My War on Drugs Rant

Narcoterrorism threatened the Colombian government in the 1990s. Now there’s increasing talk of Mexico becoming a failed state. These state enemies are so powerful because of profits from illegal drugs.

In America’s defense, Secretary of State Hillary Clinton admitted the US bears some blame. I’d go further in saying US and European policies bear most blame for Colombian, Mexican, Central American, and increasingly Venezuelan governments falling victim to cocaine cartels. Cartels are so powerful because cocaine profits are astronomical, precisely because of US and European prohibition of drugs.

A gram of cocaine in St. Louis costs $60 IF you know people in the business. If you don’t know anyone you’ll pay $80. In Bogota, I pay $5. By these numbers we can assume the price increases by a factor of ten.

Most businesses, depending on the product, mark up 20%. Domestic drug dealers turn their money over twice or more. I’ve spoken with drug dealers about investing in my legal businesses. They laugh when I promise 10% in 6 months, which is a good return for legal endeavors. But if you’re used to illegal profits, 10% is nothing.

I’ve been offered to mule cocaine to Miami or Spain. Since I’m a bigger guy, I could carry over a kilo. I’ve been offered $8000 plus the flight. That only adds $10 to the price per gram, and international traffickers’ costs are much lower than the $5 charged in the Colombian streets. So what explains the $50 – 100 prices seen in the streets of St. Louis?

Once the mule gets the dope into the US, somebody needs to pick it up. They sell it to local wholesalers, who sell it to street-level drug dealers. Each of these workers at every step in the supply chain faces stiff prison sentences according to US law. Here’s a chart of mandatory minimum sentences:

  • 28 g crack or 500 g powder cocaine – 5 years
  • 280 g crack or 5,000 g powder cocaine – 10 years

These figures were recently adjusted after the Fair Sentencing Act, in which the disparity in quantity of crack vs. powder resulted in blacks receiving higher sentences because they’re more likely to deal in crack, was signed into law in 2010 by Barack Obama.

Still, 28 g of crack or 500 g of powder is not much. It’s a lot if you’re not in the industry. But if you are and you aspire to grow, a half a kilo is easily attainable. Getting caught with that means 5 years in prison. If you get to the point where you’re only selling 1/4, 1/2, or whole kilos, you’d easily have 5 kilos on hand, which would get you a 10 year mandatory minimum.

For this business to be worth the risk, sellers need to earn a lot of money.

According to Michael Reid‘s Forgotten Continent (emphasis mine):

[A]n economist at the University of Maryland, has pointed out, prices at each stage in the long chain that turns a coca leaf on an Andean hillside into a gram of cocaine on the streets of the Bronx or the City of London are determined mainly by the need to reward risk-taking, rather than the cost of production. That is why the price of a kilo of pure cocaine (measured in relation to its equivalent in coca leaf) rises by a factor of roughly 200 times between the coca farm and the street. Most of the increase occurs once cocaine has entered the United States or Europe – because law enforcement is tighter and risk is thus higher. So even if repression in the producer countries succeeds in increasing leaf prices, this has little effect on cocaine prices.

The high profits are solely due to criminal risk faced in developed countries. If cartels can establish operations inside those countries (which they do), they get even more of those profits. That’s how they can acquire immense wealth to corrupt police and law enforcement officials, as well as challenge their national governments.

Mexico, Colombia, Peru, Bolivia, and increasingly Central America and Venezuela bear the brunt of America’s and Europe’s stiff drug policy.

Everybody Gets High

The vast majority of people get high. A tiny minority don’t drink or indulge in any conscious-altering substance like cigarettes or coffee. But most people who do not consider themselves “drug users” get high on legal drugs like ALCOHOL, Percoset, Vicodin, Ambien, Oxycontin, Valium, Tramadol, Adderall, Xanax, codeine, and more. If you use any of those, don’t lie to yourself. You get high.

What’s the difference between those listed above and this list: cocaine, ecstasy, heroin, marijuana, meth? The first list is legal and backed by the big pharm lobby.

What’s the difference between Oxycontin and heroin? Oxycontin’s legal.

What’s the difference between Adderall and ecstasy? Adderall’s legal and actually preferred by rolling aficionados.

What’s one difference between Tylenol and Percoset or Vicodin? NFL players pop the latter two daily.

BTW, Vicodin is sold over the counter in Colombia as “Sinalgen.” But be careful, it’s addictive. See Vicodin tolerance and tolerance explained.

Altering consciousness is human nature. Why are some prohibited and others allowed?

Big Business Lobbying

Alcohol companies, including my former employer Anheuser-Busch, stand to lose sales if people could get high on other drugs than alcohol.

Pharmaceutical companies, along with alcohol, oppose legalization of medical marijuana. They’d sell less pills if people could smoke.

Prison guard unions wield immense power in California. If there are less people locked up, there will be less guards and thus a smaller union with less revenue. It’s in their interest to lock up as many people as possible.

Victims of the War on Drugs

First and foremost, the real victims of the war on drugs are producer countries like Colombia. Without cocaine profits, the narco-guerrilla organization FARC would’ve been defeated long ago, as Sendero Luminoso in Peru was. Producers with operations in developed countries turn their money over 700% and higher. The limited resources of developed countries aren’t sufficient to combat that.

American organized crime was strongest during Prohibition. Regardless of legislation, people got drunk. It created huge profits and power for bootleggers. It’s the same with drugs. People are going to get high, regardless of the law. Its illegality creates powerful crime syndicates. The modern day bootleggers threaten Andean and Central American countries.

Other victims of the War on Drugs are the huge number of Americans being locked up:

The United States leads the world in the number of people incarcerated in federal and state correctional facilities. There are currently more than 2 million people in American prisons or jails. Approximately one-quarter of those people held in U.S. prisons or jails have been convicted of a drug offense. The United States incarcerates more people for drug offenses than any other country. With an estimated 6.8 million Americans struggling with drug abuse or dependence, the growth of the prison population continues to be driven largely by incarceration for drug offenses. source

“We have created an American gulag,” – said former drug czar Barry McCaffrey.

Most drug dealers I know aren’t hardened criminals. They’re simply risk takers. They have a higher propensity for risk given the reward. A great example is recently released Los Angeles-based cocaine kingpin Ricky Ross. If you hear Ricky Ross in interviews, especially The Last White Hope, you’ll hear an intelligent, well-spoken man who took advantage of a lucrative opportunity. If it weren’t for that opportunity, I don’t doubt he’d have excelled in any endeavor he chose.

The Last White Hope is a critical documentary on the American War on Drugs. I don’t buy its conspiracy theory that the drug Prohibition’s aim is to incarcerate African-Americans. But it’s inarguable that blacks are over-represented in prisons. Blacks aside, too many people of all colors are locked up. The United States has the highest incarceration rate in the world.

No Easy Solution

Nothing I’ve said here is new. Fortunately American opinion toward marijuana has shifted sharply. Possession of high quantities of marijuana is a misdemeanor in many states.

However, cocaine is the insanely profitable drug that destabilizes Latin America. I applaud Colombian president Juan Manuel Santos for publicly suggesting the world open the debate on legalization (good debate in that link’s comments). I was proud to see the US ambassador concur.

Legalization may go too far. Nobody wants crack and heroin sold at 7-11. But the mandatory minimum sentences have to go. They drive the price and profits up, which destabilize producing and transporting countries. Some form of decriminalization is needed.

There’s no easy solution because the American people won’t tolerate the level of drug addiction seen in Bogota. I’m one of few decriminalization proponents who will argue the obvious: drug use WILL GO UP if decriminalized. Use will also rise if the price drops.

In broad daylight I’ve seen bazuceros smoke crack in Chapinero, a middle class Bogota neighborhood. Americans won’t accept that. Hence, there’s no easy solution or we would’ve found it. But there must be a compromise because too many Americans are getting locked up and dangerous Latin American instability will continue because of developed countries’ demand for cocaine.

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  1. I’ve spoken with drug dealers about investing in my legal businesses. They laugh when I promise 10% in 6 months …

    May I suggest that you’re out of your damn mind promising 21% annual returns to criminals? I’ll allow that you know these people, so maybe they’re more reasonable than I assume, but even the law-abiding get sort of tetchy when investments don’t pan out exactly as advertised …

    But that aside, I endorse your rant. The war on drugs isn’t worth the cost, bootleggers & Baptists, &c. All true.

    There are persistent rumors/allegations that various Colombian gov’t figures are deep in the drugs trade. My reaction is invariably: “I certainly hope so!”

    The immediate problem is keeping a lid on the violence and lawlessness s.t. a parallel, legitimate economy has the time and conditions to prosper, and part of that involves keeping as much money as possible away from destabilizing forces such as the FARC. Legalization would achieve the same ends without the need for corruption.


  2. The thing to keep in mind is that not all drugs are equal. Pot could be legalized by allowing you to grow up to xx kilos per year for personal consumption. No transactions, no 7/’11s, etc.. That cuts 50% of the arrests per year in one simple action. Alaska used to have this law. Optiates could also be handled via perscriptions. Once you realize you are an addict, you turn yourself in. You are then given a perscription for maintenance dosages at cost. Opiate addiction is an easy issue, we dealt with it in the 1890s just fine. The ones that are tough is Coke and Meth. These are binge drugs, and I don’t have any solution. I do know that $5 / gm pure coke is not something I want in my backyard.


  3. Good to see some serious politicos like Santos and Vicente Fox suggesting that there may be alternatives to the status quo, and that a debate might be useful. And there are many others agreeing with them. Takes some balls to come out like that, especially for Santos who is holding office in a country so closely associated with the drug trade. Up until a very few years ago they would have been vilified for even suggesting there might be alternatives. I can’t see so called hard drugs being legalized during my lifetime, but maybe some of these drugs could be de-criminalized. My guess is though that it will take one more generation. Too many vested interests in today’s world.

    Excellent rant by the way. I could go on for hours (pages) on this topic.


  4. The Great Depression ended Prohibition. Maybe our current financial strains and the governments desire to tap a new stream of tax revenue will change the current laws in the US. It is financial insanity, especially when one considers how much it costs to incarcerate someone in California.

    On a side note, I hope you have some good plans for Christmas.

    Wishing you a very merry Christmas and all the best for the new year.


  5. I think having it legalized and cheap would be great. People who are addicts would have much less motive to rob and steal, instead they would just binge out on the product and eventually overdose, ridding the world of the plague that they are!! This would in turn improve traffic and parking everywhere….. not to mention addicts tend not to eat, so this would reduce the price of food for the rest of us who actually like to eat food 😉


  6. An excellent first-hand analysis of the outlaw drug economy. I do have a few quibbles, tho. Part of the reason for the huge price mark-up is to compensate for the drugs siezed by authorities, which is probably a pretty significant proportion of production.

    Also, perhaps the alcohol and tobacco industry would secretly favor legalization – it could mean new markets for them.

    Finally, decriminalization means reducing environmental damage from coca leaf cultivation and cocaine production.

    But, if cocaine were legalized and its price dropped, wouldn’t more people use and abuse it?



  7. Hey just found your blog, interesting. Just wanted to make sure you’ve seen the new documentary ‘Breaking the taboo’ about the War on Drugs, just came out a couple of weeks ago:


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