and Washington state will vote on measures that will allow adults to grow, sell and possess small amounts of marijuana for recreational use. While opinion polls in Oregon show that the referendum is unlikely to be approved there, both Colorado and Washington stand a chance of passing theirs.

Using a statistical model, IMCO researchers estimated the legalized price of marijuana produced in Oregon, Washington and Colorado based on local demand. They then assumed that some of the drug will be smuggled into other states, and that marijuana purchasers in the country would be more likely to choose domestic marijuana over Mexican marijuana because of its lower price.

As a result of this, the IMCO report estimates that Mexico’s cartels would lose $1.425 billion if the initiative passes in Colorado, $1.372 billion if Washington votes to legalize, and $1.839 billion if Oregon approves its ballot measure.

The report did not look at how marijuana legalization would affect individual cartels, but according to Mexican crime analyst Alejandro Hope -- one of the report’s authors -- the powerful Sinaloa Cartel has the most to lose if the initiatives go through. In a press conference marking the report’s release, Hope told reporters that the cartel could see its profits fall by 50 percent if the measures are passed.

InSight Crime Analysis

IMCO is not alone in suggesting that relaxing marijuana laws could be beneficial in the long term to the “war on drugs.” The report comes at a time when interest in alternative drug policies is at an all-time high in the hemisphere, with the heads of state of Guatemala, Colombia, Mexico and Uruguay all expressing interest in decriminalizing marijuana as a way to refocus law enforcement efforts on more harmful drugs and the violent crime associated with them.  

But while many analysts have pointed to the hypothetical benefits of such measures, the number of real-world variables involved suggests that legalizing marijuana would not necessarily reduce the power of Mexico’s crime syndicates. For one thing, even the percentage of cartel profits that come from marijuana as opposed to other drugs is unclear. While US officials have said that 60 percent of Mexican cartels’ profits come from marijuana, this has been disputed by analysts with the RAND Corporation, who put the figure closer to 15 to 26 percent, and say that profits from cocaine shipments to the US are near twice that.

Still, even if marijuana legalization in parts of the US were to cut into cartels’ finances, it may not have much of a long term effect on violence or criminal activity in Mexico. Groups like the Sinaloa Cartel and the Zetas have shown an impressive ability to adapt to changes in the regional drug market in order to make up for lost revenue. Indeed, there is evidence to suggest that cartels have responded to a heightened crackdown on drug trafficking in the country by deepening their involvement in alternative criminal activities like human trafficking, migrant smuggling and illegal mining.

They have also ventured into new drug markets. Taking advantage of US law enforcement’s successes against methamphetamine production, Mexican cartels have become the main source of meth to the US, taking advantage of lax controls in neighboring Guatemala to produce the drug in industrial quantities there. Considering Mexican cartels’ demonstrated ability to make up for losses by broadening their criminal portfolios, the ongoing (albeit lowered) demand for cocaine, as well as the overall cutthroat competitiveness of the drug trade, Mexico’s security situation would not likely see much of a change if marijuana were legalized in parts of the US. 

Linkedin
Google +

---

What are your thoughts? Click here to send InSight Crime your comments.

We also encourage readers to copy and distribute our work for non-commercial purposes, provided that it is attributed to InSight Crime in the byline, with a link to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

InSight Crime Search

The Complete Organized Crime Database on the Americas

InSight Crime Social

facebooktwittergooglelinkedin

InSight Crime Special Series

The Zetas in Nuevo Laredo

Los Zetas in Nuevo Laredo

After the capture of Zetas boss "Z40," Nuevo Laredo is bracing itself for the worst. This investigation breaks down what makes the city such an important trafficking corridor, and what it will take for the Zetas to maintain their grip on the city.

See entire series »

 

Uruguay's Marijuana Bill

Uruguay: Marijuana, Organized Crime and the Politics of Drugs

Uruguay is poised to become the first country on the planet to regulate the production, sale, and distribution of the drug.

See entire series »

El Salvador's Gang Truce

El Salvador's Gang Truce

The truce between El Salvador's two largest gangs -- the MS-13 and the Barrio 18 -- opens up new possibilities in how to deal with

See entire series »

Juarez After The War

Juarez After The War

As a bitter war between rival cartels grinds to an end, Ciudad Juarez has lost the title of world murder capital, and is moving towards something more like normality.

See entire series »

The Zetas And The Battle For Monterrey

The Zetas and the Battle for Monterrey

InSight Crime delves into the Zetas' battle for Mexico’s industrial capital, Monterrey, getting to the essence of a criminal gang that defies easy definition.

See entire series »

Slavery in Latin America

Slavery in Latin America

InSight Crime coordinated an investigation into modern slavery, looking at how Latin America’s criminal groups traffic human beings and force them to work as slaves.

See entire series »

FARC, Peace and Criminalization

FARC, Peace and Possible Criminalization

The possibility of ending nearly 50 years of civil conflict is being dangled before Colombia. While the vast majority of the Colombian public want to see peace, the enemies of the negotiations appear to be strong, and the risks inherent in the process are high.

See entire series »

Displacement in Latin America

Displacement in Latin America

InSight Crime coordinated an investigation into the new face of displacement in Latin America, where organized criminal groups are expanding and forcing people to flee.

See entire series »

Target: Migrants

Target: Migrants

The growth of organized crime in Mexico and Central America has led to an increase in violence and insecurity across the region, posing challenges to citizens, public security forces, and travelers.

See entire series »

Zetas in Guatemala

The Zetas in Guatemala

Mexico's Zetas have taken Guatemala by storm, and they are testing this country and the rest of the region: fail this test, and Central America sinks deeper into the abyss.

See entire series »

Most Read

Paraguay Govt Fears EPP Rebels Will Seek Prisoner Exchange

Paraguay Govt Fears EPP Rebels Will Seek Prisoner Exchange

Authorities in Paraguay fear the EPP guerrilla group will demand that the government free captured rebels in exchange for releasing kidnap victims, a move that echoes similar tactics employed by the FARC in Colombia.

Read more

Is Central America's Gang Violence a Humanitarian Crisis?

Is Central America's Gang Violence a Humanitarian Crisis?

Violence perpetrated by "mara" street gangs and drug trafficking groups in Central America undermines the state and leads to high homicide rates, forced recruitment and forced displacement -- an impact comparable to that of an...

Read more

Colombia Network Provided Stolen Fuel to Eastern Plains Narco-Paramilitaries

Colombia Network Provided Stolen Fuel to Eastern Plains Narco-Paramilitaries

Authorities in Colombia have captured members of a criminal network that reportedly stole gasoline for cocaine production, shedding light on the expanding activities of criminal leader "Pijarbey" and his narco-paramilitary group.

Read more

IDRC9-01