MEXICO CITY — As President Barack Obama trumpets that the United States economy is back on track, industry groups are shouting over who’s growing faster.
The accounting sector boasted 2014 growth of 11 percent; computer systems of 14 percent; and real estate of a whopping 23 percent, says financial information group Sageworks.
However, one industry may have beaten those hands down: legal marijuana.
According to a new report by The ArcView Group, a cannabis industry investment and research firm based in California, legal marijuana sales rocketed 74 percent in 2014 to a new high of $2.7 billion. And with more states legalizing weed — Alaska, Oregon and Washington, DC, voted to join the legal stoners in November — it predicts this growth pace could continue for several more years straight.
However, winners in some places often mean losers in others. And the losers appear to be south of the Rio Grande: Mexican marijuana growers, who’ve provided the lion’s share of cannabis for American smokers for decades.
In 2014, the US Border Patrol saw a plunge in seizures of pot heading northward. Its agents nabbed 1.9 million pounds of ganja, a 24 percent reduction compared with the 2.5 million seized in 2011 — before Colorado and Washington State first voted to legalize recreational marijuana.
Capturing less drugs doesn’t necessarily mean less drugs are coming over. Agents could be working less or focusing more on other problems. Yet one sign they are as vigilant as ever is that they made increased seizures of some other drugs, especially crystal meth, which was busted in record quantities.
More from GlobalPost: Here’s a meth cook who’s helping boost Mexico’s drug traffic to the US
Mexican security forces have also noted a dive in marijuana production. In the most recent figures released in September, the Mexican government said that it had seized 971 metric tons (1,070 US tons) of cannabis inside Mexico in 2013, the lowest amount since 2000.
“It looks like the US market for illegal Mexican marijuana will keep shrinking.”
ALEJANDRO HOPE, A DRUG EXPERT IN MEXICO.
“In the long run, it looks like the US market for illegal Mexican marijuana will keep shrinking,” says Alejandro Hope, a drug expert in Mexico. “The logic of the legal marijuana market is that it will force prices down. This would take out the big profits from the illegal market. A good way to make some money could be to short the prices of marijuana.”
As well as price problems, Mexican producers also have to compete with quality.
The legal US suppliers focus on high-grade weed, selling brands with glamorous names like “Skunk Red Hair,” “Sky Dog” and “Super Haze” in the S section of the shelves, to “Hypno,” “Hindu Kush” and “Himalayan Gold” if you look under H.
They are often labeled with their exact amount of THC, the ingredient that gets you intoxicated. They are also graded for their mix of indica, the strain that makes users stoned in a more knockout way, and sativa, which hits people in a more psychedelic way.
On the other hand, Mexican marijuana, known here as “mota,” is a mass-produced lower-grade crop, grown mostly outdoors in the mountains. It doesn’t have a fancy brand name, or tell you how spaced out or sleepy you will feel; it will just get you wasted.
Hitting the cartels
Drug smugglers, some wearing life vests, carry loads of marijuana, according to US federal agents, as seen from a helicopter flown by the US Office of Air and Marine in September near Rio Grande City, Texas. (John Moore/Getty Images)
When advocates campaigned to legalize weed in Colorado and Washington states in 2012, they argued it was better to take the cash away from Mexican cartels and put it into taxes.
Former President Vicente Fox also made this case after leaving office when he visited a university in Boulder, Colo., in 2011.
“The drug consumer in the US yields billions of dollars, money that goes back to Mexico to bribe police and money that buys guns,” Fox said. “So when you question yourselves [sic] about what is going on in Mexico, it depends very much on what happens in this nation.”
If Mexican marijuana is now sinking, it could indeed be reducing cartels’ budgets to commit mass murder. Mexico’s total homicides have gone down during the time that some US states legalized grass. Killings reached a peak in 2011 of 22,852, and then dropped to 15,649 last year, according to the Mexican government’s numbers.
However, other aspects could have played a role, too. Among them are the capture or killing of some of the most brutal drug lords, including Heriberto “The Executioner” Lazcano, the head of the Zetas cartel whom Mexican marines gunned down in 2012.
Mexican gangs also have a range of other businesses. Not only do they traffic crystal meth, heroin and cocaine, they have also diversified into crimes from sex trafficking to illegal iron mining.
More from GlobalPost: How Mexico’s cartel crackdown smashed its iron industry
Mexican meth and heroin appear to have gone up as marijuana has dropped — at least, if narcotics seizures are the gauge. Last year, the US seized a record 34,840 pounds of methamphetamine at the Mexican border.
Still, longtime experts in illegal markets say there may not be any correlation between the hikes in some drugs and dives in others.
“There are lots of variables at play here, complicated factors of both demand and supply that create the markets in these drugs,” says Sanho Tree, director of the Drug Policy Project at Washington’s Institute of Policy Studies.
“One reason for the rise in heroin use is that many doctors have over-prescribed opiate drugs to patients,” he adds, referring to legal pain treatments. “The patients have got hooked and have later turned to the illegal heroin.”
But there’s another factor that could seriously affect marijuana market trends: Mexico could itself legalize it. In 2009, the country decriminalized the possession of small amounts of drugs, including marijuana. And citizens here as elsewhere were amazed when Uruguay became the first entire country to legalize weed in 2013.
Mexican President Enrique Peña Nieto has spoken against legalization but says he’s open to debate.
Former President Fox is an advocate and even said he would like to team up with an American entrepreneur to import it to the United States.
If Mexico did legalize the plant, its cheaper labor costs could give it an edge over US producers. And while some consumers could want the higher-grade California strains, others could still choose the cheapest price.
“Cannabis is not unlike wine,” Tree says. “I can buy a $200 bottle of wine, if that is what I am after. But many people will prefer the cheaper, mass-market product. And if all the prohibition factors are taken out, then marijuana is really just an herb that can be produced very cheaply.”
VIA Global Post
The legalization of recreational marijuana sales in Colorado may be a win for the state’s tax revenue, but it is also edging out the illegal marijuana markets, including the Mexican and Colombian drug cartels.
According to a 2012 study by the Mexican Institute of Competitiveness, legalization in Colorado will cost cartels $1.425 billion annually.
While Washington state’s legal market is burgeoning, the study says it would cost cartels $1.372 billion. The legalization in these two states would push the cartels’ annual revenues down 20 to 30 percent, and cut revenue to the Sinaloa Cartel by 50 percent.
On Nov. 21, federal agents raided more than a dozen legal medical marijuana facilities and two private homes. The Denver Post reported these raids have possible ties to the Colombian drug cartel.
Tom Gorman, director of the Rocky Mountain High Intensity Drug Trafficking Area, believes legal marijuana shops are at risk of being targeted by Mexican and Colombian drug cartels. He joins Here & Now’s Robin Young to explain.
How foreign cartels could get involved with legal marijuana sales
“This is the perfect storm, because from the Mexican cartel standpoint, you have a quasi-legal business operating in the United States, which is illegal in other places, so there’s a real high demand for Colorado marijuana throughout the United States. One of the primary weapons of a cartel they use to make money is, one, selling drugs, and the other one is extortion. So it’s real easy for them to come in and look at these retail stores that are making hundreds of thousands of dollars and say, ‘We want a piece of the action.’ That’s one concern. The other one is using some of these organizations to take marijuana. Well, you don’t have to worry about crossing the border, but sending east, where most of our marijuana goes to — using these as a vehicle for doing that. So that’s our big concern.”
How foreign cartels might intimidate legal U.S. pot sellers
“They’re treacherous, and there’s no way when they show me a picture of my little girl walking to school that I am going to go to law enforcement, worrying about my family or my safety or blowing up my shop or whatever it is. I mean, they’re just treacherous. They have no morals. They do what they need to do to make money, so how do I combat that? I’m not gonna go to the cops. There’s no way I’m gonna go to the cops.”
On the amount of marijuana that previously passed through Colorado
“In 2012, we tracked interdictions that are reported, and that’s voluntary reporting, and we were able to identify about three and a half tons of marijuana that was going out of Colorado to other states, particularly east states. So that has to be some of what they’re counting for, and you have to assume, of the three and a half tons, how much did we miss? The estimates are we probably missed about 80 percent, whatever, because stops are random.”
Via How & Now
I was in Mexico on ‘Green Wednesday’ last week when those pot shops opened in Colorado, making it the first jurisdiction in the world to allow the legal sale of recreational marijuana. The reaction there was partly one of puzzlement. The war on drugs was born of American pressure. What the heck is going on?
The cost of that policy has been horrible for Mexico, where 70,000 have died since former president Felipe Calderon made crushing the cartels his top priority in 2006. While his successor, Enrique Pena Nieto, is focusing less on the cartels and more on restoring public security, blood is still being spilled every day.
Yet America is suddenly projecting muddle. The Justice Department says it still considers marijuana an illegal psychotropic substance but in the same breath promises not stand in the way of states moving to legalise it. Such is the miracle of federalism. But if marijuana is now deemed OK in Colorado – and dispensaries will open soon in Washington as well, the other state that approved legal marijuana at the end of 2012 – what message does that send to Mexico and others fighting the war on drugs largely on America’s behalf?
“It looks hypocritical that we are allowing this experiment to go forward while Mexico is waging a life-and-death war to prevent people from consuming these drugs in the United States,” remarks David Shirk, a fellow with the Mexico Institute at the Wilson Center who also teaches at San Diego University.
“Imagine you’re a Mexican soldier about to raid a major marijuana plantation. He has to be asking himself, ‘Why am I risking my life for a bunch of gringos who are going to smoke this stuff freely in Colorado?’”
Yet there are those in Mexico and elsewhere in Latin America who see hope in the Colorado ganja rush. These are the voices that contend that only by legalising can governments weaken the cartels that have so direly poisoned society with violence and by corrupting civic institutions.
Vicente Fox, Mexico’s president before Mr Calderon, has been preaching the legalisation gospel – and blasting the American-led anti-drugs campaign – to anyone who’ll listen. The war on drugs, he told High Times magazine last summer, has “been a total disaster”.
He added: “My highest priority is to stop violence in Mexico. And this is one clear way that we will accomplish that in the process of time.”
Last month Uruguay decided to move towards the complete legalisation of cannabis, and some important voices in Argentina and Peru are now starting to urge public debate on the issue also. But here in the United States, any such discussion has until now been routinely smothered.
In the religion of interdiction, all mention of legalisation is heresy. But as Americans now ponder the weed haze over the Rocky Mountain skyline, the possibly benign impact on criminal trafficking of legalisation can no longer be dismissed.
The general premise here is that if cannabis is being produced and sold legally and more cheaply in big states like Colorado and Washington – and with polls showing a majority of Americans now supporting legalisation it’s a fair bet others, including California, will soon follow – Mexican product will no longer be competitive or even of equal quality. The impact becomes all the greater if weed legally grown in those states begins to migrate to others across the US, even as far away as New York, as it surely will.
The cartels will move to compensate for the shortfall, stepping up the trafficking of cocaine and meth and growing their other businesses like kidnapping, ransoms and extortion.
Nor do we know precisely how important marijuana sales are to them; drug lords don’t generally open their books to outside scrutiny. A 2012 research paper by the Mexican Competitiveness Institute in Mexico called ‘If Our Neighbours Legalise’, said that the legalisation of marijuana in Colorado, Washington and California would depress cartel profits by as much as 30 per cent.
A 2010 Rand Corp study of what would happen if just California legalised suggests a more modest fall-out. Using consumption in the US as the most useful measure, its authors posit that marijuana accounts for perhaps 25 per cent of the cartels’ revenues. The cartels would survive losing that, but still.
“That’s enough to hurt, enough to cause massive unemployment in the illicit drugs sector,” says Mr Shirk. Less money for cartels means weaker cartels and less capacity to corrupt the judiciary and the police in Mexico with crumpled bills in brown envelopes. Crimes like extortion and kidnappings are also more easily tackled.
There is an awful lot to weigh in what Colorado has done. As a father I am not thrilled to see marijuana consumption encouraged. What I surely do welcome, however, is the opportunity for the first time to test in practice the argument that legalisation will do more to diminish violence in America’s immediate neighbour and points south than any amount of militarised prohibition.
Mr Shirk puts it this way. If you ask enforcement folk how large a dent their interdiction efforts – seizures, arrests, helicopter raids and so on – actually have on cartel earnings, they will say between 5 and 10 per cent. But just few states embracing legal cannabis may end up robbing them of two to five times that amount.
Yes, we will soon hear of some tragedy due to legalisation – a Denver kid high behind the wheel will kill someone or crash into a ravine. But put that beside the tens of thousands who have perished in Mexico thanks to a war on drugs that traces back to Richard Nixon and I can live with that.
And that is why I say open all the pot shops that you can, as fast as you can, even if I won’t be visiting them.