- Alex Wong/Getty Images
- Attorney General Jeff Sessions has knocked down an Obama-era policy shielding legal-marijuana businesses that comply with state laws.
- It’s not clear how the new policy will be applied, but many in the industry are concerned about federal prosecution.
- Higher risk in that market will drive prices up and reward those who are willing to accept that risk – namely, drug traffickers.
Attorney General Jeff Sessions’ decision to rescind an Obama-era directive that made enforcing marijuana laws against companies that comply with state laws a “low priority” raised ire in both parties and stoked uncertainty in states where the drug is legal.
The move may benefit nefarious actors who have long dominated the marijuana trade.
Legal marijuana has already become a complex, multimillion-dollar industry in the US. Eight states and the District of Columbia have legalized it for recreational use. Sessions has been a fervent opponent, however, comparing marijuana to heroin and blaming it for increases in violence.
The Justice Department said its new order “simply directs all US Attorneys to use previously established prosecutorial principles that provide them all the necessary tools to disrupt criminal organizations, tackle the growing drug crisis, and thwart violent crime across our country.”
- Lucy Nicholson/Reuters
The move sent a chill through the legal-marijuana market and spooked some investors. While some remain defiant and plan to continue their work, one party in particular stands to benefit if the new policy restricts legal sales and pushes prices up – Mexican drug traffickers who see marijuana as a kind of cash crop.
Mexican marijuana growers and traffickers long benefited from low production costs and high demand in the US, which made the crop a lucrative one. Growers even adopted advanced methods pioneered in the US to expand their production.
But they have seen their share of US marijuana market – and their profits – shrink as states pursue legalization. (Mexicans now bring safe, high-quality marijuana back to Mexico from the US, though US border agents in California will still seize the drug when they find it traveling south.)
One farmer in Mexico’s Sinaloa state – part of an area called the Golden Triangle for its prolific drug production – said in November that the value of marijuana had fallen from about $74 a kilo in 2010 to a little over $26 now.
Seizures have fallen as well. US Customs and Border Protection officers at border crossings intercepted 522,614 pounds of marijuana in 2012, which rose to a high of 602,795 pounds in 2015 – but that figure fell to 338,676 pounds in 2017, according to data compiled by the Albuquerque Journal. The amount of marijuana seized between border crossings declined from 2.3 million pounds in 2012 to 861,231 in 2017.
Meanwhile, Mexican producers – especially those in Sinaloa state – have moved heavily in the production of heroin and synthetic drugs like methamphetamine.
“The more you legalize marijuana, the more other drugs matter and become more profitable,” Arturo Fontes, a former FBI agent and expert on Mexico’s drug cartels, told the Albuquerque Journal. “And right now nothing matters more than meth, heroin.”
The amount of meth seized at the US-Mexico border jumped from 14,131 pounds in 2012 to 44,065 pounds in 2017. The amount of meth seized between border crossings rose from 3,715 pounds in 2012 to 10,328 pounds in 2017, according to the Albuquerque Journal.
Heroin seizures at border crossings have held steady, falling from 5,530 pounds in 2015 to 3,626 pounds in 2017, which was about the amount seized in 2012. The amount of heroin seized between border crossings has steadily risen, but is still below 1,000 pounds a year.
The shift toward synthetics and opioids has been motivated by both marijuana legalization and by changing drug-use patterns in the US
“The cartels are very attuned to shifts in drug abuse in the United States. They always have been,” Mike Vigil, former chief of international operations for the US Drug Enforcement Administration, told Business Insider in November.
“And as a result of that there’s been a shift to the cultivation of opium poppies,” which are used to make heroin, Vigil said.
Cashing in on neo-prohibition
The dynamic going forward will likely hinge on how the Justice Department and its prosecutors enforce their new policy, Sanho Tree, director of the Drug Policy Project at the Institute for Policy Studies in Washington, DC, told Business Insider.
“Are they going to do eradication of indoor grows, arrest budtenders, or just prosecute some big players to set an example?,” he said.
Tree mentioned a controversial US attorney in San Francisco who targeted medicinal marijuana and marijuana dispensaries to illustrate one path the US policy might take.
“Would it be dozens of Melinda Haag’s turned loose to hit targets of opportunity like she did to Harborside Dispensary? That would all affect how the Mexican market responds,” Tree said.
States have clashed with the federal government over marijuana, which remains illegal under federal law. The status of protections for medical marijuana going forward is not certain. Sessions’ order gives prosecutor discretion in focusing their enforcement efforts – some may not ramp up efforts against marijuana, but others have said there’s no guarantee they’ll maintain a hands-off approach.
Tree – who said the policy change restored a price support for growers by reintroducing a “federal risk premium” – told Business Insider that while consumers in states were marijuana was legal were probably used to a high-quality and tested product, he suspected cracking down on legal marijuana production and sales would incentivize trafficking of lower-quality marijuana to states where the drug is still illegal.
“Would Sessions go after the quality control & testing chain as well?” he added. “That would make pot more dangerous and run counter to his professed goals.”
“One thing is clear: Sessions has reversed the precipitous decline in marijuana prices with a stroke of his stupid pen,” Tree said. “As prices go up, it will draw risk-tolerant players willing to cash in on neo-prohibition.”