
Legalising marijuana: the view from Mexico - JumpCrisscross
http://www.economist.com/blogs/democracyinamerica/2012/11/legalising-marijuana?spc=scode&spv=xm&ah=9d7f7ab945510a56fa6d37c30b6f1709
======
pg
If I were running a Mexican drug cartel, I'd be trying to ensure all the drugs
I was importing into the US stayed illegal there. _How_ would I do it? And can
we detect them doing that? It would be fascinating if we could, and spam
filtering showed me people often leave trails they don't realize they're
leaving.

~~~
jQueryIsAwesome
You asked how a criminal organization would do it; so this gets a little dark:

\- Go to both main cities where marijuana is legalized and make up fake scenes
where marijuana seems to be responsible for some tragedy (like multiple fatal
car accidents where there is marijuana all over the car). People love
sensationalism and controversies.

\- Another way is so to lobby for all the politicians who strongly oppose
legalization (using a legal company as facade of course)

\- Another way is to kill political leaders that are in favor of legalization
and make it look like unrelated accidents/crimes (otherwise the movement gets
sympathy by the victimization of the cause).

Their weak point is that they are not as organized as one may think; and their
savageness sometimes lead them to do stupid things (like kidnapping hackers to
steal credit cards); most of them are probably not tech savy so there may be
many ways to intercept their communications.

~~~
javajosh
Variation of second point: Kill political leaders who are _against_
legalization, and make it clear it's because of their position on this issue.
This would imply that pro-legalization people are willing to murder to get
their way, and so in sympathy the public would vote against legalization.
[Call this the 'anti-legalization martyr' play.]

~~~
Androsynth
They are able to kill with relative impunity in Mexico because the Govt isnt
big enough or strong enough to stop them. If they killed an American
politician, regardless of which side they are on, it would draw the focus of
the US law enforcement agencies. This would cause them some very serious
issues.

They have been careful to keep the violence south of the border and I think
they are cognizant of the fact that killing south of the Rio Grande brings
profit, killing north of the Rio Grande can bring ruin.

------
DanBC
(I am strongly pro legalisation of cannabis. I think prohibition has caused a
lot of harm. I do not take cannabis, and have only ever used it a few times
when I was much much younger.)

Some people who want to keep cannabis illegal claim they are reducing harm -
reducing harm to users, to those users' families, and to wider society.

I think there might be causal links between cannabis and mental health
problems. And there are a bunch of self-medication and masking problems too.
But even though I believe this I cannot understand how people do not see the
much worse harm that prohibition causes.

In England there is a problem with criminal gangs using trafficked workers,
keeping those people imprisoned in houses which are then turned into cannabis
farms. If Bob wants to use cannabis it is more sensible for him to buy it from
a criminal gang than to grow a few small plants purely for personal use
because the crime he commits by growing it is much more serious.

Reading about the situation in Mexico is horrific.

> _In Mexico relatively few people take drugs. But many are murdered as a
> result of the export business. About 60,000 have been killed by organised
> crime during the past six years._

Sixty thousand? That's a mind-boggling amount. (There's a tv programme in the
UK at the moment about road safety, with lots of "how do we reduce road
deaths?" About 2,000 people die each year in RTAs in the UK.)

Even stupid people should know there's a serious problem when they're told
there is a criminal called "the Soupmaker" who dissolves victims in vats of
sodium hydroxide.

([http://www.economist.com/blogs/americasview/2010/09/mexicos_...](http://www.economist.com/blogs/americasview/2010/09/mexicos_drug_war))

> _another collaborator of Sinaloa's, Teodoro García, was captured in the
> coastal city of La Paz. He was accused of ordering his victims to be
> dissolved in barrels of acid by his henchman, known as “the soup-maker”._

~~~
marcoamorales
I'm from Mexico, and I can tell you what is happening here is worrisome. The
death toll during Calderon's presidency is way over the roof. He declared war
to the cartel's like no one had ever dared to do. This caused a big uproar
because know there's a real problem with trying to keep your safe route of
drugs.

I'm also pro legislation (have never consumed anything) and the only thing
that worries me more than what is happening right now is that maybe, with
legislation, cartel's are going to jump to the next profitable illegal
activity they can find (kidnapping, extorsion, whatever). I've lived in the
same city all my life, and for the last 2 years, for the first time ever, I
don't feel safe anymore. When I see soldiers driving around town with their
hummer-esque vehicles, I can't find tranquility.

Reading this article gives me some peace, but I can't find any real assurance
that this will stop any soon.

~~~
fossuser
Why jump to something else that's illegal?

I would suspect with legalization the cartels would have an advantage as a
legal drug seller since they already have the distribution network and systems
in place.

There would also be less need for violence with the ability to take people to
court for breaking contractual deals.

~~~
grannyg00se
"Why jump to something else that's illegal?"

Because it's the prohibition that causes the absurd profit margins they are
accustomed to. It's unlikely that they would accept an average profiting legal
product rather than go after the next absurdly profitable illegal product.
Also, their entire business is based around providing a prohibited product.
They wouldn't likely be keen to completely change business models.

~~~
tehayj
The market will get much smaller for people who want to sell cannabis because
lots of consumers will grow it themselves.

Many cannabis dealer will also try to start larger growing operations. Same
thing happened in the Netherlands.

~~~
dwiel
Actually, growing your own is still illegal in Washington. Colorado limits
each person to 6 plants. Will be interesting to see how the difference effects
the markets.

~~~
loeg
Actually, if either of these conditions are met, it's legal to grow in
Washington:

    
    
      * Medical cannabis patient (limited to some small number of plants, like CO), or
      * State-licensed grower under I-502

------
alan_cx
Really? Only now people are working out that legalising pot destroys cartels?
Not just that, the networks too.

Imagine if the tobacco companies sold it. Imagine if the gov told them to
secretly stock up , and suddenly put it on the market at half the usual price.
Imagine all those dealer holding stock that was on credit. Imagine not being
able to sell it. A huge market crash. Game over.

All the gov do now is hold the prices high. They actually do control the
market. A bit socialist, no? Why not let the worshipped capitalism deal with
these cartels? If all western governments legalised, these evil cartels would
be out of business.

Any one worked out how much tax revenue the governments could make? Or would
people just grow their own?

Anyway, the best way to destroy these cartels over night (ish) is instant
legalisation, and the tax raised can pay directly for rehab, etc. Or is the
too communist?

~~~
freeclimbfree
I had the same reaction. It scares me to think that intelligent people are
just now realizing the consequences of making a highly-demanded product
illegal. Really, all drugs should be legalized and controlled. The problem is
that we're not only facing religious drones who can't see past the end of
their noses, but more importantly, we're up against big money. And big money
has power. I'm talking not only the cartels but private prison owners. Do you
think those guys want to see their customer(prisoner) numbers decrease? Or
what about law enforcement and the drug agency? You think those guys want
their funding cut? Because if you remove drug-crime control you remove the
majority of their work. The convenient thing is that this drug-scare hysteria
that has this nation by the balls is what keeps this endless cycle going.
Those who benefit where the "righteous" mask of public protector or advocates
for our children.

------
ojbyrne
The calculations don't take into account the onerous taxes that are going to
be imposed on legal marijuana, and probably at some point there are going to
be limits on the THC levels that can legally be sold. Illegal weed is going to
end up still competitive.

~~~
gnosis
This is unfortunately quite likely. Witness the involvement of organized crime
in cigarette smuggling as cigarette taxes have risen.

If we want to minimize the involvement of organized crime, not only does
marijuana have to be legalized, but the taxes have to be low enough for black
market alternatives not to be worth the trouble.

~~~
ryanmolden
black market prices are so far out of whack with market value (apart from the
value of getting something your govt. has declared illegal) that taxes would
have to be ridiculously high to make prices even come close to street cost of
equivalent drugs. Either that or street price collapses to legal price
(perhaps minus taxes) and criminals are less incented to participate due to
drastically reduced margins. High taxes really are only a concern for someone
looking to buy wholesale, an individual user buying say 3.5-7 grams at a time
would likely be paying, at most, a few dollars in taxes, which is hardly
prohibitive since the same amount illegally costs ~40-80 dollars afaik (note:
I don't dabble in illegal drugs but may have used some in high-school, so this
cost knowledge is a little out of date, but I suspect not horribly off).

~~~
gnosis
You're talking about current illegal drug prices. When taxes on legal drugs
are high enough, criminals selling legal drugs on the black market could still
make a tidy profit while undercutting the cost of legal drugs. Granted, those
profits won't be nearly as obscene as those garnered now from the sale of
illegal drugs, but profitable enough to stay in business.

Legal cigarette prices in the US are nowhere near the price of illegal drugs,
but the taxes on them still provide enough incentive for organized crime to
get involved in smuggling cigarettes and selling them on the black market, and
enough incentive for cigarette users to buy black market cigarettes.

The same is likely to happen with legalized marijuana, unless the price
(including taxes) is kept low enough to make buying black market marijuana not
worth the trouble -- much like it's usually not worth the trouble to buy
moonshine in the US, when there's plenty of relatively cheap, legal and safe
alcohol available.

~~~
ryanmolden
Yes, my primary point was that the current cost on the illegal market (which
is what attracts criminal elements) is so ridiculously out of whack with the
actual cost of production that taxes would have to be massively high to drive
a black market similar to what exists when it is illegal. Will there be some
people still getting it 'illegally'? Sure, as you pointed out there is a black
market for cigarettes, but it pales in profit comparison to markets that are
entirely illegal, and cartels aren't going to be attracted to nickel and dime
markets when they have so many other ways to make money.

American organized crime may be involved in black market cigarettes, but that
could also be viewed as a sign of them searching for new revenue streams as
their old(er) ones get shut down or become less reliable. Organized crime also
used to be involved in alcohol, not so much anymore yet it is still heavily
taxed in most peoples eyes.

Further, I assume that legal providers would need some sort of
approval/licensing from the state. Illegal providers would not pursue that. So
while they would save money dodging the licensing/tax issues they likely could
not cost compete with legal producers as they are taking a greater risk they
would want to be compensated for (i.e. arrest). The illegal producers would
then be doing a risky activity (they wouldn't be shielded by the legality if
there are rules around production/supply that they aren't following) and
incurring costs that legal producers would not incur. Whether those costs
offset the licensing/tax issues is unclear, but I suspect they would.

I don't think your claim is preposterous (that taxes need to be kept in
check), but I also am not convinced that taxes will be so high as to drive
this kind of market. Time will tell since more states have recently introduced
marijuana legalization (assuming the DEA doesn't go all gangbusters on said
states).

------
Revisor
Why should the US marijuana have a higher THC content than the Mexican one?
Can't Mexican plantations grow the stronger type? Or is there a difference in
the agricultural process that influences the THC content?

I don't understand this part of the article.

~~~
tehayj
Mexican cannabis is grown outdoor without much care, while most commercially
grown cannabis is grown in greenhouses or for small growers under artificial
light (or even in hydro setups).

Most people today do not go to their dealer and ask for the kinds of cannabis
they have. They just take whatever is there.

~~~
olalonde
I would assume that it's very difficult to assess the quality of cannabis
which puts sellers of high quality weed in a difficult position. See
<http://en.wikipedia.org/wiki/The_Market_for_Lemons>

~~~
DavidWoof
The cannabis market doesn't match Akerlof's conditions. Due to the high rate
of repeat business and relative ease of evaluating quality post-transaction,
reputation functions as an effective public quality assurance mechanism.

Forced reliance on word-of-mouth advertising is very important as well in
avoiding the market for lemons problem, but I don't think Akerlof considered
that.

------
sedev
As tempting as it is, every time I read about legalizing marijuana, I'm
reminded that implementing that legalization would be an enormous headache (
[http://steve-yegge.blogspot.com/2009/04/have-you-ever-
legali...](http://steve-yegge.blogspot.com/2009/04/have-you-ever-legalized-
marijuana.html) ). I believe that the War On Drugs is counterproductive and
suspicious to the degree that it's outright evil, but fixing the situation is
going to be very difficult and it serves no one well to ignore that
difficulty.

------
stevewillows
I would have thought that the weed for the pacific northwest would come from
BC.

~~~
loeg
I don't have any sources to cite, obviously, but from what I know of it, quite
a lot is grown locally (i.e., in Washington state). It's maybe less risky than
moving it over the Canada-US border, and Washington has been fairly soft on
marijuana users for a while (medical marijuana for two decades[0], lowest
priority for the Seattle police department since 2003[1]).

There have been ~illegal medical marijuana coops in Seattle for a long time
now[2]. (IIRC, Washington's medical marijuana laws allowed patients to grow a
few plants, but didn't allow for dispensaries[3]. Obviously federal law is
different, which is what the DEA is acting on.) Those coops are largely
stocked from locally grown plants. It wouldn't surprise me if some medical
marijuana patients also sold into the grey/black market for some extra cash.

[0]:
[http://apps.leg.wa.gov/rcw/default.aspx?cite=69.51a&full...](http://apps.leg.wa.gov/rcw/default.aspx?cite=69.51a&full=true)

[1]: [http://clerk.ci.seattle.wa.us/~scripts/nph-
brs.exe?d=CODE...](http://clerk.ci.seattle.wa.us/~scripts/nph-
brs.exe?d=CODE&s1=12A.20.060.snum.&Sect5=CODE1&Sect6=HITOFF&l=20&p=1&u=/~public/code1.htm&r=1&f=G)

[2]: [http://slog.thestranger.com/slog/archives/2011/11/15/feds-
ra...](http://slog.thestranger.com/slog/archives/2011/11/15/feds-raiding-pot-
dispensaries-in-western-washington)

[3]: <http://www.komonews.com/news/local/125532903.html>

~~~
ryanmolden
From my experience (back in the high school days, I don't dabble anymore, so
this is somewhat dated but not massively so) most high-quality marijuana in
Washington comes from north of the border. While Washington has been fairly
lax on consumers (as you point out), they have not been lax on growers, and
definitely not growers on industrial scales [0][1][2] (though 2 does say they
are seeing more local growing). Also, smuggling from BC is fairly
sophisticated and most smugglers are doing it in both directions and have some
sophistication. They generally don't just try and drive it through a manned
checkpoint. Helicopters have been known to be involved [3][4][5]. It is not
uncommon for BC marijuana to be smuggled in to Washington and exchanged for
cocaine that came to Washington from California, and came to California from
Mexico. When I was on a grand jury a couple of years back we saw numerous
indictments involving this kind of thing (i.e. smugglers from Canada bringing
down pot/ecstasy and exchanging it for cocaine and heroin in Washington).

[0] <http://www.wsp.wa.gov/crime/hotline.htm>

[1] [http://www.tri-cityherald.com/2011/08/23/1612457/3-jailed-
in...](http://www.tri-cityherald.com/2011/08/23/1612457/3-jailed-in-pot-bust-
worth-about.html)

[2] [http://www.king5.com/news/cities/renton/2-arrested-in-DEA-
ra...](http://www.king5.com/news/cities/renton/2-arrested-in-DEA-raid-of-
Renton-home-143476886.html)

[3] <http://www.ice.gov/news/releases/1211/121107seattle.htm>

[4]
[http://www.amsterdammarijuanaseedbank.com/news/Helicopters.h...](http://www.amsterdammarijuanaseedbank.com/news/Helicopters.html)

[5] [http://www.cbc.ca/news/canada/british-
columbia/story/2009/03...](http://www.cbc.ca/news/canada/british-
columbia/story/2009/03/24/bc-smuggling-operation-busted.html)

------
paulhauggis
"In Mexico relatively few people take drugs. "

Really? Where are the stats to back this up?

"the president, has said that if Americans cannot bring themselves to stop
buying drugs, they ought to consider “market alternatives”, by which he means
legalisation. Vicente Fox and Ernesto Zedillo, the two previous presidents of
Mexico, have reached the same conclusion."

So, the leaders of Mexico can't seem to stop corruption and blame the US.

"That would make it more expensive than imported Mexican pot. But home-grown
marijuana is much better quality than the Mexican sort."

Which is why there will always be a market for Mexican pot. You would think
that people wouldn't buy junk quality items...but Walmart is still a billion
dollar business.

Legalizing it will just make it easier for the cartels to get over the borders
with their product. The violence will not stop because the Mexican government
can't get their shit together and police their own country.

The reason the end of prohibition in the US meant the end of gangster-owned
territories is because you couldn't buy off any cop, official, or judge in the
country.

"IMCO reckons. Exports of other drugs, from cocaine to methamphetamine, would
become less competitive,"

Less competitive? Let's say the Cartels are all selling 3 main drugs: cocaine,
MJ, and meth. MJ goes away. cocaine and meth are now more competitive than
ever.

For being called "the economist", the sure don't understand how business
works...

~~~
apendleton
Historically speaking, there's not strong evidence of this. Despite
bootleggers' existing alcohol production and distribution infrastructure at
the end of prohibition in the US, they didn't end up as major players in the
liquor market after prohibition was repealed, and it's pretty easy to see why:
no sane consumer would choose to buy a product from a gangster in an alley
when they could just as easily buy from a reputable liquor store down the
street. This was all magnified by the fact that government regulation and
corporate oversight ensured safer and higher-quality products at lower prices.

There's no reason to think the same thing wouldn't happen with pot: if you
could buy it at the pharmacy, why would you go through a dealer? _Maybe_ if
there were huge discrepancies in cost because of high taxes, there might be an
opportunity at the margins for some arbitrage, the same way there is for
cigarette smuggling in Europe, but I'm skeptical, especially because most of
the cost, today, of buying pot isn't paying for direct production costs
(materials, fertilizer, electricity, etc.), but rather compensating the
various players involved for the risk they assume in producing and
distributing the product. This all goes away with legalization.

