Legal cannabis is cutting into Mexican drug cartels' profits

Legal cannabis may be doing at least one thing that a decades-long drug war couldn't: taking a bite out of Mexican drug cartels' profits.

The latest data from the US Border Patrol shows that last year cannabis seizures along the southwest border tumbled to their lowest level in at least a decade.

Agents snagged roughly 1.5 million pounds of cannabis at the border, down from a peak of nearly 4 million pounds in 2009.

The data supports the many stories about the difficulties cannabis growers in Mexico face in light of increased competition from the north.

As domestic cannabis production has ramped up in places such as California, Colorado and Washington, cannabis prices have fallen, especially at the bulk level.

"Two or three years ago, a kilogram [2.2 pounds] of cannabis was worth $60 to $90," a Mexican cannabis grower told NPR news in December 2014. "But now they're paying us $30 to $40 a kilo. It's a big difference. If the US continues to legalise pot, they'll run us into the ground."

And it's not just price - Mexican growers are facing pressure on quality, too. "The quality of cannabis produced in Mexico and the Caribbean is thought to be inferior to the cannabis produced domestically in the United States, or in Canada," the DEA wrote last year in its 2015 National Drug Threat Assessment. "Law enforcement reporting indicates that Mexican cartels are attempting to produce higher-quality cannabis to keep up with US demand."

If the decline in border seizures is any indication, however, it appears that Mexican growers are having difficulty competing with domestic production. Some federal authorities are beginning to believe this is the case.

Noting the decline in border seizures, Michael Botticelli, director of the Office of National Drug Control Policy, told a Senate committee last year that "given the increase in cannabis use among the American population, this suggests that people using cannabis in the United States may be increasingly obtaining cannabis from domestic sources."

Experts caution, however, the recreational cannabis market in places, such as Colorado and Washington, is likely having a smaller impact than the much larger and older medical cannabis market in many states, primarily California.

"Those trying to understand what has happened with US cannabis consumption and imports over the past decade need to pay close attention to licensed and unlicensed production in medical states, especially California," Beau Kilmer of the RAND Corporation said in an email.

California remains the country's leader in the illicit production of cannabis, as well as cannabis grown legally under the state's medical cannabis regime.

A good barometer of this is the DEA's data on cannabis eradication, which indicates where law enforcement officers discover and destroy cannabis crops. In 2014, California accounted for more than 60 percent of all cannabis plants seized in the United States.

Given those numbers, "it's still too soon for production in Colorado, Washington, Oregon and Alaska to be a bigger story than California," said Jonathan Caulkins, a Carnegie-Mellon drug policy expert, in an email.

Still, there's no question that drug production south of the border is changing. The DEA has even found evidence that the flow of illegal cannabis is starting to reverse, with some cases of US cannabis being smuggled into Mexico.

The cartels, of course, are already adapting to the new reality. Seizure data appears to indicate that with cannabis profits tumbling, they're switching over to heroin and meth.

- The Washington Post