Wednesday, November 7, 2012

A Legalization Whammy for Mexican Drug Cartels?

Marijuana: Better legal?
While the world's attention was on Barack Obama's reelection victory, individual states continued their marijuana legalization trend  - which may mean a big revenue hit for the drug cartels which are tearing Mexico apart.

The Mexican Competitiveness Institute's study, titled 'If the Neighbors Legalize,' projected that if one or more U.S. states legalized marijuana for recreational use it would not only mean more pot access in those states, but in others as well, as the legal post states exported across the country. As it turned out, both Washington and Colorado legalized recreational marijuana use yesterday, while Massachusetts legalized medical marijuana (making medical pot legal in almost all the New England states).

The Mexican institute guesstimated that between 40% and 70% of the pot now consumed in the U.S. is imported from Mexico. But legal pot producers in the U.S. should now be able to undercut the illegal Mexican producers' prices, cutting them out of the business.

Severed heads on a Mexico disco floor.
Victims of the illegal drug trade?
"It would be expected that almost all of the consumers would prefer buying and consuming legally produced marijuana," the report said.

While the legalized states represent only a few percent of the U.S.'s total marijuana consumption, the analysts concluded that the lower prices and better quality of legal pot will make legal, U.S.-grown pot a better deal throughout almost the whole U.S., except some border areas with Mexico.

That, in turn, will take away between one fourth and one third of the Mexican cartels' profits if one of the states voted to legalize, according to the analysis. That would translate into between one and two billion dollars in reduced income for the cartels, depending on which one of the states legalized. Since two states legalized, one would expect the hit to be even bigger, altho the study doesn't specify how much.
A Zeta cartel weapons arsenal. Purchased
with money from marijuana exports?

In any case, a cool billion or two fewer dollars in income for the organizations which have terrorized big swaths of northern Mexico has to be an excellent thing. It'll translate into their buying fewer guns, hiring fewer assassins, terrorizing fewer Mexican citizens.

The Associated Press interviewed a critic of legalization who predicted that the cartels would simply move into states where pot is legal. But, then they'd have to compete with legal, licensed producers, who would have the law on their side. And, if the drug cartels start producing pot where it's legal, then they'll presumably produce it in a more peaceful way.

A good idea?
The big unknown here is the reponse by the federal government, which still considers marijuana illegal. But it's hard to conceive of the Obama administration cracking down on legal pot, especially when it's clear that many Americans ](especially those young Obama voters) support legalization and Obama himself admitted inhaling as a young man.

The Fed's best policy here is to respect states' decisions.

Legal pot in a few states could also cause a domino effect, as neighboring states face the reality that the pot's coming acorss the border anyway, and by not legalizing they're just denying themselves a huge potential tax income.

After all, marijuana is already the most valuable agricultural crop in California and numerous other states.

Legalization's downsides shouldn't be ignored, either, of course: cheaper marijuana and easier access will probably mean more users. That's a concern, particularly for young people. I don't recall potheads excelling particularly in high school. But states should use part of their tax haul for education and to reduce abuse of all drugs - tobacco, alcohol, pot, cocaine, etc.

My only major doubt about this study comes from the fact that so many states have legalized 'medical marijuana' - which people describe to me as de facto legalization there. And, California pot is already smuggled across the country. So, could full legalization in a few states really make such a big difference? Apparently the Mexican analysts believe so, and their study is very detailed and authoritative.

The next logical step here, naturally, is to other drugs, such as cocaine, which would reduce the income of Colombia's violent, illegal organizations. (With the plus for Colombia's economy that coca leaf cultivation would likely stay here). That's a big leap, but the fundamental arguments are the same: more money for taxes, less money for violent cartels, and moving a huge industry from illegality to legality.

By Mike Ceaser, of Bogotá Bike Tours

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