Bloomberg Editorial: Legal US Pot Won’t Translate Into Peace In Mexico

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MARFA, Texas — There’s been a great deal of speculation about the impact in Mexico of marijuana legalization in some American states.

Former Mexican President Vicente Fox, current Guatemalan President Otto Perez Molino, former Colombian Defense Minister and current President Juan Manuel Santos and Uruguay’s President, whose country has legalized the recreational use of marijuana, have all called for marijuana’s legalization or, at the very least, a reconsideration of existing law in their own countries and elsewhere.

For most of these politicians, the rationale is that legalization will weaken the drug cartels’ grip on their nations and lessen drug-related violence.

Fox traveled in June to Seattle in advance of the state of Washington’s ballot initiative that was recently passed legalizing the sale of marijuana. He was there to support a marijuana store owner who wanted the ballot to pass, which it did.

Now, a leading Mexico security analyst says any tilt toward the legal use of marijuana in the United States will not mean an end to the Mexican drug war.

Former Mexican intelligence officer Alejandro Hope is now an analyst at IMCO, the Spanish acronym for Instituto Mexicano para la Competitividad, the Mexican Institute for Competitiveness.

Writing in Bloomberg News, Hope says the economic imperative for Mexico’s cartels only partially depends on the marijuana trade.

He theorizes that were Mexican organized crime to forfeit its marijuana customers and distribution rings to legal outlets in the U.S., the cartels would still remain powerful and economically vibrant.

Hope states:

Losing the marijuana trade would be a blow to their finances but it certainly wouldn’t put them out of business.

Hope says the pot trade is substantial, representing up to $2 billion every year. That may seem a staggering amount of money, but Hope says that only is about one third of all cartel proceeds; heroin, cocaine and other illicit activities such as human smuggling, extortion and organized kidnapping represent up to another $4 billion annually.

UCLA professor Mark Kleiman, an expert on the economic implications of legalization, says Hope’s thesis is correct. Kleiman told the Fronteras Desk that cartels are vertically integrated organizations that move all kinds of products; human beings, pirated DVDs, stolen cars and furniture.

Kleiman says Mexico would benefit were marijuana legalized but he says that benefit is “easy to overstate.”

“Large criminal organizations that are in are intentionally violent and that in some cases threaten state control of territory would lose money,” he explained. “That would make them a somewhat smaller threat to Mexican civil society and the Mexican state, and there would be somewhat less bloodshed. Those are all good things for Mexico. But the Mexican security problem would remain, based on the drug traffickers’ other product lines. The problem would not go away.”

In his editorial, Hope says:

Marijuana output is concentrated in five states — Chihuahua, Durango, Sinaloa, Michoacan and Guerrero that accounted for approximately a third of all homicides committed in Mexico in 2012. Assuming improbably that half of all murders in those areas were marijuana-related, we can estimate that the full elimination of the illegal marijuana trade would reduce Mexico’s homicide rate to 18 per 100,000 inhabitants from 22 — still about four times the U.S. rate.

While there is debate over the connection between the cannabis trade and violence, there is some agreement that legal marijuana would cut about 20 percent of the cartels’ estimated yearly revenue from exports and up to 30 percent of their domestic drug proceeds within Mexico.

study by the RAND Corporation in 2010 looking into the possible ripple effect of a California proposal to legalize marijuana concluded that were it to pass — it did not — cartel drug income might fall by 20 percent.

Using debatable arithmetic based on the hypothetical price of marijuana smuggled to other states from Oregon and Washington, another study by IMCO said legalization would mean a loss to Mexico’s cartels of $1.425 billion to the cartels if Colorado legalizes — it recently did so — $1.372 billion if the state of Washington did the same, which it now has.

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