Pubdate: Sun, 06 Mar 2016
Source: Albuquerque Journal (NM)
Copyright: 2016 Albuquerque Journal
Author: Christopher Ingraham, the Washington Post


Competition from U.S. growers is cutting into Mexican pot's value and 
size of the market

Legal marijuana 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 U.S. Border Patrol shows that last 
year marijuana seizures along the Southwest border tumbled to their 
lowest level in at least a decade. Agents snagged roughly 1.5 million 
pounds of marijuana at the border, down from a peak of nearly 4 
million pounds in 2009.

The data supports the many stories about the difficulties marijuana 
growers in Mexico face in light of increased competition from the 
north. As domestic marijuana production has ramped up in places such 
as California, Colorado and Washington, marijuana prices have fallen, 
especially at the bulk level. "Two or three years ago, a kilogram 
(2.2 pounds) of marijuana was worth $60 to $90," a Mexican marijuana 
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 U.S. continues to 
legalize 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 marijuana produced in Mexico and the 
Caribbean is thought to be inferior to the marijuana 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 marijuana to keep up with U.S. 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 
marijuana use among the American population, this suggests that 
people using marijuana in the United States may be increasingly 
obtaining marijuana from domestic sources."

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

"Those trying to understand what has happened with U.S. 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 Corp. said in an email.

California remains the country's leader in the illicit production of 
marijuana, as well as marijuana grown legally under the state's 
medical marijuana regime. A good barometer of this is the DEA's data 
on marijuana eradication, which indicates where law enforcement 
officers discover and destroy marijuana crops. In 2014, California 
accounted for more than 60 percent of all marijuana 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 
marijuana is starting to reverse, with some cases of U.S. marijuana 
being smuggled into Mexico.

The cartels, of course, are already adapting to the new reality. 
Seizure data appears to indicate that with marijuana profits 
tumbling, they're switching over to heroin and meth.
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MAP posted-by: Jay Bergstrom