Will Mexican Cartels Allow the Government to Legalize Medical Marijuana?

Bernardo Perez Rojas, a 33-year-old entrepreneur from Mexico City, is one of many Mexican citizens interested in joining the emerging legal medical marijuana market, which the government recently announced plans to create. However, due to several factors, he is approaching the business with caution. Rojas is the CEO of Grupo Perfumeros de México, a company that produces dyes and flavorings for the food industry and household chemical manufacturers.

For the past few months, Rojas has been negotiating with government officials to obtain a license for the mass import of CBD into Mexico, intending to use it as a flavor additive in various products. He plans to add small amounts of CBD oil to food, personal hygiene products, and even plain water, samples of which (without CBD) he distributes as promotional material. Rojas also believes that using CBD as a flavor and aroma additive is just the beginning of his future marijuana business, which could soon operate in the therapeutic or even recreational market.

“I pray to God that everything turns out as well as possible for the people of Mexico!” he tells reporters with a smile.

Of course, Rojas quickly notes that the country could face real difficulties with the cartels if any significant reforms are implemented. Despite his optimism, he doubts that criminals will simply give up such a profitable business without a fight. He also suspects that if the reform succeeds and a regulated market is created, Mexico’s pervasive corruption could lead to a “gray” marijuana market, diverting some legal products to underground dealers working for the same cartels.

An $8 Billion Potential

According to analysts from RAND, Mexico’s black market for psychoactive substances brings the cartels annual profits of $6 to $8 billion. With legalization in many U.S. states and the prospect of full reform in Mexico, marijuana production is becoming less profitable, but it remains a solid and easy source of income for criminals. In 2010, marijuana exports to the U.S. accounted for about 15-26% of cartel profits. Since some U.S. states began legalizing marijuana in 2014, marijuana exports have noticeably decreased, as seen in the drop in marijuana smuggling arrests at the U.S. border.

Given these facts, it’s hard to imagine that small, local marijuana farmers will pose a financial threat to the cartels, who have already largely abandoned marijuana cultivation. Still, many entrepreneurs and growers fear possible retaliation, given the unpredictable nature of many criminal organizations.

“I’m seriously concerned about the reaction from the black market marijuana players. I highly doubt they will calmly accept competition from legal businesses,” says another potential marijuana entrepreneur, Andre Perez Cadena, in an interview with reporters.

Nevertheless, Cadena, a 31-year-old marketing manager working with Monterrey-based pharmaceutical company Fincan Pharma, believes that legalization will help many regions of Mexico improve their finances legally and open the door to full legalization of marijuana production and consumption nationwide.

“In the best-case scenario, high-quality legal marijuana will be sold across Mexico within the next 2-3 years. However, even then, we’ll be competing with underground organizations that don’t pay taxes and can therefore offer much lower prices,” Cadena predicts. “Of course, we can surpass the underground market in terms of product quality, but they will have the advantage of a wider market reach and the ability to bypass laws, sometimes violently.”

Marijuana Reform as a Way to Counter Drug War Violence

Benjamin Smith, an expert on the Mexican drug war at the University of Warwick in London, believes that reform could significantly reduce violent crime by giving poor Mexican farmers and their families the opportunity to earn a decent living legally. However, he does not rule out the possibility of a violent reaction from criminals to regional and federal legalization reforms.

Smith, co-author of the book “The Mexican Drug War: Impact on the Country’s Economic, Social, and Cultural Life,” notes in an interview that, in addition to cartels moving away from mass marijuana production, these organizations have splintered into internal subgroups, forming criminal conglomerates. Fields that cartel gunmen defended from police and the army in 2010 were burned by the cartels themselves by 2015, replacing marijuana with more profitable crops like opium poppies.

“Now, cartels aren’t just involved in drug production and distribution,” says Smith. “These organizations are increasingly engaged in robberies, kidnappings, and racketeering. Some cartels even steal oil and other Mexican natural resources to resell on the black market.”

Given that criminals have infiltrated not only the police and government but also many local industries, such as the coffee industry, it’s hard to imagine that authorities can fully isolate the new legal marijuana market from criminal contacts.

“Can corruption threaten the future legal marijuana market? Yes, absolutely,” Smith concludes.

The Best Option for the Country

Ethan Nadelmann, former executive director of the Drug Policy Alliance, believes that despite all the challenges and possible obstacles, marijuana reform is the best political course for Mexico’s stabilization and economic development. “Legalization will undermine cartel profits, redirecting billions of marijuana dollars into the state treasury, where the money can be used for things that truly benefit the people, like healthcare and education,” Nadelmann says.

In April, the organization “Citizens of Mexico Against Organized Crime” conducted a public opinion poll showing that about 56% of the population opposes marijuana legalization. In 2010, about 77% were against any form of legalization, so there has been some progress. The poll also found that only 15% of the population feels confident in the country’s future stability and safety, the lowest figure in the past 10 years.

In June, the popular Catholic-leaning newspaper Desda la Fe published an article expressing skepticism about whether marijuana legalization could improve public safety in Mexico. The authors stated that legalizing medical marijuana would be “like treating a terminally ill patient with aspirin,” arguing that such a simple measure would not help “a country so mired in vice and violence.”

The Path to Peace

In any case, most of Mexico’s youth agree on the need to legalize marijuana, at least for therapeutic use.

“No one in our country truly feels safe because of the cartels,” says 27-year-old Beto Munoz, a marijuana activist from Mexico City. “Legalization is necessary as a barrier to contain the expansion of the illegal business.”

Munoz’s group currently has about 2,000 members, many of whom use medical marijuana. Munoz hopes that one day he will be able to legally grow marijuana and open his own chain of stores to sell it. For now, he runs a small business selling shirts and accessories with hidden pockets for storing marijuana, using the proceeds to fund the organization’s work.

Wearing one of these shirts with legalization slogans, 25-year-old Alex Sega, also part of the reform movement, believes that the authorities are deliberately delaying the discussion on changing marijuana’s legal status out of fear of possible consequences. “Unlike our leaders, Mexico’s youth only fear that with all these delays, we’ll end up being the last country in the world to legalize access to medical and recreational marijuana,” he tells reporters.

“We can’t assume that all our cartel problems will simply disappear after the reform is passed,” says Cadena, a native of northern Mexico who has witnessed many cartel atrocities. “One way or another, we can’t let ourselves be intimidated. Also, we must not cut corners when developing market regulations, as we need to isolate the market from cartel contact as much as possible to avoid corruption.”

Channel about growing ethnic plants: Ethno Grow