US marijuana cuts into traffickers’ profits

Illicit pot production in the United States has been increasing steadily for decades. But recent changes in state laws that allow the use and cultivation of marijuana for medical purposes are giving US growers a competitive advantage, challenging the traditional dominance of the Mexican traffickers, who once made brands such as Acapulco Gold the standard for quality.

Almost all of the marijuana consumed in the United States once came from Mexico or Colombia. Now as much as half is produced domestically, often by small-scale operators who painstakingly tend greenhouses and indoor gardens to produce the more potent, and expensive, product, according to authorities and marijuana dealers on both sides of the border.

The shifting economics of the marijuana trade have broad implications for Mexico’s war against the drug cartels, suggesting that market forces, as much as law enforcement, can extract a heavy price from criminal organizations that have used the spectacular profits generated by pot sales to fuel the violence and corruption that plague Mexico.

While the trafficking of cocaine, heroin, and methamphetamine is the main focus of US law enforcement, marijuana has long provided most of the revenue for Mexican drug cartels. More than 60 percent of the cartels’ revenue - $8.6 billion out of $13.8 billion in 2006 - came from US marijuana sales, according to the White House Office of National Drug Control Policy.

Now, to stay competitive, Mexican traffickers are changing their business model to improve their product and streamline delivery. Well-organized Mexican cartels have also moved to increasingly cultivate marijuana on public lands in the United States, according to the National Drug Intelligence Center and local authorities. This strategy gives the Mexicans direct access to US markets, avoids the risk of seizure at the border, and reduces transportation costs.

Unlike cocaine, which the traffickers must buy and transport from South America, driving up costs, marijuana has been especially lucrative for the cartels because they control the business all the way from clandestine fields in the Mexican mountains to the wholesale dealers in US cities such as Washington.

“It’s pure profit,’’ said Jorge Chabat, an expert on the drug trade at the Center for Research and Teaching in Economics in Mexico City.

The exact dimensions of the US marijuana market are unknown. The 2007 National Survey on Drug Use and Health estimated that 14.4 million Americans age 12 and older had used marijuana in the past month.

Mexico produced 35 million pounds of marijuana last year, according to government estimates. On a hidden hilltop field in Mexico’s Sinaloa state, a pound of pot might earn a farmer $25. The wholesale price for the same pound in Phoenix is $550, and so the Mexican cartels could be selling $20 billion worth of marijuana in the US market each year.

“Marijuana created the drug trafficking organizations you see today. The founding families of the cartels got their start with pot. And marijuana remains a highly profitable business they will fight to protect,’’ said Luis Astorga, a leading authority on the drug cartels at the National Autonomous University of Mexico.

Led by California, 13 US states now permit some use of marijuana. In many cities, marijuana is one of the lowest priorities for police.

To some authorities, the new laws are essentially licenses to grow money. With a $100 investment in enriched soil and nutrients, almost anyone can cultivate a plant that will produce two pounds of marijuana that can sell for $9,000 in hundreds of medical marijuana clubs or on the street, according to growers.

High-end marijuana grown under such special conditions often fetches 10 times the price of poor-quality Mexican pot.