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  • Book Review - Dealing Death And Drugs: The Big Business Of Dope In The U.S. And Mexico

    Dealing Death and Drugs: The Big Business of Dope in the U.S. and Mexico (Cinco Puntos Checkpoint Series)

    Beto O'Rourke and Susie Byrd

    Cinco Puntos Press, 2011

    $12.95 (paperback)

    ISBN-10 1933693940

    ISBN-13 978-1933693941

    144 pages

    Few U.S. politicians have been willing to tackle the issue of marijuana reform. Avoidance seems prudent: public perception of marijuana decriminalization (not prosecuting consumers for possession for personal use) and legalization (abandoning prohibition of the plant altogether) ranges from cause célèbre to street theater. Public perception aside, the cost of enforcing marijuana prohibition in the United States is steep. Estimates of federal spending to keep marijuana off the streets (and smokers in jails) vary anywhere from $7 to $12 billion annually. As a politician your options seem limited: Tackle an unpopular issue, be labeled a pothead, and have your budget eliminated for you. This is not the typical path to longevity in office.

    Lacking an imperative to analyze the economics of marijuana reform, fewer U.S. politicians have crafted an articulate and thorough analysis of the business of illicit drugs in the United States. Out of necessity, Beto O'Rourke and Susie Byrd, both Texas politicians with intimate first-hand knowledge of the collateral damage associated with cocaine and marijuana smuggling, have provided a compelling and concise argument for marijuana reform.

    Dealing Death and Drugs: The Big Business of Dope in the U.S. and Mexico is a brief but powerful examination of drugs as "big business," and the conclusion runs directly counter to the premise of America's 41-year old War on Drugs-a platform based on prohibition and prosecution. According to O'Rourke and Byrd, legalization of marijuana in the United States will undermine Mexican drug cartels' profit models and therefore greatly reduce the violence and bloodshed that is now commonplace in Juarez and other parts of Mexico.

    Deftly argued, and meticulously researched and footnoted, Dealing Death and Drugs: The Big Business of Dope in the U.S. and Mexico examines the market for illicit drugs in the United States and analyzes the supply chain implications of removing the most profitable component (marijuana) from the cartels' business models.

    Much in the same way a skilled financial planner would walk an investor through a 10-K filing, O'Rourke and Byrd use federal court testimonies and affidavits to frame the market forces at work in what has become a deadly and costly-tens of thousands of civilian deaths to date and $23 billion spent annually-war with few visible successes.

    Depending on data sources, O'Rourke and Byrd are quick to highlight, market estimates for illegal substances vary greatly. Politics obviously play a role here. If a politician's stated aim is to receive more federal funding to fight the War on Drugs, then his valuation of the drugs trafficked will be higher. Rough estimates pin the total U.S. illicit drug market between $63 and $81 billion dollars. O'Rourke and Byrd argue, however, that targeting profitability instead of total revenue is the key to breaking the cartels' stranglehold on the region.

    Marijuana has the largest customer base with the most stable demand and steady prices. Cocaine prices, costs and demand are more volatile. Marijuana is the cheapest drug to cultivate and produce while cocaine goes through an expensive manufacturing process. The cartels pay about $23 to buy a pound of marijuana from a farmer in Mexico. It costs the cartels about $4,000 to buy a pound of cocaine from the Colombians to import to the U.S. Cocaine also has a longer supply chain through more international borders than marijuana, increasing the risks of seizures. (O'Rourke, Beto; Byrd, Susie. Dealing Death and Drugs: The Big Business of Dope in the U.S. and Mexico (Kindle Locations 454-458). Perseus Books Group, 2011. Kindle Edition.)

    O'Rourke and Byrd highlight each step in the marijuana supply chain from cultivation to acquisition to resale. Ultimately, the cartels can control or eliminate altogether the risks associated with marijuana trafficking, while the process of risk mitigation with cocaine distribution is much more complex. According to O'Rourke and Byrd, "The Mexican Cartels own the value of marijuana from farm to market. The cocaine market is not vertically integrated." (Ibid., 461-462.)

    Prohibition of marijuana, coupled with the low-risk nature of marijuana trafficking, ultimately inflates profits for Mexican cartels doing business in the United States, where estimates for the marijuana market scale up to $113 billion.

    The Rand Drug Policy Research Center looked at the impacts on the price of marijuana if cartels were removed from the equation by legalizing the cultivation, production, distribution and possession of marijuana in California. […] Their analysis demonstrates that the prohibition of marijuana accounts for 90 percent of the markup of marijuana. (Ibid., 418-422.)

    A 90% decrease in profits is substantial, especially when those profits are used to make payroll and buy illegal weapons. If the marijuana market is conservatively estimated at $10 billion, roughly the equivalent of annual security funding for Mexico to fight the War on Drugs (in addition to the U.S. spend of $13 billion annually), the argument for regulating supply and demand inside the United States seems fairly logical. Amend the argument to include taxable revenues from legal sales of marijuana and the authors' position becomes increasingly convincing.

    O'Rourke and Byrd estimate that "states could expect to collect almost $3 billion in new taxes and the federal government nearly $6 billion if marijuana was taxed at rates comparable to alcohol and tobacco." (Ibid., 1049-1050.) Simple math tells us that $9 billion in net new tax revenues is better than $13 billion in annual expenditures for prohibition with no viable returns.

    Recent referendums in Washington and Colorado to allow limited cultivation and sale of marijuana will likely lead to similar outcomes in other states. Will a state-by-state decriminalization of marijuana result in divestiture for Mexico's drug cartels? No, but over time, regulation could decrease the cartels' capacity to inflict violence and mayhem on innocent civilians.

    As Byrd concludes, if the War on Drugs hasn't kept drugs out of the hands of our children, but has in turn has sponsored terrorism and murder while wasting billions of taxpayer dollars, it's time for a change.

    William Scott Williams is a writer and editor from Chapel Hill, North Carolina. His work has been nominated for a Pushcart Prize and has appeared in Meridian: The Semi-Annual from the University of Virginia, The Massachusetts Review, Poydras Review, and The Greensboro Review.

    Mar 22 9:57 AM | Link | Comment!
  • Deal of the Century

    The Congressional Oversight Panel responsible for keeping tabs on the Troubled Asset Relief Program (TARP) indicates that banks who have paid back TARP funds early have done so at a discount (roughly 66% off face value).

    Liquidity discounts are cited as the major reason for the reduction in value which could, if continued, result in a $2 billion shortfall to taxpayers. 
     

    Tags: TARP
    Jul 10 12:17 AM | Link | Comment!
  • Better than pink slips?

    Sobering (if slanted) analysis from Kevin Hassett at Bloomberg on the California crisis and what it could mean for Obamanomics.

    $3.3 billion in IOUs for the month of July alone. So annually roughly $40 billion owed that is lighter than air.

    California’s Nightmare Will Kill Obamanomics

    Presumably Hassett doesn't believe there's $1.1 trillion in the current health care system that could be re-provisioned.

    Best case scenario? The do-nothing alternative and health care costs continue to sky rocket, leaving the working poor in bankruptcy court and the middle class holding the bag.

    Jul 07 12:19 AM | Link | Comment!
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