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Rand Study: Marijuana Legalization Would Markedly Cut Mexican Drug Cartel Profits

Jon Walker

A policeman cordons off a crime scene where gunmen tried to kidnap a government official outside the Topo Chico prison in Monterrey, June 11, 2010. A recent study determines legalizing, taxing and regulating marijuana could eliminate all the profits the Mexican drug cartels currently make thanks to cannabis prohibition. (Credit: Reuters/Tomas Bravo)

The Rand Corporation is notorious for its history of pro-drug-war
studies. A report of theirs from earlier this year on Proposition 19 was
full of dubious claims based on what even they had to admit were just guesses.
Once again, with their newest report about marijuana legalization, the
Rand Corporation buries the lede from their own study, one which
strongly supporters the anti-cartel claims made by marijuana reformers.
While not part of the press release, the study, in fact, backs up one of
the main arguments of the supporters of marijuana legalization. The
study determines legalizing, taxing and regulating marijuana could
eliminate all the profits the Mexican drug cartels currently make thanks
to cannabis prohibition. From the Rand Study (PDF):

We believe that legalizing marijuana in
California would effectively eliminate Mexican DTOs’ revenues from
supplying Mexican-grown marijuana to the California market. As we
elaborate in this chapter, even with taxes, legally produced marijuana
would likely cost no more than would illegal marijuana from Mexico and
would cost less than half as much per unit of THC (Kilmer, Caulkins,
Pacula, et al., 2010). Thus, the needs of the California market would be
supplied by the new legal industry. While, in theory, some DTO
employees might choose to work in the legal marijuana industry, they
would not be able to generate unusual profits, nor be able to draw on
talents that are particular to a criminal organization.

Of course, this is not the story the Rand Corporation wanted to push. Instead, their press release press release was shaped to encourage the media to write stories with a fairly negative spin on Prop 19 –-and cited by supporters of Proposition 19–-that marijuana accounts for
60 percent of Mexican drug cartel profits. According to their study,
which they admit is full of uncertainty, marijuana sold in the US
accounts for only about $2 billion in annual revenue, and about 15 to 26
percent of all revenue for Mexican drug cartels. Not surprisingly,
since California is only one of 50 states, legalization of marijuana in
California alone would, they project, only cut off a portion of the
cartels’ profits from marijuana. This leads to a finding by Rand–which
they try to present as damaging to pro-legalization arguments–that the
passage of Prop 19 would only eliminate about two to four perent of
cartel profits.

Leaving the vagaries of their numbers aside, any supporter of
marijuana legalization knows that you won’t fully eliminate the illicit
profits from marijuana in this country until it is fully legalized and
regulated. No one has been claiming just the passage Prop 19 alone would
eliminate all of the Mexican drug cartels’ marijuana profits across the
whole country. Prop 19 is just the first big step toward a broader
adoption of a more sensible marijuana policy that denies the cartels a
huge source of funding.

What is important is that even this Rand study fully backs up the
inherent logic of those pushing for marijuana legalization (see page
19). The study shows legalizing and regulating marijuana in one region
would effectively shut down the cartels’ lucrative marijuana trade to
that location. Whether legalizing and regulating marijuana in this
country would take away 60, 50, or only 26 percent of the dangerous
Mexican drug cartels’ revenue is impossible to pinpoint, due to the lack
of good statistics on illegal products. Whether legalizing marijuana
would make the murderous cartels terrorizing Mexico $6 billion a year
poorer or a mere $2 billion, I still think it is a very good
idea to take the first step toward depriving dangerous criminals of
billions of dollars in revenue.

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