Legal Marijuana is Reducing the Cross-Border Drug Trade

Legal Marijuana is Reducing the Cross-Border Drug Trade June 11, 2015

Bloomberg News reports something that was easily predictable, that as more and more states legalize marijuana either for medical or recreational uses, the amount of pot crossing the border is decreasing, along with the influence, wealth and violence of the cartels that control it.

With marijuana now permitted in some form in 23 U.S. states, the usual flow of pot from south to north has slowed and, to a growing degree, reversed. This was never imagined as a benefit of Nafta. Now, the expanding U.S. pot industry is transforming the drug distribution patterns of the notorious cartels—forcing them to deal more exclusively in heroin, for example—and leading to both cultural and economic change in Mexico’s own consumption of marijuana. Two opportunities may arise: a business boom for legal pot producers in the U.S. and the chance to concentrate the drug war on far more deadly substances…

In the past, only a sixth of cannabis consumed in the U.S. was grown within the 50 states; today that’s up to at least one-third, according to the United Nations. Pot from Colorado and California has started to displace the low-grade stuff that’s long flowed in by truck, tunnel, human mule, and boat from Mexico. Marijuana seizures by U.S. Customs and Border Protection at California border crossings totaled 132,075 pounds in fiscal 2014, half of the amount five years earlier.

Colorado weed carries such cachet in both the U.S. and Mexico that entrepreneurs like Shawn Lucas, founder of a Denver grow-equipment supplier called Dutch Hort, say it could one day be a global brand. The state’s burgeoning export prowess has already irked Nebraska and Oklahoma, where marijuana is still illegal. They claim a rise in crime related to pot from their neighbor and, in December, petitioned the U.S. Supreme Court to shut down Colorado’s pot production. In Mexico City, young men mingling at an outdoor market and hawking mota—or pot—namecheck brands popular north of the border. By 2020, if marijuana were fully legalized, American sales might reach $35 billion, says Matt Karnes, a former media analyst at First Union Securities who now runs New York-based cannabis researcher GreenWave Advisors. That’s not much less than the $38.5 billion Americans spent at pizza restaurants last year…

The drug war isn’t over. Yet there has been an historic change at the border. The fight can now focus on heroin and other deadly substances. The toll of the war on marijuana has been huge in terms of security and lives. Decades of prohibition never slowed the flow of pot from Mexico; legalization did. The choice is now who controls that flow: an unnamed dealer in Juárez or a legalized cross-border industry.

If it were legal everywhere, most of the negative externalities of the drug market would be eliminated. Black markets inevitably create violence. You don’t see Seagram’s and Budweiser having violent turf wars over distribution of alcohol, but we did during prohibition. We’ve still learned nothing from that.

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