Drug cartels, RAND study, FSO, assassins, Pelosi, Tijuana bust, Los Zetas

On October 12, 2010, an article by Martha Mendoza of the Associated Press was published on MSNBC entitled "Study: Legalizing pot won't hinder Mexican cartels." The study was released October 12, 2010 by the RAND Drug Policy Research Center, and the study's lead author was co-director of the RAND Drug Policy Resarch Center Beau Kilmer. The study found that under $2 billion of cartel profits come from marijuana, and only about 3% of Mexican marijuana sales are in California. Mendoza said Prop 19 "will do little to quell the drug gangs' violent and sophisticated organizations that generate billions of dollars a year" according to the study.

The study found that Californians already tend to buy marijuana grown in California, and grow marijuana at a higher rate than surrounding states. Mendoza said Californians make up 14% of the US marijuana market. Mendoza said Mexico President Felipe Calderon and US President Barack Obama "agree the vast profits cartels collect in the US", an estimated $18 to $35 billion annually, "fuel drugs wars" in Mexico. Since Calderon cracked down on organized crime in 2006, over 28,000 people have died due to drug violence in Mexico.

Mendoza said Prop 19 supporters say they are focused on weed tax revenue, want to save money on prison costs, and that Prop 19 would reduce violence associated with the black market.

Head of the US ONDCP, drug czar Gil Kerlikowske told the AP "This report shows that despite the millions spent on marketing the idea, legalized marijuana won't reduce the revenue or violence generated by Mexican drug trafficking organizations." But former LAPD police deputy chief Stephen Downing said "It's ridiculous to claim that ending prohibition won't have a big financial impact on these violent criminals' bottom lines." (I think Downing is ignoring that Prop 19 will not end prohibition in 49 US states, or anywhere else on Earth. And if only 10% of California cities allow weed stores (which is about the percentage that currently allow medical marijuana dispensaries), there will still be a black market in 90% of California cities, as well as a statewide black market for minors. If "prohibition" is only ended in California, wouldn't criminal organizations just relocate to (or increase their presence in) California in order to legally homegrow? If some cities allowed industrial marijuana production, marijuana prices in California would probably fall. Lots of cheap weed in California means bigger profits in black markets worldwide.)

According to Mendoza, the study said if legal marijuana growers took over cartel distribution in the US, that would be the only way to cut into cartel profits. Mexican drug traffickers currently provide at least 50% of the marijuana in America, and would lose about 20% of their total drug revenue, but profits from heroin and cocaine would continue. Beau Kilmer said "If that happens, then legalization could reduce some of the Mexican drug violence in the long run."

But isn't Mexican drug violence over territory and against rival smugglers and people that have betrayed them or refused to cooperate with them? Why wouldn't cartels move to Calfornia? Wouldn't drug cartels fight over territory and drug trafficking routes and seek to eliminate rivals in California and other US states? And wouldn't cartels sell hard drugs to all the drug tourists coming to California (or sell to people selling to tourists)?

But the study authors said they don't believe the federal government will stand idly by if home-grown smugglers were to capture the entire national market now held by Mexico-sourced marijuana. Economist John Carnevale of the ONDCP said smuggling marijuana out of California will be easy, and that there is anecdotal information that marijuana smuggling through the mail system is already happening.

Joseph McNamara questioned the study's assumptions about sales and use, and said Prop 19's key objective isn't resolving Mexico's drug violence. I suppose McNamara is technically correct, "resolving Mexico's drug violence" is in fact not Prop 19's main goal. And yet Prop 19 supporters often claim that Prop 19 will reduce drug violence, mistakenly believing that Prop 19 means "no black markets."

In this pro Prop 19 ad featuring Joseph McNamara, McNamara says Prop 19 will "generate billions of dollars for local communities, allow police to focus on violent crimes, and put drug cartels out of business." (At the bottom of the ad it says "Yes on 19. Tax Cannabis 2010. Sponsored by S.K. Seymour LLC, a Medical Cannabis Provider, dba Oaksterdam University, a Cannabis Educator" -- which is also displayed on the bottom of yeson19.com)

Prop 19 itself doesn't generate any tax revenue (although local ballot measures like Measure V in Oakland supposedly would if Prop 19 passes and Measure V passes on November 2, 2010). As seen in Fresno and Oakland, there are already violent crimes associated with medical marijuana. Violent crimes associated with medical marijuana homegrowing is one of the reasons the Oakland City Council enacted ordinance 13033 to allow for large-scale grow permits. And I think the RAND study makes it clear that Prop 19 will not put drug cartels out of business. To me it seems like Prop 19 would give drug cartels a legal business to get involved in. Cartel members or people employed by cartels could legally grow in California. Legal weed stores could act as fronts to launder money. Maybe cartels could even purchase marijuana cheaply at wholesale from industrial marijuana growers. If Prop 19 passes, why wouldn't criminal organizations increase their presence in California?

On October 7, 2009, Steve Fainaru and William Booth of the Washington Post wrote that according to the White House ONDCP, over 60% of cartel revenue, $8.6 billion out of $13.8 billion in 2006, came from US marijuana sales. At the time, the article said "now as much as half [of marijuana consumed in the US] is produced domestically." The article said according to government estimates, Mexico produced 35 million pounds of marijuana in 2008. (A 2010 study by Joanne Brion of Brion and Associates estimated that California currently grows approximately 8.6 million pounds of marijuana a year.) The Fainaru/Booth article said a marijuana farmer in Sinaloa might make $25 a pound, which could sell wholesale for $550 a pound in Phoenix, and that Mexican drug cartels could be selling $20 billion worth of marijuana in the US each year.

On October 13, 2010, the Los Angeles Times published an article by John Hoeffel entitled "Legalizing pot in California would hardly dent cartels' revenue, report says" and that Prop 19 "would do little to curtail the violent Mexican cartels that smuggle marijuana across the border." Researchers at RAND estimated that cartel income from marijuana exported to the US was $1.5 billion, far lower than previous federal government reports which estimated as much as $14.3 billion.

The RAND study dismissed an often quoted estimate by the ONDCP that marijuana sales make up 60% of cartel export revenue. The researchers could find no data to back the figure up. The paper said the 60% figure "appeared out of nowhere" and "has acquired great authority", but "should not be taken seriously." The paper said marijuana sales make up probably 15 to 26% of cartel export revenue. If Calfornians consume 14% of the marijuana consumed in the US, 14% of 15% of cartel revenue is about 2%, and 14% of 26% of cartel revenue is about 3.6% -- 2 to 4%.

Stephen Gutwillig of the Drug Policy Alliance said prohibition of marijuana has failed because it's created a massive underground black market controlled by violent criminals. He said California can't put cartels out of business by itself, but Prop 19 is a "crucial first step." But I thought Joseph McNamara said Prop 19 would put cartels out of business in that Prop 19 support ad? And how would Prop 19 be a first step in putting cartels out of business if the "massive underground black market" still exists in 49 US states, (and likely 90% of California cities), and is still controlled by violent criminals? Even if Prop 19 passes, there will still be a black market for minors in California.

If Prop 19 passes, California homegrowers should mail all their weed out of state to thwart cartels? What if cartels also do the mailing?

The paper said Mexican marijuana has a US market share of 40 to 67%, and contains less THC than marijuana grown in California. The researchers figured that the average joint weighs 460mg. The paper concluded that violence might even increase as gangs fight over small revenue.

An overview of the RAND study "Reducing Drug Trafficking Revenues and Violence in Mexico", by Beau Kilmer, Jonathan P. Caulkins, Brittany M. Bond, and Peter H. Reuter can be found on rand.org. A PDF of the full study can be downloaded online. There is also a PDF of appendixes for the study.

It's interesting to me how the RAND study has been described online (and spun) by various groups.

A press release for the study on rand.org from October 12, 2020 is entitled "Legalizing Marijuana in California Will Not Dramatically Reduce Mexican Drug Trafficking Revenues."

A blog post about the study by Gene Maddaus of LA Weekly was entitled Legalizing Pot Would Cut Mexican Cartel Revenues Only Slightly, Could Boost Violence, Study Finds. Maddaus wrote that besides the 15-26% of export revenue cartels get from US pot sales, the rest comes from cocaine, meth, and heroin. Gutwillig of the DPA said the study "misses the mark" and any step towards legalization would cut into cartel profits. Gutwillig said Proposition 19 "is bad for their bottom line and a direct challenge to the monopoly they currently enjoy over their most lucrative product."

An article on NPR from October 30, 2010 about the study was entitled "Study: Legalizing Pot In Calif. Won't Hurt Cartels."

Meanwhile, a post by Jon Walker on justsaynow.firedoglake.com, (firedoglake claims to be a progressive blog and activist hub, and Just Saw Now is a campaign for marijuana legalization) about the RAND study is entitled "Rand Study: Marijuana Legalization Would Markedly Cut Mexican Drug Cartel Profits."

Walker began by saying "The Rand Corporation is notorious for its history of pro-drug-war studies." And said "the Rand Corporation buries the lede from their own study, one which strongly [supports] the anti-cartel claims made by marijuana reformers." Walker wrote "The study determines legalizing, taxing and regulating marijuana could eliminate all the profits the Mexican drug cartels currently make thanks to cannabis prohibition." Even if that's true, that's kind of a misleading way to say that nationwide marijuana legalization might possibly eliminate 15 to 26% of Mexican drug cartel revenue, which currently comes from US pot sales.

Walker quotes part of the study, in part "Thus, the needs of the California market would be supplied by the new legal industry. While, in theory, some DTO employees might choose to work in the legal marijuana industry, they would not be able to generate unusual profits, nor be able to draw on talents that are particular to a criminal organization."

By "the new legal industry", does that refer to legal homegrowers or commercial growers (which cities may or may not allow)? Criminal organizations could get involved in either.

Personally, I disagree with the study's claim that crime syndicate members "would not be able to generate unusual profits nor be able to draw on talents that are particular to a criminal organization" if Prop 19 passes.

While some criminals may work in the legal marijuana industry, profits would not come in the form of their wages there. It would come from learning more efficient ways to grow, embezzling, investing dirty money in commercial grows or weed stores, theft of bud/clones/seeds, drug rings at places of employment, sabotage of crops or seeds, destruction to weed stores and commercial grows, extortion or harassment or murder of marijuana company owners or employees, falsifying production yields, redirecting or funneling product to smugglers, selling product to smugglers, etc. Los Zetas is a Mexican drug cartel made up of ex-military from Mexico. Members previously worked as security for another cartel. Private security companies will be in high demand in California if Prop 19 passes and if cities allow commercial grows. Gropech said they were in talks with ex-military regarding security. If Mexican drug cartels can kill nearly 30,000 people while fighting over territory and fighting rivals, what's going to stop them from raiding industrial marijuana grows?

California currently produces about 8.6 million pounds of marijuana per year. If marijuana was legalized and industrialized, California could produce hundreds of millions of pounds of cannabis per year, cannabis that is currently worth 1/4th its weight in gold outside of California. You might argue that if Prop 19 passes, marijuana prices will drop nationwide based on the idea that supply will outweigh nationwide demand (if only 100 million Americans consume marijuana and they only consume a few ounces per year on average and they only buy what they consume and don't buy any more for resale elsewhere), or the idea that there will be more sellers than buyers, or that smugglers will try to undercut each other, or that smugglers will be forced to sell for less to offload product. Marijuana prices might drop nationwide if Prop 19 passes, but I haven't seen any predictions on nationwide price drops, only possible price drops in California. If Prop 19 passes, there will be no place in the US where marijuana sells for $300/oz? Over 2,000 strains will all sell for under $300/oz? Medical marijuana dispensaries in 14 states and DC will all stop selling marijuana for $20/g? People and criminals will no longer make concentrates? Medical marijuana dispensaries will stop selling concentrates? If Prop 19 passes, will there be a global price drop? Why wouldn't big smugglers hold onto product to create artificial scarcity and keep prices high and seek to eliminate others selling for less? If the price of marijuana drops globally, would the price of concentrates also drop in a relative manner?

Walker said "their press release was shaped to encourage the media to write stories with a fairly negative spin on Prop 19." Walker said "This leads to a finding by Rand–which they try to present as damaging to pro-legalization arguments–that the passage of Prop 19 would only eliminate about two to four percent of cartel profits." And yet Jon Walker of Just Say Now wants to claim "Marijuana Legalization Would Markedly Cut Mexican Drug Cartel Profits." Walker says "No one has been claiming just the passage Prop 19 alone would eliminate all of the Mexican drug cartels’ marijuana profits across the whole country." But I've certainly heard plenty of general arguments by Prop 19 supporters that sound like that.

Walker said "The study shows legalizing and regulating marijuana in one region would effectively shut down the cartels' lucrative marijuana trade to that location." But wouldn't it enable cartels' marijuana trade from that location? Why bother growing marijuana in Mexico and trying to smuggle it across the US/Mexico border when you can relocate to California and grow it legally anywhere in the state and have 3 state borders and the Pacific Ocean to choose from? Not only by automobile, but ship, plane, train, mail, etc.

Walker concluded "Whether legalizing marijuana would make the murderous cartels terrorizing Mexico $6 billion a year poorer or a mere $2 billion, I still think it is a very good idea to take the first step toward depriving dangerous criminals of billions of dollars in revenue." Yet Walker seems to ignore the other part of the study that says that cartel violence might increase as they fight over smaller and smaller revenues. Why do cartels terrorize Mexico now? They're fighting over drug turf and fighting rivals and fighting the Mexican government. Do we want cartels moving to California en masse and fighting over drug turf and fighting rivals and fighting state and federal law enforcement agents here? Prop 19 doesn't make "dangerous criminals" any less dangerous. It gives incentive for criminals to move to California.

Jon Walker's article also appeared on commondreams.org and drugwarrant.com. Pete Guither of drugwarrant.com said "Jon Walker has the true story of the newest Rand report, and how some of the intellectually dishonest 'academics' at Rand are trying to spin it." I don't know exactly how it's "intellectually dishonest" for the RAND study to claim that Prop 19 "will not dramatically reduce Mexican drug trafficking revenues" based on the estimate that Prop 19 would only affect 2 to 4% of cartel revenue. We're talking about the quantity of Mexican brick weed currently sold and consumed in California (and I don't know, but perhaps also marijuana grown by cartels on public land in California). That leaves 96 to 98% of cartel revenue untouched by Prop 19. Who's doing the spinning here?

And that doesn't even factor in potential increases in sales of cocaine, heroin, and meth (which account for 74 to 85% of cartel revenue) to waves of drug tourists coming to California if Prop 19 passes. And what about the black market sale of marijuana concentrates, easily produced in washing machines full of ice, with large supplies of cheap legal weed or legally homegrown weed? What about the black market sale of commercial or homegrown marijuana laced with cocaine, heroin, or meth?

On October 12, 2010, NORML Deputy Director Paul Armentano blogged about the RAND study, with the headline "Someone Is Lying: Latest RAND Reports Disputes Feds’ Longstanding Cartel Claims." Armentano said the claim from the ONDCP that marijuana accounts for 60% of gross drug export revenue for Mexican drug traffickers "is not credible" according to RAND.

Armentano asked "So who should we believe? On the one hand we have the federal government, which consistently lies about marijuana to further their own agenda. On the other hand, we have RAND, which also isn’t above making its own specious claims to further their own agenda — which in this case seems to be opposing California’s Prop. 19." Um, several RAND papers state outright that much of the information in them is speculative.

Armentano said "the criminal prohibition of marijuana fuels an underground, unregulated, black market economy that empowers criminal entrepreneurs and jeopardizes the public’s — and the marijuana consumer’s — safety." But Prop 19 won't end the "prohibition of marijuana". Cananbis will still be a Schedule I drug federally. Prop 19 won't even end prohibition in California. Only 10% of California cities currently allow medical marijuana dispensaries. It's likely that 90% of cities will not allow retail weed stores either, so there will still be black markets in those cities. And there will still be a black market economy statewide for minors looking to buy weed. If Prop 19 passes, anyone selling marijuana without the proper license from their local government will be part of the black market economy. Which "fuels" the underground economy more? Medical growers in California now who can legally homegrow, or every adult in California being able to legally homegrow? Many medical marijuana patients in California currently sell to dispensaries. If Prop 19 passes, dispensaries may no longer buy product from patient farmers, instead opting for commercially grown weed. Patients who expect that regular income might then look for buyers on the black market. More homegrowers means more people selling weed without a license. Who would buy weed from them? People who want certain strains or clones or seeds, minors, people who live in the likely 90% of cities that won't allow retail weed stores, people out of state, etc.

On October 19, 2010, an article by William Booth and Nick Miroff appeared in the Washington Post entitled "Threat grows as Mexican cartels move to beef up U.S. presence."

On July 23, 2010, a press release by the United States Attorney's Office in the Southern District of California, part of the Department of Justice, regarding Operation Luz Verde was published on the Federal Bureau of Investigation website, San Diego Division. It said a criminal complaint was unsealed that day charging 43 defendants with a federal racketeering influenced and corrupt organization (RICO) conspiracy.

The Washington Post article came 3 months after that press release. And I suppose the headline may have been written to grab attention before the vote on Proposition 19. It mentioned, on July 23, 2010, a federal racketeering indictment was unsealed which described stash houses, smuggling crews, marijuana and meth distribution, weapon trafficking, money laundering, and robberies. And the collection of drug debts, with non-payment met with murder or kidnapping in California and Mexico.

The Washington Post article was about a "savage trafficking ring" called the Fernando Sanchez Organization, an offshoot of (and a weaker syndicate than) the Tijuana cartel (aka Arellano-Félix Organization which is led by Luis Fernando Sánchez Arellano). The organization moved aggressively to set up operations in San Diego, working out of an apartment called "The Office."

Booth and Miroff wrote that it's not unusual for cartels to place representatives in large cities like Los Angeles, Chicago, and Atlanta to manage large drug deliveries, or for leaders and underlings to move north to seek refuge. But the FSO was building a network in San Diego with senior managers. Prosecutors said the organization functioned almost like a franchise "giving it greater control over lucrative smuggling routes and drug distribution networks north of the border." It recruited people from Latino street gangs based in the US. FSO lieutenants lived in San Diego and ordered murders and kidnappings in Mexico according to assistant US attorney Todd Robinson who will prosecute the alleged drug ring in 2011.

The FBI obtained "roving" wiretaps for 44 people in February 2010 that let investigators track their movements by GPS. US authorities tapped cellphones for 6 months and recorded over 50,000 calls, which helped build a case against 43 suspects. The case is known as Operation Luz Verde (Green Light) and the Washington Post said it shows how Mexican cartels are trying to increase their presence in the US. US agents were able to eavesdrop on calls between two cellphone callers in Mexico due to towers on the north side of the border. Phones were quickly discarded and people spoke in Spanish, in code, with lots of street slang. Top lieutenants often used personal assistants who took messages so the boss wouldn't be heard on the line. Based on information from informants and wiretaps, the suspects hired US teenage girls to smuggle quarter pounds of meth across the border for $100 per trip. The wiretaps helped save the lives of 2 Mexican police officers and a cartel associate who had disrespected druglords in Tijuana and was going to be killed.

Jesus Quinones Marquez, codenamed "The Kidney", was an international liaison and adviser to Rommel Moreno, the Attorney General of Baja California, and passed along information to cartel bosses. The father of 3 was arrested on July 22, 2010 in a setup at the San Diego police department.

Of the 43 people indicted, 12 have alleged gang affiliations in San Diego, 8 are women, and 6 are current or former Mexican law enforcement officers. 35 suspects are currently in US jails. 8 others are still at large. One cartel leader was a former homicide detective from Tijuana.

On October 16, 2010, an article in The Washington Times by Jerry Seper was published, entitled Mexican hit men stalk U.S.. The Fox News headline was Mexican Assassins Headed to Arizona, U.S. Warned.

In May 2010, the Department of Homeland Security warned authorities in Arizona law enforcement with a memo stating that drug smuggling gangs in Mexico sent 15 well equipped assassins with bullet proof vests who would be disguised as backpackers carrying empty boxes covered in burlap into Arizona to draw out bandits ambushing/stealing loads of cocaine, marijuana, and heroin headed to US buyers and kill them.

The federal government put up signs along Interstate 8 warning travelers the area is unsafe due to drug/illegal alien smugglers. The local sheriff said Mexican drug cartels no control some parts of Arizona.

According to Fox News, on October 15, 2010 the Department of Homeless Security released a statement saying "This particular information proved to be inaccurate." Fox News went on to say "But Sheriff Babeu said there was already a hit carried out by these cartel assassins, when deputies found two men shot to death in the desert earlier this year."

On October 23, 2010, an article by Mark Potter appeared on MNSBC entitled "Drug ‘war next door’ linked directly to U.S." and said "Federal authorities say traffickers are now entrenched in at least 270 American cities." Potter wrote that the DEA says that US sales of cocaine, heroin, meth, and marijuana by Mexican trafficking organizations generates $19 to $39 billion annually. DEA chief for global enforcement operations David Gaddis said transnational drug trafficking "is our country's number one organized crime threat."

Anthony Coulson, who was a supervisor and ran the DEA's Tuscon District Office until he recently retired, said the amounts of illegal drugs coming into the US from Mexico and the violence has never been higher, and that cartels have never been in control of more territory or more powerful than now. Coulson said "It's getting worse. I've never seen it at this level before."

Potter said "Political and law enforcement leaders in both countries agree that American drug users fuel the Mexican trafficking cartels by purchasing their illicit products." Tony Payan, a drug cartel expert and teacher at the University of Texas at El Paso said he doesn't think it's a winnable war since the US "is not addressing the consumption part. It's not doing its part to reduce the market itself."

According to Potter, Gaddis said "extreme violence is the result of traffickers being threatened and cut off from their normal smuggling activities by the Mexican police and military."

On October 26, 2010, an article by Ryan Grim appeared on Huffington Post entitled "Pelosi: Mexican Officials Lobbying Against Pot Legalization." House Speaker and San Francisco representative told the Huffington Post that "I have the Mexicans coming in here and saying, 'Oh, my gosh, this is going to be problematic if in fact there's the decriminalization of marijuana.'"

Grim wrote "Mexican officials worry that legalization would lead to increased demand, which could funnel more money to the cartels. Backers of the initiative, however, note that under legalization, regulated production would take place within the state rather than in Mexico, cutting out the cartels."

And that's only if cities allow regulated production, which might be 10% of California cities if Prop 19 passes. And as if drug cartels couldn't relocate to California. You could argue that drug cartels wouldn't be able to compete in California with industrial cannabis production, but they can always pay legal homegrowers. And can California marijuana corporations deal with violent criminals who've killed nearly 30,000 people? That's like 10 9/11's.

Grim wrote "RAND, which is a largely government-funded operation, reported to the media that its study found there would be little effect on the cartels if Prop 19 passed."

Grim quoted from the study, saying legalizing marijuana in California would effectively eliminated Mexican drug-trafficking organization revenues that come from supplying Mexican grown marijuana to the California market. And that is California exports marijuana to the rest of America (which would be illegal drug trafficking), cartels could lost 20% of their revenue.

Pelosi said she has supported medical marijuana for a long time, and was pleased with SB 1449, but hadn't taken a position on Prop 19.

On October 21, 2010, an article by Randal C. Archibold was published on the New York Times saying 134 metric tons of marijuana, the most ever seized in Mexico, was seized October 17, 2010 in Tijuana after local police "happened on a convoy and were fired upon." Local police and state police and the military found 3 tractor-trailers and a smaller track in an industrial neighborhood near the border. The marijuana was in 15,300 bales wrapped in plastic and aluminum foil, some labeled with apparent labels or brands for US drug distributors. The seizure was announced October 18, 2010 and later burned. A 2010 US DOJ report said marijuana production in Mexico had increased 59% since 2003, due to a 48% decrease in eradication efforts since 2006.

On October 20, 2010 (last updated October 28, 2010) an article by Chris Arsenault appeared on Al Jazeera entitled "US-trained cartel terrorises Mexico." The article said "Founders of the Zetas drug gang learned special forces techniques at Ft. Bragg before waging a campaign of carnage." Arsenault said "Some of the cartel's initial members were elite Mexican troops, trained in the early 1990s by America's 7th Special Forces Group or "snake eaters" at Ft. Bragg, North Carolina, a former US special operations commander has told Al Jazeera."

Arsenault said they "came from the Airmobile Special Forces Group (GAFE), which is considered an elite division of the Mexican military" and their training in the US "was designed to prepare them for counter-insurgency and, ironically, counter-narcotics operations."

Craig Deare, a former special forces commander and current professor at the US National Defence University estimated that "probably more than 500" GAFE personnel received special forces training. Arsenault wrote "The Zetas came to the attention of Mexico's Attorney General's office in 1999."