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Illegal Marijuana Market Goes to Pot

Written by Gary North on May 27, 2014

Pot growers in Mexico are going bankrupt. Prices have fallen 75%. Why? It has been legalized in two states: Colorado and Washington.

The price of pot has fallen 75%.

This is basic economics. Competition drives down prices.

But how? How does all that legal pot in two states get to other states? By car.

Someone takes greenbacks into Colorado, buys pot, and drives back home. Then he sells his stash for cash.

Doesn’t all that cash coming into Colorado draw attention to itself? No. The market is 100% cash in Colorado. Why? The Federal Reserve will not allow banks to set up accounts for pot sales companies. It’s illegal for banks to service such accounts. It’s a form of drug trafficking, says federal law.

There are no border checks points, except in California. It will be interesting to see how effective California’s border checkpoints are. The price of pot should be higher in California if the checkpoints are honored.

The market is responding in Mexico. Farmers who used to grow pot are now growing heroin poppies.

It turns out that growing heroin poppies are more profitable than growing corn.

It turns out that the legalization of pot is cutting into the profits of the Mexican drug cartels.

The logic of this indicates that the legalization of drugs in the USA reduces crime in Mexico and the USA. So, there is an alliance: Mexican drug cartels and voters who want drugs legalized.

This is a variation of the famous alliance between fundamentalists on one side of a county line in “dry” counties and liquor stores just across the border. I used to live in a dry county: Smith County, Texas. The liquor stores were on all side: north/south and east/west. The liquor stores help fund the advertising against legalization whenever it would come up in Smith County.

Baptists pretend that the ads against legalization were funded by Baptists. They pretend that Baptists in Smith County pay for the ads.

Silly Baptists.

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17 thoughts on “Illegal Marijuana Market Goes to Pot

  1. Robert What? says:

    I think you meant to say there is a non-alliance between the Mexican drug cartels and the voters who want pot legalized? The alliance is between the cartels and the DEA who both want it kept illegal because otherwise it cuts into the revenues, power and influence of both.

  2. kodster says:

    Silly Gary North! If folks would go to read the original article, you'd find that it was written for the Seattle Times… and referencing Washington State, who has NO stores or dispensaries open yet, because the Court won't let them… 2 years after the passing of the legalization of pot in that state. They worded that law so harshly that it's next to impossible to comply and be able to buy or sell pot in that state. So, how could the price of pot have gone down there, when they haven't even opened up the ability to buy/sell?

  3. Cliffystones says:

    Futures trading maybe? 🙂

  4. Really the alliance is between the Mexican drug cartels and votes who want pot ILLEGAL. They are obviously on the same side (for differing reasons) just like the Baptists and the out-of-county liquor stores.

  5. FIRSTSTRIKE says:

    "The logic of this indicates that the legalization of drugs in the USA reduces crime in Mexico and the USA. So, there is an alliance: Mexican drug cartels and voters who want drugs legalized."
    TOTALLY ILLOGICAL – Cartels DO NOT want their pro ices lowered by legal competition.

  6. David in MA says:

    "Pot growers in Mexico are going bankrupt. Prices have fallen 75%. Why? It has been legalized in two states: Colorado and Washington."

    Are we to believe two states legalizing pot has an effect as great as this?
    Hogwash!

    If true then Hawaii & Alaska should have been allowed to do this a long time ago…….get my point?

  7. Mr. Krispy says:

    The author makes no sense because he doesn't understand the first thing about the marketplace in general, and this situation in particular….or…he's been smoking a LOT of weed.

  8. JH holloway says:

    If you had read it you would have seen that it stated that it was because people were going there and bying it then taking it back and selling it at home where ever that may be. I. Know it smokes good in Georgia so wake up man.

  9. This only reinforces Gary's point, that it takes only ONE state to legalize pot to dramatically drive down prices.

  10. Robert What? says:

    Hojo,

    OK, there is a three-way alliance between the drug lords, the DEA and the “traditional conservatives”. The only difference IMO is that the tradcons don’t realize what they’re doing and who they are aiding and abetting, whereas the DEA know exactly what they are doing: legalized pot this year – smaller budgets and less power next year.

  11. Rattlerjake says:

    There's an even bigger picture, and that is that with legalization there will be far less need for prison space, less funding for the judicial system for prosecuting minor offenders, no justification to confiscate cash and property, less income for attorneys, etc. Prohibition is all about MONEY!

  12. Robert What? says:

    Rattlerjake,

    Yes, there are huge amounts of money being made off the illegal drug trade, only some of it by the drug lords. Lots of people profiting handsomely on other people’s misery.

  13. Boiling says:

    I’m in Alabama and I get it from people who travel to California and Colorado. I know some others who do the same…get someone they know that frequently commutes to a state that has legalized it. I’m sure this happens on a broad spectrum across the states where it has not been legalized, so look at all the tax revenue states like mine are losing! Oh…Alabama did recently take a step towards medical marijuana. They passed a bill legalizing cannabis oil for epileptic children, but you have to travel to U of Birmingham medical school to get it, and I’m still baffled as to why it was limited to children with epilepsy because epilepsy is the reason I smoke marijuana…Wouldn’t that be age discrimination?

  14. Guest 1 says:

    You can drive a car between Hawaii and the continental US? No kidding.

    Going from Alaska to the Conus involves crossing into Canada. There are border checks on both borders, yes?

  15. Guest 1 says:

    Happy to read this…. and I despise getting stoned or drunk.

    People need to mind their own business.

  16. David in MA says:

    Thanks for helping me make my point.

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