The recent surge in violence in Mexico has been dramatic. While the per capita murder rate fell by roughly 25 percent between 2000 and 2007, it jumped 50 percent between 2007 and 2009 (Sistema Nacional de Seguridad Pública and Consejo Nacional de Población, 2010). The violence associated with the illicit drug trade is largely responsible for this reversal. The estimated annual total for drug-related homicides in Mexico increased from 1,776 in 2005 to 6,587 in 2009, and, in 2010, the total was already 5,775 by July (Duran-Martinez, Hazard, and Rios, 2010; Shirk, 2010). In 2009, the murder rate for drug-related...

Our goal is to estimate how legalizing marijuana would affect the revenues earned by Mexican DTOs and how this, in turn, could affect violence in Mexico. The estimate naturally pertains to marijuana, but it is important to scale that loss of revenue relative to the DTOs’ total revenues from trafficking drugs into the United States. Few people have any intuition about how useful in absolute terms it is to take $100 million or $1 billion in revenues away from the DTOs. Therefore, when it comes to projecting effects on DTO power and violence, it is easier to work from percentage...

To estimate gross revenues earned by Mexican DTOs from exporting marijuana to the United States, we estimate, in turn, (1) total U.S. marijuana consumption, (2) Mexican marijuana’s market share, and (3) the price of Mexican marijuana at the wholesale level. Multiplying these three items generates our estimate of gross revenues earned through Mexican marijuana exports.

Table 3.1 displays five demand-side estimates of the amount of marijuana consumed in the United States annually. As is clear, there is a lot of variation, with figures ranging over an order of magnitude from 1,000 MT to 5,000 MT, including one outlier estimate of...

Mexican DTOs earn $1.1 billion to $2 billion from exporting marijuana to the U.S. and selling it to wholesalers across the southwest border. Legalizing marijuana in California would present two sources of competition. The obvious one is marijuana sold legally in California to California residents and drug “tourists” visiting from out of state, as well as legalized home cultivation. A less obvious but potentially more important threat is marijuana diverted from legal distribution channels. The latter includes marijuana that is grown legally in California but then smuggled to another state and sold illegally there, as well as marijuana sold to...

Mexican DTOs generate revenue from a host of drugs, products, and services; in other words, exporting marijuana to the United States is only part of the portfolio. This chapter provides a critical assessment of the claim that 60 percent of Mexican DTO drug revenues come from marijuana and presents an exploratory analysis of DTO revenues from exporting other drugs. It concludes with a discussion about DTO revenues from domestic distribution within the United States.

It is common in contentious policy domains for sensational numbers to get the most attention and to be repeated so often that they take on an...

The previous chapters have estimated, for Mexican DTOs, both revenues now generated by U.S. drug markets and how these figures might be affected by the legalization of marijuana production in California. Although these estimates are of interest in themselves, we are ultimately most concerned about how this revenue decline will affect Mexican society. That, in turn, depends largely on how Mexican DTOs respond to a decline in revenues. To what extent will the DTOs compensate for the loss of revenues by downsizing versus shifting to other activities, and how violent would any substitute activities be? In particular, will this increase...

This paper helps inform two questions that receive a considerable amount of attention within California and throughout the hemisphere: What are the potential effects of marijuana legalization? And what can the United States do to help reduce the violence in Mexico? Regardless of what happens in November with Prop 19, legalization and the security situation in Mexico will remain on the policy agenda in the United States, Mexico, and elsewhere.

Our goal was not to provide comprehensive answers to both questions, but rather to look at their intersection. Both of these issues are complex, and much of the data needed...