Mexico Study: US Legalization Cuts Cartel Profits
A study released Wednesday by a respected Mexican think tank asserts that proposals to legalize the recreational use of marijuana in Colorado, Oregon and Washington could cut Mexican drug cartels’ earnings from traffic to the U.S. by as much as 30 percent.
Opponents questioned some of the study’s assumptions, saying the proposals could also offer new opportunities for cartels to operate inside the U.S. and replace any profit lost to a drop in international smuggling.
The ballot measures to be decided on Nov. 6 would allow adults to possess small amounts of pot under a regimen of state regulation and taxation. Polls have shown tight races in Washington and Colorado, with Washington’s measure appearing to have the best chance of passing. Oregon’s measure, which would impose the fewest regulations, does not appear likely to pass.
The study by the Mexican Competitiveness Institute, “If Our Neighbors Legalize,” assumes that legalization in any state would allow growers there to produce marijuana relatively cheaply and create an illicit flow to other states, where the drug could be made available at cheaper prices and higher quality than Mexican marijuana smuggled across the international border.
The report, based on previous studies by U.S. experts including those at the RAND Corporation, assumes that Mexican cartels earn more than $6 billion a year from drug smuggling to the U.S.
It calculates the hypothetical, post-legalization price of marijuana produced in Oregon, Washington and Colorado and sold within those states and smuggled to other states. It then assumes that purchasers around the U.S. will choose domestic marijuana when it is sold cheaper than the current price of Mexican marijuana. That choice will lead to a loss of $1.425 billion to the cartels if Colorado legalizes, $1.372 billion if Washington approves the ballot measure, and $1.839 billion if Oregon votes yes, the study says