What Marijuana Legalization Could Mean for The Mexican Cartels
The drug war has raged on for decades at an incalculable cost in lives destroyed, money spent, and effort wasted. Ever since the Nixon administration declared the “War on Drugs” in 1971, the expenditures in its name have only gone up. America has tried – and failed – to destroy the suppliers and has locked up millions of users in the process. What we have accomplished with all of this is a subject of intense debate, but what we have lost is obvious in its ongoing devastation.
In many ways, the current opioid crisis is a repudiation of a prohibition-first approach. America now finds itself in the worst drug overdose epidemic in its history – 76,000 dead, mostly from opioids, in 2017. While prescription drugs have played no small roll creating the initial market, the Mexican cartels have become the primary supplier of illegal heroin and opioids like fentanyl and carfentanyl.
If we are waging “the war on drugs” harder than ever before, why is the body count from drugs in our own country at an all-time high?
To say it’s a complicated story is an understatement. But some aspects of this saga are straightforward. Beneath all the politics, morality policing, misery, human frailty, and the whole slew of issues that comes with chemical addiction, there are some simple underlying economic truths that the government continues to ignore at our peril.
The most obvious one is the hardest to change so far… The illegal drug trade is really profitable. As a function of supply and demand, no reasonable, informed observer could ever think that we will wipe out – or even substantially reduce – the global illicit drug trade with more laws, policing, and interdiction efforts.
The illegal drug trade is worth hundreds of billions of dollars, much of that going to the Mexican cartels. And it is estimated that the global war on drugs costs as much as $100 billion a year. With financial incentives that strong, there will always be men and women who will find a way to supply the demand for others to get high.
And it’s clearer than ever that the biggest players in this mess – the Mexican cartels – are structured and operate like a black market Fortune 100 company.
Yes, all of the stuff you have heard about cartel executions conducted in grisly and sadistic fashion are true. Cartels have beheaded, mutilated, and tortured on a systematic scale that is every bit as sadistic as what we have seen from Islamic jihadis like Al Qaeda.
Despite what a casual observer may think, cartel violence is at a peak right now. Under the tenure of President Felipe Calderón, from 2006-2012, the country suffered a staggering 120,000 homicides. But Mexico recorded 29,168 murders in 2017, the most since the country began keeping homicide statistics in 1997.
Yet underneath the bloodthirsty quasi-anarchy of the cartels warring with each other and the Mexican government, the decision-making of the major drug lords and their lieutenants is still very much like what you would expect from any other international company with vast resources, a built-in market, and competitor, franchisee, and distributor issues.
Tom Wainwright, the British author of the excellent book Narcomomics: How to Run a Drug Cartel, describes how these “narcos” present the day-to-day challenges of the most sophisticated criminal syndicates on the planet in terms that would sound like they came from the Walmart or IBM handbook:
“The same mundane problems that blight the lives of other entrepreneurs: managing personnel, navigating government regulations, finding reliable suppliers, and dealing with competitors.”
So while the cartels operate ruthlessly and in the black market, they also must operate efficiently. This means that, even though they sell illegal products to a customer-base that is often addicted to them, they have to adjust with the times.
Marijuana legalization and decriminalization in several U.S. states is one recent example.
As recently as a decade ago, a big portion of cartel profits – some estimates as high as 20%-30% – came from marijuana. With legalization in Canada and some U.S. states like Colorado and Washington, the cartels have adjusted their business model, albeit on a minor scale.
The losses to date are estimated to be small – in the 2%-3% range of revenue. This is not surprising, as most U.S. states still adhere to federal law and treat marijuana as a criminal offense, which means that selling weed in America is still very profitable overall.
But even if the cartel’s adjustments are small, they are real. In part as a response to the market changes of legalization, the cartels have now gotten deeper into the heroin, opioid, and methamphetamine businesses. They are now the largest foreign suppliers of all those substances in the United States, and a leading producer of fentanyl. They have diversified their portfolios.
Cartel heroin production is believed to have jumped 37% between 2016 and 2017. And the DEA estimates that methamphetamine usage in the U.S. is currently at an all time high, as the cartels now produce the stimulant in vast quantities in industrial factories south of the border.
Approaching cartels as a business first raises the prospect of new policy approaches that could stymie – and perhaps eventually – defang them. Take a comprehensive review of the drug war to date, with some recent marijuana legalization data thrown in, and you have a strong argument for controlled legalization on a much larger scale.
Fighting the supply is never going to work. Tackling the demand end of the drug equation is the only new policy approach worth trying at this point. Marijuana legalization gives government a way to experiment with this before tackling the much more profitable – and deadly – substances, like fentanyl.
None of this will be easy, even if the U.S. government does finally take a cue from piecemeal marijuana legalization. Currently, weed is still illegal at the federal level, and so it remains a source of ready funds for any criminal willing to take the risk to sell it. And even if it is decriminalized, a thriving black market will endure as long as marijuana is tightly regulated and taxed at high levels.
Added to that are the multi-faceted ways the cartels make money that have nothing to do with drugs. Extortion is a reliable source of illegal funds, as is kidnapping. With the surge of migrants at the southern border, human trafficking is now estimated to net the cartels hundreds of millions a year. The cartels not only can diversify their product focus – they can expand their illegal services, too.
One thing is for sure: It’s time for a new approach from Uncle Sam. Legalization of marijuana in some states hasn’t destroyed them. On the contrary, the evidence supports further legalization of marijuana will continue to push down criminal profits while lowering social and financial costs to the American people for policing and incarceration.
The cartels have shown they will adapt to marijuana legalization. Rather than trying the same tactics that have always failed, perhaps it’s time we adapt, too, with phased-in, mass legalization. It’s time to go after the cartels where it really hurts them: their bottom line.
Buck Sexton is host of the nationally syndicated talk radio program, The Buck Sexton Show, heard on over 100 stations across the country. He’s also a former CIA and NYC police department intelligence officer.