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Reducing Drug Trafficking Revenues and Violence in Mexico Would Legalizing Marijuana in California Help?

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Reducing Drug Trafficking Revenues and Violence in Mexico Would Legalizing Marijuana in California Help? INTERNATIONAL PROGRAMS and DRUG POLICY RESEARCH CENTER THE ARTS This PDF document was made available from www.rand.org as a public CHILD POLICY service of the RAND Corporation. CIVIL JUSTICE EDUCATION ENERGY AND ENVIRONMENT Jump down to document6 HEALTH AND HEALTH CARE INTERNATIONAL AFFAIRS NATIONAL SECURITY The RAND Corporation is a nonprofit research POPULATION AND AGING organization providing objective analysis and effective PUBLIC SAFETY solutions that address the challenges facing the public SCIENCE AND TECHNOLOGY and private sectors around the world. 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RAND occasional papers may include an informed perspective on a timely policy issue, a discussion of new research methodologies, essays, a paper presented at a conference, a conference summary, or a summary of work in progress. All RAND occasional papers undergo rigorous peer review to ensure that they meet high standards for research quality and objectivity. Reducing Drug Trafficking Revenues and Violence in Mexico Would Legalizing Marijuana in California Help? Beau Kilmer, Jonathan P. Caulkins, Brittany M. Bond, Peter H. Reuter INTERNATIONAL PROGRAMS and DRUG POLICY RESEARCH CENTER Funding for this study was provided by RAND International Programs through RAND's Investment in People and Ideas program, which combines philanthropic contributions from individuals, foundations, and private-sector firms with earnings from RAND's endowment and operations to support research on issues that reach beyond the scope of traditional client sponsorship. Library of Congress Control Number: 2010938755 ISBN: 978-0-8330-5107-3 The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. R® is a registered trademark. © Copyright 2010 RAND Corporation Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Copies may not be duplicated for commercial purposes. Unauthorized posting of RAND documents to a non-RAND website is prohibited. RAND documents are protected under copyright law. For information on reprint and linking permissions, please visit the RAND permissions page (http://www.rand.org/publications/ permissions.html). Published 2010 by the RAND Corporation 1776 Main Street, P.O. Box 2138, Santa Monica, CA 90407-2138 1200 South Hayes Street, Arlington, VA 22202-5050 4570 Fifth Avenue, Suite 600, Pittsburgh, PA 15213-2665 RAND URL: http://www.rand.org To order RAND documents or to obtain additional information, contact Distribution Services: Telephone: (310) 451-7002; Fax: (310) 451-6915; Email: [email protected] Preface U.S. demand for illicit drugs creates markets for Mexican drug trafficking organizations (DTOs). This paper examines how marijuana legalization in California might influence DTO revenues and the violence in Mexico, focusing on gross revenues from export and distribution to wholesale markets near the southwestern U.S. border. The analysis described here is rooted in an earlier RAND Corporation study on marijuana legalization (Kilmer, Caulkins, Pacula, et al., 2010) and presents a method of estimating the revenues that international drug traffick- ers derive from U.S. sales that is transparent and, hence, auditable and replicable. We believe that this method can be iteratively improved by research over time, whereas existing methods that rely heavily on classified information have not been subject to review and have not shown much ongoing improvement. Five technical appendixes include additional information about the weight of a marijuana joint, THC content of sinsemilla and commercial-grade marijuana, marijuana prices, Mexican DTO revenues from drugs other than marijuana, and the availability of Mexican marijuana in the U.S. They are available online at http://www.rand.org/pubs/occasional_papers/OP325/. This research was conducted under the auspices of RAND International Programs with funding from RAND’s Investment in People and Ideas program, which combines philan- thropic contributions from individuals, foundations, and private-sector firms with earnings from RAND’s endowment and operations to support research on issues that reach beyond the scope of traditional client sponsorship. RAND International Programs facilitates research on regionally and internationally focused topics for a wide range of U.S. as well as interna- tional clients, including governments, foundations, and corporations. For more information on RAND International Programs, see http://www.rand.org/international_programs/about/ or contact the director (contact information is provided on the web page). iii Contents Preface . .......................................................................................................... iii Figures . ..........................................................................................................vii Tables . ........................................................................................................... ix Acknowledgments . ............................................................................................ xi Abbreviations . .................................................................................................xiii ChAPTer One Introduction . .................................................................................................... 1 ChAPTer TwO Methods for estimating Drug-Trafficking Organizations’ Drug revenues . ........................ 5 Current Approaches for Estimating the Size of U.S. Drug Markets . ...................................... 6 Supply-Side Estimates . ........................................................................................ 6 Demand-Side Estimates . ...................................................................................... 8 Definitions and Distinctions.................................................................................... 9 Revenues Versus Profits . ...................................................................................... 9 Prices Along the Supply Chain . .............................................................................. 9 ChAPTer Three U.S. Marijuana Consumption and Mexican Drug-Trafficking Organizations’ revenues from exporting Marijuana . .............................................................................11 Total Consumption of Marijuana in the United States . ...................................................11 Mexican Marijuana’s Share of the U.S. Market . ............................................................14 Wholesale Marijuana Prices Along the Southwest Border . ................................................16 Mexican Drug-Trafficking Organizations’ Gross Revenues from Exporting Marijuana to the United States . ...............................................................................................17 ChAPTer FOUr how Might Legalization in California Affect Mexican Drug-Trafficking Organizations’ Marijuana export revenues? . ..........................................................................19 ChAPTer FIve Beyond Marijuana exports: Insights About Additional Sources of Mexican Drug- Trafficking Organizations’ Drug revenue . ......................................................... 27 Assessing the Claim That 60 Percent of Mexican Drug-Trafficking Organization Drug Revenues Are from Marijuana . .......................................................................... 27 v vi Reducing Drug Trafficking Revenues and Violence in Mexico Background . .................................................................................................. 27 There Is No Empirical Justification for This Figure That Can Be Verified . .......................... 28 Subsequent National Drug Intelligence Center Estimates Reveal Large Uncertainty About These Numbers . ......................................................................................... 28 The $8.57 Billion Figure for Drug-Trafficking Organizations’ Marijuana Revenues Is Not Credible . ..................................................................................................29 Exploratory Analysis of Gross Export Revenues for Other Drugs . .......................................29 Drug-Trafficking Organizations’ Revenues from Domestic Distribution Within the United States . ........................................................................................................31 Concluding Thoughts . .........................................................................................32
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