Biggest blow to Mexico drug cartels? It could be on your state ballot.

A Mexican study says legalizing marijuana for recreational use in the US - an issue on the ballot in three US states - could cut the proceeds of Mexican drug gangs by 30 percent.

By , Staff Writer

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    In this October 2010 file photo, marijuana plants flourish under grow lights at a warehouse in Denver.
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Over the past year, the world has eyed Latin America as it has forged forward, in both policy and politics, with a rethink of the “war on drugs.” (See our recent cover story on “Latin America reinventing the war on drugs” here.)

But tomorrow, the world will be watching the United States, the birthplace of the “war on drugs,” as three states vote on legalizing the recreational use of marijuana.

A “yes” for any state would have huge implications for the US, but the referendums would also have ramifications south of the border. A new study released by the think tank Mexican Competitiveness Institute (IMCO) shows that if the referendums do pass, proceeds for Mexican drug trafficking organizations could be cut by up to 30 percent, depending on which state goes forward with the referendum. (Read the report here in Spanish.)

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“The possible legalization of marijuana at the state level in the US could provoke a considerable loss in proceeds of drug trafficking for Mexican criminal organizations,” the report concludes. In fact, it says, ballot initiatives Tuesday could represent the biggest blow to Mexican criminal syndicates in decades.

IMCO assumes that better quality and cheaper marijuana – factoring in such things as transport savings – produced in the states of Washington, Oregon, or Colorado, where voters will have a chance to accept or reject new marijuana initiatives, would undercut demand for Mexican pot.

The ballot initiatives, which polls show have a chance of passing in Washington and Colorado but are less likely to pass in Oregon, go well beyond medicinal marijuana usage. (So far, 17 states allow that, with another three voting on it during this election cycle.) But Washington, Colorado, and Oregon are voting on state-regulated markets that would allow residents to smoke pot recreationally, not just to relieve pain.

If that wish is granted, the impact depends on the US response.

“There is a significant caveat,” says the report’s author Alejandro Hope, “which is that all of the displacement effects that we describe are contingent on the federal government not clamping down on whichever states decide to legalize.”

In other words, if no “illegal” drug market emerges in Colorado – say, to supply Ohio, where pot would still be illegal –  then Mexicans will still have the upper hand as they'll have illegal markets to supply in other states.

This was a similar caveat presented before a 2010 initiative in California, which voters ultimately rejected. RAND looked at what Proposition 19's impact would be on drug-trafficking organizations, or DTOs, in Mexico. “If legalization only affects revenues from supplying marijuana to California, DTO drug export revenue losses would be very small, perhaps 2 to 4 percent,” the report concludes.

“The only way legalizing marijuana in California would significantly influence DTO revenues and the related violence is if California-produced marijuana is smuggled to other states at prices that outcompete current Mexican supplies. The extent of such smuggling will depend on a number of factors, including the response of the US federal government,” the report notes.

What about drug-related violence?

Today's propositions have many critics, including those who are simply against it because marijuana is a drug and drugs are bad, they say. But even separating out the moral part of the question, it could have very little impact on violence in Latin America, which is what leaders here care most about, and the reason they are pioneering alternative drug policies. (In fact, critics suggest that it could make drug trafficking organizations more dependent on other drugs and illegal activities to make up for losses in the marijuana market).

Martin Jelsma, an expert on drug policy in Latin America at the Transnational Institute in the Netherlands who supports legalization measures, says that the revenue loss would not be insignificant for Mexican groups – as it is estimated that they depend on marijuana sales for about a quarter of total revenue. But there is still cocaine and heroin. “It is clear for Mexican cartels that cocaine and heroin are the areas where in terms of export they earn the most,” says Mr. Jelsma.

(And in looking at the “big picture” of the war on drugs, Mr. Hope said in an interview this summer for The Christian Science Monitor cover story that the discussion of legalization of marijuana really only has implications for Mexico. “Although marijuana has taken center stage [in the debate], it is pretty much meaningless in any country except in Mexico. The only large exporter [of marijuana] in the region is Mexico. If everyone legalizes it tomorrow, in Guatemala homicides would go down by zero and nothing,” he told me.)

But, Jelsma points out, even if drug violence in Latin America were to persist, the political implications of a “yes” in Washington, or Colorado, or Oregon could be far-reaching.

“The indirect effect could be even bigger in the sense that if such a thing happens in the US it would also increase [the] possibility and political space for things to happen in Latin America itself, also in the case of Mexico,” he says.

The last time the US faced an initiative to legalize the recreational use of marijuana, in 2010, many leaders looked upon it wearily. At a 2010 summit in Cartagena, Colombia, Colombian President Juan Manuel Santos said in relation to California’s Prop. 19:  "It's confusing for our people to see that, while we lose lives and invest resources in the fight against drug trafficking, in consuming countries initiatives like California's referendum are being promoted," President Santos said.  (See the entire Monitor story on this here.)

Fast-forward two years. Santos is one of the leaders calling for a “rethink” on drug policy. And just weeks after the US election, Uruguay is poised to vote on a first-of-its-kind, state-regulated drug market. President José Mujica of Uruguay earlier this year floated his idea to establish a system in which marijuana would be produced and distributed under state control (See the Monitor’s report on Uruguay’s initiative here). If even one US state and one country were to move forward – and they could show at a practical level that drug consumption does not go up, says Jelsma – he believes other countries could quickly follow. “It’s the breakthrough needed,” he says.

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