AMERICAN elections are
watched closely in Mexico,
which sends most of its
exports and about a tenth of
its citizens north of the
border. But Tuesday’s
presidential contest is not the
only poll that’s sparking
interest south of the Rio
Grande. On the same day,
voters in Colorado, Oregon and
Washington will vote on
whether to legalise marijuana
—not just for medical use, but
for fun and profit. Polls suggest that the
initiatives have a decent chance of passing in
Washington and Colorado (Oregon is a longer shot).
The impact on Mexico could be profound. Between
40% and 70% of American pot is reckoned to be
grown in Mexico. According to a recent study (in
Spanish) by the Mexican Institute for
Competitiveness (IMCO), a think-tank in Mexico
City, the American marijuana business brings in
about $2 billion a year to Mexico’s drug
traffickers. That makes it almost as important to
their business as the cocaine trade, which is worth
about $2.4 billion.
In Mexico relatively few people take drugs. But
many are murdered as a result of the export
business. About 60,000 have been killed by
organised crime during the past six years.
Thousands more have disappeared. Many Mexicans
therefore wonder if America might consider a new
approach. Felipe Calderon, the president, has said
that if Americans cannot bring themselves to stop
buying drugs, they ought to consider “market
alternatives”, by which he means legalisation.
Vicente Fox and Ernesto Zedillo, the two previous
presidents of Mexico, have reached the same
conclusion.
What would happen if Colorado, Oregon or
Washington were to vote for such a “market
alternative” on Tuesday? None of those states is a
very big drug market in itself. But if it were legal
to grow pot in, say, Washington, it’s not hard to
imagine that a certain amount of it would illegally
leak out into neighbouring states. Would Mexico’s
bandits find themselves undercut by “El Cártel de
Seattle”?
IMCO reckons they could be. It calculates that
the cost of growing marijuana legally is about $880
per kilo. Adding on a decent mark-up, plus the
taxes that would be applied, it puts the wholesale
price of Washington marijuana at just over $2,000
per kilo. The cost of illegally transporting the drug
adds about $500 per kilo for every thousand
kilometres that the drug is hauled, it calculates,
based on the fact that pot gets pricier the
further you get from the Mexican border. So
smuggling legal Washington dope to New York, for
instance, would add about $1,900 to the cost of a
kilo, giving a total wholesale price not much below
$4,000.
That would make it more expensive than imported
Mexican pot. But home-grown marijuana is much
better quality than the Mexican sort. The content
of tetrahydrocannabinol (THC), the part that gives
you the giggles, is between 10% and 18%, whereas
in Mexican pot it is only about 4% to 6%. Once you
adjust for quality, Washington pot would be about
half the price of the Mexican stuff, even after it
had made its expensive illegal journey to New
York. IMCO reckons that home-grown marijuana
from Colorado, Oregon or Washington would be
cheaper than the Mexican stuff virtually
everywhere in the country, with the exception of a
few border states where the Mexican variety
would still come in a bit cheaper.
As a result, it estimates that Mexico’s traffickers
would lose about $1.4 billion of their $2 billion
revenues from marijuana. The effect on some
groups would be severe: the Sinaloa “cartel” would
lose up to half its total income, IMCO reckons.
Exports of other drugs, from cocaine to
methamphetamine, would become less competitive,
as the traffickers’ fixed costs (from torturing
rivals to bribing American and Mexican border
officials) would remain unchanged, even as
marijuana revenues fell.
Legalisation could, in short, deal a blow to Mexico’s
traffickers of a magnitude that no current policy
has got close to achieving. The stoned and sober
alike should bear that in mind when they cast their
votes on Tuesday.

www.economist.com/blogs/democracyinamerica/2012/11/legalising-marijuana?spc=scode&spv=xm&ah=9d7f7ab945510a56fa6d37c30b6f1709

But home-grown marijuana is much
better quality than the Mexican sort. The content
of tetrahydrocannabinol (THC), the part that
gives
you the giggles, is between 10% and 18%, whereas
in Mexican pot it is only about 4% to 6%. Once you
adjust for quality, Washington pot would be about
half the price of the Mexican stuff, even after it
had made its expensive illegal journey to New
York. IMCO reckons that home-grown marijuana
from Colorado, Oregon or Washington would be
cheaper than the Mexican stuff virtually
everywhere in the country, with the exception of
a
few border states where the Mexican variety
would still come in a bit cheaper.