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Economics 101

Tracing the U.S. heroin surge back south of the border as Mexican cannabis output falls in the Washington Post.

Farmers in the storied “Golden Triangle” region of Mexico’s Sinaloa state, which has produced the country’s most notorious gangsters and biggest marijuana harvests, say they are no longer planting the crop. Its wholesale price has collapsed in the past five years, from $100 per kilogram to less than $25.

“It’s not worth it anymore,” said Rodrigo Silla, 50, a lifelong cannabis farmer who said he couldn’t remember the last time his family and others in their tiny hamlet gave up growing mota. “I wish the Americans would stop with this legalization.”

Growers from this area and as far afield as Central America are sowing their plots with opium poppies, and large-scale operations are turning up in places where authorities have never seen them.

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24 comments to Economics 101

  • Daniel Williams

    This underscores the point I’ve made numerous times that the cartels would not be ruined by legal pot, but that they’d attempt to make up lost revenue by increasing the marketing and distribution of the remaining drugs in their bag.

    So we should not be surprised to see an influx of raw opium to satisfy our smoking pleasure; a pound of opium is far more lucrative than a pound of pot.

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    • darkcycle

      They may not be ruined, but it cuts out their number one cash crop. That they are trying to make up for lost revenue is the point here. And the demand for opium will still be lower than the demand for pot, no matter what the price point. Damage done.

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      • War Vet

        You don’t think opium could be the next k2 or X craze, considering a lot of people don’t want to become addicted to heroin or pills? And wouldn’t our movement in legalizing pot entice many opiate addicts and would be opiate addicts to go all natural with the herb–flower. I’ve heard people talk about trying opium back in the 70’s and 80’s as a specialty item. I’ve never heard of it being in my state and think it would be popular amongst tweekers and opiate addicts and experimenters of other substances

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        • darkcycle

          No. The population use rates now are actually the same, or nearly the same as they were when you could buy Heroin cough syrup at your local pharmacy. The use rates fluctuate around a baseline, and the economy, wars and other social factors (ethnicity, etc.) play a much larger role than availability in the patterns that occur.

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        • Daniel Williams

          A few puffs of opium is not nearly as potent as hydrocodone (synthetic morphine), the number one drug of choice by millions of Americans. It could easily be to heroin what beer is to bourbon.

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      • Duncan20903

        .
        .

        We shouldn’t forget to mention that their retail distribution chain for Mexican ditch weed consists of perhaps as much as 90% of low level retail vendors who are fans of cannabis. I think it safe to presume that a very significant number of those vendors aren’t going to move into selling heroin, crack, meth whatever. There is an awfully large percentage who just see nothing wrong with selling reefer. Whether or not absolute prohibition of the popular substances on the DEA’s naughty lists has failed and those substances would be better controlled by not assigning the market to gangsters is irrelevant.

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    • Matthew Meyer

      I do believe there are some rough moments ahead as people realize that you cannot stop at reforming cannabis laws.

      And for what it’s worth, folks in Humboldt have already looked at the same idea (growing poppies instead of ganja) due to falling domestic cannabis prices.

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    • Duncan20903

      .
      .

      Supply follows demand Daniel, not vice versa. Why in the world would you think there is $10 billion + of gross revenue that hasn’t been exploited by the black market vendors? Is it that you think that the gangsters live by the motto of “take what you need and leave the rest”? Or perhaps you think that the current gangsters are suffering from amotivational syndrome from being around all of that bunkweed?

      Reality is that hard drugs have a very, very inelastic consumer demand. The customers have to be taken from someone else. That someone else is likely to object to the idea.

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      • Daniel Williams

        There was no demand for crack before importers, experiencing a glut of cocaine due to believing Reagan was going to interdict more than he did, turned it into rock to extend its shelf-life. So there’s that…

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    • claygooding

      The drug market is already saturated and anyone wanting drugs has them so for them to increase quantity is going to bring prices and profits down

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  • drwoo

    As a proud broke smoker of Schwag I for one am glad that the reason they are paying only $25 per kilo is because interdiction at the border is working and it’s just so much easier for the cartels to grow it on American soil. National Parks , National Forest, hunting leases and my supply is still uninterrupted and the same price.

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    • allan

      except this:

      interdiction at the border is working

      seizure rates only fluctuate. the gubmint seizes no greater percentage now than at any other time.

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    • Appreciate the info, but you are being part of the problem instead of the solution.

      Get legal and buy American.

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      • War Vet

        Most of the time, you’ve got no choice in the mater between buying Blue Dream and Mexi. You give a guy your money because he knows where to get the best ‘American Grown’, 8 out of 10 times, but ends up with Mex because America is running low on good American buds and thus you didn’t have a choice . . . that’s how it has been since July: 1/3 Mex and 2/3 American. My cops are to blame if I buy Mex; I’m to blame if I buy cannabis. You cannot go a week with only 22-24 hrs of sleep and pot helps induce sleep and sometimes you’ve just got to make do, even if you pick mex because it’s the only choice offered. Just because it finances the cartels, doesn’t mean it doesn’t put food on the table for a poor family . . . soon, they’ll use cannabis as hemp and create jobs there when we legalize it all. My local cop is to blame if my money kills a child since his law and action turned my money to black and not green, automatically . . . not every Mexi brick is cartel owned, some is family and not la familia either, but small mom and pop mex. It all depends on who knows who . . . I blame all the teens and college kids not willing to move cutie-pies and lbs. from Colorado to here. I’m too old to bring back the Lyndon Baines johnson–been there, dealt that. In Some places, only Rap music smokes hydro, not the smokers listening to it since it will not be seen out in the small towns and farms.

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        • I know you are right war vet. The whole thing just gets under my skin. I still tip the scales wherever I can. It’s good advice if there is some choice in the matter.

          There is some 300 MPH “choice” coming down the tracks right now.

          My apologies drwoo. Guess I am a bit testy today.

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        • War Vet

          Who doesn’t get angry or a bit testy when hearing the name Kevin S and the rest of the drug war hoopla. Wonder why they tried not to mention Lord Vol– in Harry Potter.

          And who’s to know if it’s Mexican Hydro from either down there or up here? How will you know if you are buying legally medical or legally legal? All these new Mexican restaurants in small mostly white towns with maybe 800 Hispanics. They do a lot with race horses and construction. I wouldn’t put it past them to believe a good $100 Mill of fine Mexican dro is made a year in America . . . falsely labeled and not taxed. How would you keep the cartels from setting up ‘legal’ weed shops? State ran, Big Marijuana (it’s not a bad word, especially in this big capitalist environment of ours) . . . mom and pop and specialty shops as well, since we are capitalists. A good way to reduce the cartel’s ability to compete legally with more competition. Who really wants them to profit with our victory? Just like we don’t want that one former DEA guy to sell legal, but he does.

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      • drwoo

        I am only a part of the problem because of where I live. Louisiana one of the most draconian when it comes to marijuana laws. Any kind of good herb here is $25 / gram $400+ an ounce. Most of the good herb around these parts is grown in Houston by the Vietnamese and the Mexicans anyway. Its all about price for me. I am priced out of the good shit here. 1 income 3 person family, but I am not crying about it. I am however saving my bitcoins so I can move to Colorado next summer. I have already informed my boss and family. You are right sir no need to apologize. Time for me to get legal.

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  • A bit OT, but well within Economics 101 parameters.

    Who’s the Pusher Now?
    Thanks to Steve Elliott for the one up on the video.
    http://youtu.be/kSw_vILNf6s

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  • claygooding

    If the DEA had not tightened up on oxys there wouldn’t be a sudden increase in inexperiencd users buying an unknown
    quality of heroin,,as with all chemical drugs by the time you realize it was the good stuff it is too late.

    All a part of the whack-a-mole drug policy,,pressure on one point causes the cartels and drug users to go the way of least resistance.

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  • Look at this crazy guy:
    http://www.cnbc.com/id/101883610
    “WARNING!!! Legalizing pot will make income inequality a lot worse”
    Is that headline hysterical enough for ya? From the never-inaccurate and always-concerned-about-trueness, cnbc. Complete with bearded stoner photo!

    Quoting patty qennedy as a credible source? Saying weed is addictive like it’s common knowledge? No reader comments necessary? Ah, precious, just precious!

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    • Matthew Meyer

      He does have a point about the desire for strict controls setting the stage for massive rent-seeking, even if the conclusion about income inequality is overblown.

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  • cy klebs

    On the day before a 6 week vacation, the House of Representatives had the claims (planes, trains and automobiles) which no one bothers to correct. That website needs to be deleted from favorites!

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  • CJ

    There is absolutely nothing wrong with using and doing heroin or pain pills. When I first got involved in this reform world online many years ago I was so angry and bitter and I directed alot of it at pot smokers that I felt were outrageously hypocritical. I have to say, in all seriousness, I did use the term marijuana majority way before Kevin Sabeet made it one of his catch phrases. But I realized alot of things, one of which is I was behaving worse than the people I was angry with. I was being a bigger hypocrite because I was behaving like a nutcase rightwing religious fanatic, intolerant. I will maintain that my devotion to the poppy, particulary after it’s been manufactured into glorious heroin is still definitely religious in many ways.

    I found out a few things, I mean, people first of all not because they’re bad or evil and not intentionally either, they just did not know anything or enough about heroin and understandably believed alot of the nonsense alot of us knew was wrong but couldnt quite put a finger on until we came here.

    Also I think I’ve been able to change some opinions, here in the real world, I am very free with admitting that i use heroin everyday and people do get shocked and it’s very freshing to see people open up their minds, get educated.

    Cannabis vs Poppy is not the way, man. Different strokes for different folks. It appears to me that alot of men around my age love fake blonde chicks, I am a red head man myself or deep black hair works, actually my favorite is totally shaved head but clearly that’s not the number 1 preference.

    The best line in the article was the farmer who said “I wish the Americans would stop with the legalization”

    oh im sorry man, i’m sorry in your dirt shack out there that you’re profits from an industry that over all has personally killed my friends and ruined my life etc. etc. has had to stop. Heaven forbid you should throw on your grass weaved sandals and walk into the city, find a job, help your country prosper to levels that people will actually stay there and help the country grow as opposed to running away. Instead of hiding in the boonies profiting off our blood go do something useful. “I wish these Americans would stop with the legalization” what a jackass!!!!!!!!

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  • Duncan20903

    .
    .

    BTW, I have boilerplate for when a sycophants Please disregard the tone of disgusted malevolence that’s reserved for the prohibitionists.

    The prohibitionist parasites and their sycophants assert that “drug users” are responsible for the crimes of organized criminal syndicates because the users send them money by buying their product. If only the users would stop doing that the cartels would wither away and die from money deprivation.

    The drugs law reform advocate points out that establishing a well regulated retail supply chain and domestic production would take that money away from the foreign criminal interests.

    The prohibitionist declares that it will not deprive the cartels of their income because the criminals would replace that cash flow by just switching to other criminal profit centers.

    So if everyone quit buying their product the crims wouldn’t be able to replace the same cash flow by just switching to other criminal profit centers?? Neither consistency nor continuity are the strong suit of the prohibitionist.

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