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Marijuana Legalization Will Hurt Mexican Cartels, But How Much?

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mexico drug cartel zetas marijuana legalizationSpecial to the Chronicle by Bernd Debusmann, Jr., who is currently studying for an MA in International Journalism at City University London. Prior to that, he lived and worked in his native Mexico, most of it as a full-time freelancer for Reuters TV, also contributing to Fox Latino. Earlier he worked as a reporter in New York City and as a freelance producer for the Reuters Latin American Television Desk in Washington DC, during which time he dealt with many drug trafficking stories. During 2010 and 2011 he authored the weekly Mexico Drug War Update published by this newsletter, available in our Mexican Drug War archive section.

On January 1, Colorado made history by becoming the first American state where marijuana can be purchased for recreational purposes, and in which marijuana is regulated from the seed to the actual sale of product. As attitudes in Americabegin to shift in favor of outright legalization, it increasingly seems possible that more states — and eventually the entire country — might follow. But what does this mean south of the border, where Mexican cartels make enormous profits by trafficking this illegal commodity?

Given the nature of the illegal drug business, arriving at a precise figure is impossible. At times, the Office of National Drug Policy has said that as much as 60% of cartel profits come from the production and sale of marijuana. On the other hand, a 2010 RAND study estimated the percentage to be between 15 and 26 percent. More recently, research by the Mexican Institute of Competiveness released in October 2012 suggests that if only Washington, Colorado and Oregon legalized marijuana, then cartel profits would fall as much as 30 percent.

Another variable which must be taken into account when analyzing the impact of legalization on the cartels is the nature of the organizations themselves. All of Mexico’s criminal groups have a range of diverse business interests aside from marijuana, and most are considered poly-drug organizations, which make huge profits from methamphetamine, cocaine and other drugs. Some cartels, including the notorious Zetas, have gone beyond trafficking illicit goods and are now involved in prostitution, migrant smuggling, extortion, human trafficking, counterfeiting and oil theft.

On its own, legalization would not be able to bring an end to the activities of these groups, but — whatever the actual figure — legalization would have a definite financial impact. By some accounts, legalization in Colorado kept $5 million from the hands of criminals the first week, much of which, if the US government is to be believed, would have gone to Mexican traffickers.

The most immediate effect in Mexico would likely be felt in areas heavily involved in production, such as Michoacán or the “Golden Triangle” region that straddles Sinaloa, Durango and Chihuahua. Parts of this region are completely dominated by the cartels, who pay farmers to grow marijuana (and poppy, to a lesser extent). If the price of marijuana were to suddenly drop, the cartels that manage the production in that area would experience a significant decline in profits. Mexican analyst Alejandro Hope estimated that the Sinaloa Cartel stands to lose up to half of its profits from legalization in Colorado, Oregon and Washington alone.

Much of the power of cartels in Mexico stems from their ability to corrupt local authorities and buy protection. Whatever the precise figure, any legislation that disrupts the flow of money into cartel coffers benefits the Mexican government by allowing it to focus their resources elsewhere.

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14 Comments

  1. Drug cartels are not just drug sellers they are armed and violent people the US army should take them out before legalizing it because now we may see violence by the cartels who by the way are much more stronger than a state militia.

  2. Rod Stoneballs on

    NAFTA will take over weed production in Mexico and the quality will get better, putting American growers out. The engineering is happening now, Monsanto is heading it up. Wake up America, grow yer own, the tyrants need to be overthrown.

  3. See my earlier comments, especially that I live in Mexico. I haven’t smoked marijuana in about ten years because of the police issue and los cabrones you have to deal with, from the cartels down to the street dealers. But the major reason is that the stuff here is so lousy; I think you get the export quality up there and you know that means that what we get is even worse. I hope that when it’s legalized here someone impresses upon the driving forces that quality is an issue or we might end up with border trafficking in reverse.

  4. The last I heard there was a discussion of some form of legalization in Mexico City; I don’t know the details. This is only my opinion and I can’t prove it, but I strongly believe, as someone who lives in Mexico, that it won’t happen until Mexico gets a nod from the US to go ahead. To get back to the original article, the question is not only how much legalization in the US will hurt the cartels, but also how much legalization in Mexico will hurt them. A third consideration is how much legalization in both countries would hurt the cartels; I hope you agree that the third option is by far the best way to go as it would hurt the cartels far more; you know, the whole is greater than the sum of the parts.

    I agree with you “that we must end this fraudulent, counterproductive marijuana prohibition at is source.” And I agree with you that the demand in the US

  5. I think you speak from your heart my friend, but answer me this,If marijuana is legal in the u.s. then I would assume that the marijuana would be extra primo,so why would any American.white ,Mexican,black,yello,what ever color .why would they buy that mexico grown garbage,bullshit. I know I wouldn’t and I don’t, I don’t know what americans you hang with but the ones I know, want that good marijuana that can only be grown in America, and that’s what americans want. they want there marijuana to be grown by,and I don’t mean to sound racist but, some white dude that knows his shit.so the more that americans grow there own marijuana,the less demand for that bullshit mexico calls weed…

  6. One thing is certain. What drives the drug gangs in Mexico is the U.S. demand and black-market, primarily of marijuana.

    It almost doesn’t matter what the Mexican government does, except in how it may influence U.S. reform.

    To solve this mess we must end the fraudulent, counter-productive marijuana prohibition at its source. – Thank goodness we are well on our way!

  7. Though a US citizen, I have lived in Mexico, city Zacatecas, for the last 14 years and will probably stay here forever. I have experienced the explosion of the cartels from hardly significant here to . . . well, you all know how things are going. As you suggested in your article, it’s a complicated situation and perhaps there is no simple solution, but legalization of marijuana and maybe even other drugs is absolutely necessary, both in Mexico and the US. The longer we wait, the worse the situation will get. Maybe I’m wrong, but I think Mexico is unlikely to do anything until a positive signal is given from the big bully to the north to do so, and it’s imperative that the two countries work together as equals (politicians and most people in the US don’t have a clue as to what is going on here), not just have more idiotic policies shoved down our throats here. As for statistics, I’m highly dubious of any numbers thrown out.

  8. FBI statistics show 80% of all illegal drug sales are of marijuana. That means with re-legalization, drug gangs will be reduced by 80 percent. – Then when the people see the sky didn’t fall, they will lose their hysteria and be able to rationally consider how to regulate the other illegal drugs.

    Good-bye remaining 20 percent. Adios, drug gangs.

  9. Juice Mexican Runner on

    What Americans fail to realize The Sinaloa Cartel runs Arizona and La familia michoacan and Los zetas and the gulf cartel and Juarez cartel are all in Texas and All through the Us The Mexicans Run The Drug Business from Cocaine to Crystal meth ,heroin , and of course Mexican Marijuana

  10. Juice Mexican Runner on

    Americans don’t kno shit about what they talking about Mexican Swag will always sell in The Us stupid ass Americans Mexicans All over the Us

  11. San Diego has a large military and military-industrial population and is notoriously conservative. Working to replace politicians who know nothing about cannabis but everything about getting re-elected by their old white friends is a good place to start.

  12. Thank you for this insight. This is a serious problem in the city I live in that borders MX. San Diego is fighting very hard to criminalize the legal use of medical cannabis dispensaries. Although “legal” in our state, you really can’t go to a dispensary to purchase meds anymore. This allows the drug cartels way too much power and money while disabled and dying patients struggle to find a safe place to purchase meds (me being one of them). It’s awful. Federal law needs to do right by us US citizens and protect our cannabis rights so they can stop feeding the greedy drug cartels already.