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The end game of such a strategy doesn't sound too bright. Recreational cocaine will be still ilegal in any other country and the internal and medical markets ar

by yholio 6y ago

The end game of such a strategy doesn't sound too bright. Recreational cocaine will be still ilegal in any other country and the internal and medical markets are not significant to the problem. So you are legalizing an export industry that cannot be lawfully exported anywhere in quantity. This is problematic for many reasons. By necessity the legal producers will have to sell large quantities to clandestine entities that export unlawfully it out of the county (since nobody would accept a lawful import with all the required customs paperwork). The value chain will push prices down in the supply and manufacture and reward the international smugglers who take the risks and can eliminate competition by forming cartels. So you will have immensely powerful cartels based in Colombia that purchase in bulk on the legal market, that can bribe politicians to maintain a favorable regulatory framework, you get the whole Escobar situation, state capture and narco-state structures. The next fallout is diplomatic. Countries served by smugglers based in Colombia will ask for cooperation to stop those export routes. You either ignore them and get sanctions or military action, or you put pressure on the legal industry, driving it underground again.

dcolkitt 6y ago
That analysis sounds compelling, but doesn't really match up with the experience of state-level cannabis legalization in the US. For two years, Colorado was the only state in the US with legal cannabis, let alone the world. Did cannabis get exported from Colorado? Absolutely. Did it corrupt the legal industry or the Colorado state government? Not to any extent, I'm aware. Like you said, the margin on inter-state smuggling are so large, that there's no reason for exporters to even bother with grey market wholesale sourcing to save a few pennies. Just source retail, then ship overseas. Back of the envelope math. Let's say cocaine is recreationally legal in Colombia and retailed at $5/gram. (Black market prices inside Colombia are already cheaper than this.) Let's say wholesale production costs $1000/kilo. Current wholesale smuggling prices in the US are $25,000/kilo in the US, and double that in Europe. The simplest option for any would-be is just to have smurfs continuously accumulate recreational product from Colombian legal retailers. Then package small-scale retail buys into wholesale international shipment. Trying to buy wholesale from produces only increases profit margins by ~20%, and makes your operation a lot more visible and attackable. Pablo Escobar was a different beast because he had to run an enormous and visible illegal operation inside Colombia. He needed farms, processing facilities and all the logistics that come with that. That required bribing a lot of politicians to protect those operations. A post-legalization Escobar doesn't need anything more than a warehouse, a small payroll of shoppers, a Silk Road account, and some international postage. This isn't speculation, it's pretty much how the large-scale MDMA traffickers (who are so lightly prosecuted that it might as well be legal) operate in Holland.

by yholio 6y ago

dcolkitt 6y ago

That analysis sounds compelling, but doesn't really match up with the experience of state-level cannabis legalization in the US. For two years, Colorado was the only state in the US with legal cannabis, let alone the world. Did cannabis get exported from Colorado? Absolutely. Did it corrupt the legal industry or the Colorado state government? Not to any extent, I'm aware. Like you said, the margin on inter-state smuggling are so large, that there's no reason for exporters to even bother with grey market wholesale sourcing to save a few pennies. Just source retail, then ship overseas. Back of the envelope math. Let's say cocaine is recreationally legal in Colombia and retailed at $5/gram. (Black market prices inside Colombia are already cheaper than this.) Let's say wholesale production costs $1000/kilo. Current wholesale smuggling prices in the US are $25,000/kilo in the US, and double that in Europe. The simplest option for any would-be is just to have smurfs continuously accumulate recreational product from Colombian legal retailers. Then package small-scale retail buys into wholesale international shipment. Trying to buy wholesale from produces only increases profit margins by ~20%, and makes your operation a lot more visible and attackable. Pablo Escobar was a different beast because he had to run an enormous and visible illegal operation inside Colombia. He needed farms, processing facilities and all the logistics that come with that. That required bribing a lot of politicians to protect those operations. A post-legalization Escobar doesn't need anything more than a warehouse, a small payroll of shoppers, a Silk Road account, and some international postage. This isn't speculation, it's pretty much how the large-scale MDMA traffickers (who are so lightly prosecuted that it might as well be legal) operate in Holland.