Can Legalization Cut Off Drug Cartels?

Cartels

Department of Justice priority number two with respect to the marijuana enforcement is to keep revenue from the sale of marijuana from going to criminal enterprises, gangs and cartels. There is no arguing with that goal.

Mexican drug cartels are often synonymous with unspeakable violence. But trying to shut down a criminal enterprise, especially an international one, is like squeezing a balloon: The air goes elsewhere. If the commodity is not marijuana, it might be heroin or human beings. The unintended consequences can be lethal.

Consequences for Cartels

Legalization in the U.S. has long been expected to cut drastically into Mexican drug cartel profits. The Fiscal Times reported that the study “If Our Neighbors Legalize,” conducted in 2012 by the Mexican Institute of Competitiveness, suggested that legalization in Colorado would cost cartels $1.425 billion annually, and $1.372 billion in the state of Washington. Overall, the report posits that legalization would push the cartels’ annual revenues down 20 to 30 percent and cut revenue to the Sinaloa cartel alone by 50 percent.

The question, what happens next? Mexico’s criminal groups have business interests other than marijuana, making huge profits from methamphetamine, cocaine and other drugs. Some cartels, including the Zetas, are also involved in prostitution, migrant smuggling, extortion, human trafficking, counterfeiting and oil theft. Cartels seem to breed multifaceted criminal activity.

On the sunny side, some argue that legalization of drugs in the U.S. may alleviate much of the violence of the Mexican drug war, ultimately creating a legal kumbaya that permits buyers and sellers to resolve disputes with lawsuits, arbitration or advertising. As farmers in Mexico’s Sinaloa state plant poppies in place of cannabis, others see an evolution of criminal enterprise.

 

Consequences in the US

Much of this debate seems genuinely speculative. Some fear that the cartels will infiltrate legal marijuana businesses, either through extortion, or by using a legitimate business as a front for illegal activity. Others focus on the potential role for cartels in transporting a product legal in one state to another state where it is not.

Alejandro Hope, one of the authors of the study from the Mexican Institute of Competitiveness, concedes that the drastic reduction in cartel profits anticipated by the study assumes lax enforcement of interstate restrictions. Aggressive enforcement would make illegal activity more profitable. Finally, many see a redirection of cartel involvement in the current refugee crisis along the southern border.

It is possible, at this point, to feel a sudden sympathy for law enforcement. Mexican drug cartels are responding and will continue to respond to the decreased profitability of black market marijuana. Where the threat will pop up is harder to guess. Some things are clear, though. Access to legitimate banking and business finance is one way to reduce the risk of extortion rackets. Making enforcement of interstate transportation prohibitions a low priority may be a way to avoid worse problems.  Of course, that problem could also be solved with widespread legalization.

A rational immigration policy would not only be a step toward reducing human suffering, it could reduce cartel involvement as well. The law of unintended consequences, as articulated by sociologist Robert Merton in 1936, explores why large scale government action can produce results vastly different from those intended. That is the immediate challenge. In the heat of the arguments swirling around legalization, it takes a cool head to assess the potential for these consequences and to correct the course as necessary.

Anne Wallace is a New York lawyer who writes extensively on legal and business issues. She also teaches law and business writing at the college and professional level. Anne graduated from Fordham Law School and Wellesley College.

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