Drug Law

Would Legal Marijuana Help or Hurt Mexican Drug Cartels?

| by Reason Foundation

By Mike Riggs

A recurring point of contention in the debate over marijuana legalization is what liberating the herb from its shadow-economy confines would do to Mexico's cartels. Would it destroy them, or just shift their energies to trafficking other drugs? 

Throughout 2010, Prop. 19 advocacy group Yes On 19 argued that legalizing weed would "cut off funding to violent drug cartels across our border who currently generate 60 percent of their revenue from the illegal U.S. marijuana market." 

Then in October, 2010, a month before the vote on Prop 19, the RAND Corporation released a study that suggested cartels were getting only 16 percent of their revenue from marijuana, and concluded it "is unclear whether reductions in Mexican [cartels’] revenues from exporting marijuana would lead to corresponding decreases in violence. Some mechanisms suggest that large reductions in revenues could increase violence in the short run but decrease it in the long run."

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The study infuriated drug law reform advocates, not least because it relied on numbers provided by the Office of National Drug Control Policy. (The ONDCP also disagrees that legalization would drastically affect cartels.

Prop 19 failed, and the question of how it would have affected Mexico remains unanswered. Writing in the New York Times this past weekend, drug war analyst Sylvia Longmire suggested that weed is only part of the picture, and that legalizing it isn't a fix-all:

Legalization would deliver a significant short-term hit to the cartels — if drug trafficking were the only activity they were engaged in. But cartels derive a growing slice of their income from other illegal activities. Some experts on organized crime in Latin America, like Edgardo Buscaglia, say that cartels earn just half their income from drugs.

Indeed, in recent years cartels have used an extensive portfolio of rackets and scams to diversify their income. For example, they used to kidnap rivals, informants and incompetent subordinates to punish, exact revenge or send a message. Now that they have seen that people are willing to pay heavy ransoms, kidnapping has become their second-most-lucrative venture, with the targets ranging from businessmen to migrants.

Another new source of cartel revenue is oil theft, long a problem for the Mexican government. The national oil company, Pemex, loses hundreds of millions of dollars’ worth of petroleum every year to bandits and criminal gangs who tap into pipelines and siphon it off. Now the cartels are getting involved in this business, working with associates north of the border to sell the oil to American companies at huge markups.

Cartels are also moving into the market in pirated goods in Latin America. The market used to be dominated by terrorist groups like Hezbollah and Hamas, who operated in the triborder area of Argentina, Brazil and Paraguay. Now the field is being overtaken by Mexican cartels, which already have so much control over the sale of pirated CDs, DVDs and software that many legitimate companies no longer even bother to distribute their full-price products in parts of Mexico.

Taking another page from traditional organized crime, cartels are also moving into extortion. A cartel representative will approach the owner of a business — whether a pharmacy or a taco stand — demanding a monthly stipend for “protection.” If those payments aren’t made on time, the business is often burned to the ground, or the owner is threatened, kidnapped or killed.

A popular cartel racket involves branded products. For example, a cartel member — most often from Los Zetas and La Familia Michoacana, two of the largest and most diversified cartels — will tell a music-store owner that he has to sell CDs with the Zetas logo stamped on them, with the cartel taking a 25 percent cut of the profits. Noncompliance isn’t an option.

As Longmire evinces, Mexico's drug problem is a reflection of deeper institutional problems. A Wikileaked State Department cable, for instance, points to the rottenness of Mexico's law enforcement institutions

Mexican security institutions are often locked in a zero-sum competition in which one agency's success is viewed as another's failure, information is closely guarded, and joint operations are all but unheard of. Official corruption is widespread, leading to a compartmentalized siege mentality among "clean" law enforcement leaders and their lieutenants. Prosecution rates for organized crime-related offenses are dismal; two percent of those detained are brought to trail. Only 2 percent of those arrested in Ciudad Juarez have even been charged with a crime.

Longmire doesn't advocate throwing the baby out with the bathwater. "We need to stop viewing casual users as criminals, and we need to treat addicts as people with health and emotional problems," she writes. "Doing so would free up a significant amount of jail space, court time and law enforcement resources. What it won’t do, though, is stop the violence in Mexico."