Cannabis Legalization Effects on the Cartels’ Bottom Line

For years anti-drug advertisements warned their audience of the violent cartels they unknowingly funded through their marijuana habit. These advertisements were largely correct. The illegal smuggling of marijuana by Mexican cartels into the U.S. brought in billions of dollars and was a critical component of cartel operations. Since 2006, 150,000 homicides have been connected to cartel violence in Mexico.

Today, even if you illegally consume cannabis in the U.S., you no longer have to carry the devastating consequences of the illegal drug trade on your conscience. If you’re in the 37% of America that lives in a state without legal access to medical or recreational marijuana, chances are the illegal marijuana in your area is the product of states with legal access (namely California).

Since 2013, Marijuana seized by the U.S. Border Patrol has more than halved, dropping from 1,450 tons to 600 tons. In this time, legal access to either medical or recreational marijuana has grown from 37% to 63% of the U.S. population. The shift of Marijuana production to the U.S. from Mexico isn’t the only aspect of the trade that is now costing cartels.

The legalization of marijuana in 29 states (and more recently Oklahoma) has caused prices to collapse. In 2010, Colorado marijuana prices averaged about $3,500 per pound. Today, the national average is $1,292 per pound. This 63% decline in price, combined with the 59% decline in marijuana coming over the border, has put a dent in cartels’ bottomline.

2018 is on track to be the first time in at least the past 6 years (and presumably much longer) that, of all drug seizures, marijuana is not the most valuable. Cocaine and Methamphetamine have eclipsed marijuana in total value of all seized drugs. The arrival of fentanyl in 2016 in response to the opioid crisis may signal a new era in drug smuggling and a shift from cartel reliance on marijuana.