Cartels and Colorado Pot
A recent story in USA today had federal authorities claiming drug cartels are moving into the Colorado’s legal marijuana industry. The concern is that the cartels are using legal marijuana operations as a front to supply marijuana to other states for an illegal profit. Tom Gorman, head of the Rocky Mountain Drug Trafficking Task Force, said, “You have a very desirable product with 48 other states that are potential customers. My God! What a market that is. Our intelligence tells us, and all indications are (drug cartels) are going to move in if they haven’t already.”
The story also notes that federal authorities raided ten medical marijuana dispensaries on November 21 of 2013 on suspicion of trafficking marijuana to other states. And Mr. Gorman reminded people of the high level of violence associated with the cartels, stating “Cartels are treacherous and they have no sense of morality.”
Now let’s do a bit of reality checking on Mr. Gorman’s concerns.
- Drug Cartels are moving into Colorado’s legal marijuana industry. It is without doubt that the drug cartels are already controlling the illegal drug market in Colorado and have been for decades. In fact, the legal marijuana business is the single biggest threat to their operations. It is estimated that 60% of drug cartel revenue stems from marijuana sales. Every dollar spent in the legal market is a dollar taken away from the drug cartels, who have now lost their monopoly on marijuana sales.
In fact, it is quite interesting that NO Charges have yet been leveled against the legal pot operations that were raided on November 21 on allegations of smuggling marijuana to other states. With over 90 days since that raid, a federal statement that “the investigation is continuing” speaks volumes.
- Cartels will dominate and control the legal marijuana business. This is the big concern. However, the country’s experience with legal gambling convinces me that the legal market can keep organized crime out of the marijuana business. As legal gambling became more widespread, the fear was always that organized crime would take control. But tight governmental control of gambling operations has proven effective against organized crime involvement.
Cartels run their operations with a business model that relies on violence, corruption and intimidation. They cannot compete with American entrepreneurs in a free, regulated marketplace.
- Legal marijuana from Colorado is now showing up in other states. Are there now people who are seizing the opportunity to buy quantities of marijuana in Colorado and take them to other states for profit? It is 100% lock-certain there are a number of people who are taking advantage of the situation to make a profit for themselves. Could drug cartels be among those? The economics argue against it. Why buy higher price legal marijuana when they have their own supply and their own networks that can move marijuana anywhere in the country more cheaply than legal pot from Colorado? In fact, I’d argue that this is a positive development for those states. Think about it. The most likely source of this marijuana is non-cartel entrepreneurs, illegally of course, bringing legal marijuana to other states for a profit. The fact that this is not CARTEL PRODUCT is important as these dollars are not going to enrich cartel members but in fact are now competition for cartel product. As Mr. Gorman points out, the cartel product comes with a lot of violence and pot from a legal source takes away the money that fuels that violence.
Finally, when Mr. Gorman says “Cartels are treacherous and they have no sense of morality” he is speaking absolute truth. What he fails to recognize is that it is prohibition which gives them their power. Everywhere in the country, every day, Americans are victimized in the illegal drug market. For 50 years we’ve waged a War on Drugs that promised to end drug use and all its associated problems. It is clear now to the majority of Americans the promise of the War on Drugs cannot be realized. Colorado and Washington State are trying a new strategy. It will not be problem free and the issue of differing cross state regulations is one that authorities must address.
We all need to keep in mind addressing this problem is an improvement over trying to cope with the ongoing violence that is embedded in the illegal market.