Pubdate: Wed, 30 Dec 2015
Source: Los Angeles Times (CA)
Copyright: 2015 Los Angeles Times
Author: Deborah Bonello


The Loosening of Marijuana Laws in Much of the U.S. Increases Competition.

BADIRAGUATO, Mexico - He started growing marijuana as a teenager and 
for four decades earned a modest living from his tiny plot tucked at 
the base of these rugged mountains of western Mexico.

He proudly shows off his illegal plants, waist-high and fragrant, 
strategically hidden from view by rows of corn and nearly ready to be 

"I've always liked this business, producing marijuana," the 
50-year-old farmer said wistfully. He had decided that this season's 
crop would be his last.

The reason: free-market economics.

The loosening of marijuana laws across much of the United States has 
increased competition from growers north of the border, apparently 
enough to drive down prices paid to Mexican farmers. Small-scale 
growers here in the state of Sinaloa, one of the country's biggest 
production areas, said that over the last four years the amount they 
receive per kilogram has fallen from $100 to $30.

The price decline appears to have led to reduced marijuana production 
in Mexico and a drop in trafficking to the U.S., according to 
officials on both sides of the border and available data.

"People don't want to abandon their illicit crops, but more and more 
they are realizing that it is no longer good business," said Juan 
Guerra, the state's agriculture secretary.

For decades, the U.S. and Mexican governments looked for ways to 
reduce marijuana cultivation. They paid farmers to grow legal crops 
or periodically sent Mexican soldiers to seek out and eradicate drug fields.

But those efforts failed, because marijuana was still more profitable 
than the alternatives.

As recently as 2008, Mexico was providing as much as two-thirds of 
the marijuana consumed in the U.S. each year, said Beau Kilmer, 
codirector of the Drug Policy Research Center at the Rand Corp. think tank.

U.S. growers, however, have been spurred on by the increasing number 
of states that have lifted restrictions on the drug.

In 1996, California, the nation's biggest producer, became the first 
state to legalize it for medical purposes. Twenty-two states have 
followed suit over the last two decades. Alaska, Colorado, Oregon and 
Washington have also allowed cultivation and sale for recreational use.

Though federal law still criminalizes production and possession, the 
U.S. Justice Department has backed off its enforcement efforts when 
they clash with state law.

The relaxed legal environment has upended the old business model.

"Changes on the other side of the border are making marijuana less 
profitable for organizations like the Cartel de Sinaloa," said 
Antonio Mazzitelli, the representative in Mexico for the United 
Nations Office on Drugs and Crime.

Although Mexico remains a major supplier of marijuana to the U.S., 
its market share is thought to have declined significantly. Alejandro 
Hope, a security and drug analyst in Mexico City, estimated that 
Mexican marijuana now accounts for less than a third of the total 
consumed in the U.S.

There is little reliable data on marijuana production in Mexico. But 
two key measures - how much is destroyed in the fields and how much 
is intercepted at the U.S. border - strongly suggest it has been in decline.

The Mexican government is on pace to eradicate about 12,000 acres 
this year, down from more than 44,000 in 2010, according to the 
Mexican attorney general's office.

U.S. Customs and Border Protection seized about 1,085 tons of 
marijuana at the border in 2014. In the previous four years, that 
figure hovered around 1,500 tons. Seizures are thought to represent a 
tiny fraction of the amount that gets successfully imported.

In addition, the number of U.S. arrests by federal agents involving 
foreign-grown marijuana dropped from 4,519 in 2010 to 2,367 in 2014, 
according to the U.S. Drug Enforcement Administration. The number 
involving domestically produced marijuana held relatively steady over 
that time with an average of 1,536 arrests per year.

U.S. and Mexican growers compete not only on price but also on 
quality. Legalization has expanded the market for more expensive 
specialty strains, which are more powerful than standard Mexican 
product because of a higher concentration of THC, the ingredient that 
delivers the high.

"Mexican marijuana is deemed lowest on the totem pole and very few 
people who consider themselves aficionados or connoisseurs would 
admit to smoking it," said Daniel Vinkovetsky, who writes under the 
name Danny Danko for High Times magazine. "It's typically brown, 
pressed tightly together for transport, and full of seeds."

"Access to better quality American cannabis has led many to turn 
their backs on imports from Mexico and beyond," he said.

Ethan Nadelmann, who runs Drug Policy Alliance, a nonprofit based in 
New York that promotes decriminalization of drugs, said he expects 
that Mexican exports of marijuana will continue to fall as legal 
cannabis proliferates. "More and more, the U.S. is going to grow 
marijuana here," he said.

 From 2013 to 2014, the legal market grew from $1.5 billion to $2.7 
billion, according to a report this year from the ArcView Group, a 
cannabis industry investment and research firm based in Oakland. 
Illegal sales are thought to be many times that.

The shifting market has forced small-scale marijuana farmers in 
Mexico to look for ways to supplement their incomes.

In remote Sinaloa, a 47year-old farmer named Emilio tends four 
marijuana plots with his sons. He inherited the business from his 
father. Their municipality, Badiraguato, is famous for being the 
birthplace of Joaquin "El Chapo" Guzman, the world's most-wanted drug 
lord and head of the powerful Sinaloa cartel.

But there is little sign of the cartel's wealth in their village, 
official population 1,000, a two-hour drive from the main town square 
on a crumbling mountain road. Emilio never finished primary school 
and doesn't know how to read or write. His house has dirt floors. 
Like the other farmers interviewed for this story, he spoke on 
condition that his full name not be published.

One of his neighbors, 55year-old Efrain, said he stopped cultivating 
marijuana a few years ago and now supports his family as a day 
laborer. The middlemen who used to purchase his crop barely come 
around anymore.

"If someone comes to buy it here, they want it really cheap," he said.

But Emilio said he can't afford to give up on marijuana.

"Even though it's not really considered good business anymore here, 
there's nothing else to do," he said.

His wife and daughter work occasional shifts at a greenhouse where 
tomatoes are grown for commercial sale - part of a government project 
to give families a chance to leave the drug business. The work, 
sporadic and seasonal, pays about $12 a day.

Guerra, the Sinaloa agriculture secretary, said the government has a 
responsibility to provide more as legalization sweeps the U.S.

The Mexican drug cartels are already adapting.

For one, they are moving to compete in the high-end marijuana market, 
according to the 2015 National Drug Threat Assessment produced by the 
DEA. "Law enforcement reporting indicates that Mexican cartels are 
attempting to produce higher-quality marijuana to keep up with U.S. 
demand for high-quality marijuana," it said.

In one of the more telling signs of how legalization has transformed 
the industry, the DEA has found instances of high-grade marijuana 
being smuggled from the U.S. into Mexico, an agency official said.

"I don't really have a sense of the amount or scale, but we have seen 
instances of it occurring," said the official, who was not authorized 
to speak publicly about the subject.

More significant, experts said, the cartels are likely to shift 
resources away from marijuana toward other drugs that are illegal in 
the U.S., including heroin, methamphetamine and cocaine. A 2010 Rand 
study estimated that marijuana accounted for 15% to 26% of cartel revenues.

Emilio already farms a few patches of poppies used to produce heroin.

They are a more labor-intensive crop than marijuana and require more 
water and a bigger investment upfront. "Poppy takes longer," he said. 
"And if you neglect it, the crop is useless."

But it may be a safer bet than marijuana: High demand for heroin in 
the U.S. has been driving up prices, and there is little chance it 
will be legal any time soon.

Bonello is a special correspondent. Cecilia Sanchez in The Times' 
Mexico City bureau contributed to this report.
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MAP posted-by: Jay Bergstrom