Weekly InSight: Uruguay’s Historic Marijuana Legalization Experiment

In our July 20 Facebook Live session, Senior Editor Mike LaSusa and Geoff Ramsey, a research and communications associate at the Washington Office on Latin America (WOLA), discussed Uruguay‘s experience establishing a legal and regulated marijuana market, as well as the implications of this for organized crime and future discussions about drug policy…

Read this piece in its entirety at InSight Crime. You can watch the full live stream below:

Mexico Cartel Suspect Named in Panama Papers Arrested in Uruguay

Uruguayan authorities have arrested several suspects linked to Mexico crime group Los Cuinis, a move that could shed light on some previously obscure aspects of the organization’s international operations…

Read this piece in its entirety at InSight Crime.

Uruguay’s presidential elections explained

On 26 October 2014, Uruguay will hold a presidential election to decide who will replace current President Jose Mujica (Broad Front), who is constitutionally prohibited from pursuing a second term. If no candidate receives an absolute majority, a runoff election between the top-finishing candidates will take place on 30 November 2014…

Read this piece in its entirety at Southern Pulse.

Another Way Uruguay’s Legalization Experiment Could Go Wrong

I wrote a few months ago that legalizing marijuana in Uruguay could be a bad idea because gangs and drug traffickers might export cheap, price-controlled government pot for sale in foreign countries where it is illegal. Recently, Quartz had an interesting article that made me rethink the issue.

Citing Paraguayan officials who say illegal pot from Paraguay will be still cheaper for Uruguayans than the government’s product – $0.30 a gram versus the government price of $1 (in Paraguay it fetches only $0.06 per gram) – the article describes how Paraguayan smugglers might have an opportunity to undercut the state-controlled Uruguayan market.

The head of Paraguay’s National Anti-drugs Secretariat Luis Rojas said his government is “more than convinced [legalization] is going to stimulate internal consumption [in Uruguay] and thus the trafficking of marijuana towards there.” Non-citizens are not covered under the law, so the least-risky way for smugglers to grow and move weed in the country would be to contract production and transportation to local Uruguayans.

As much as 80% of cannabis from Paraguay ends up in Brazil. The new law could give Paraguayan trafficking organizations the opportunity to increase their presence in Uruguay and open up new routes and networks into Brazil – especially the southern city of Porto Alegre, Brazil’s fourth largest metropolitan area.

If all these hypotheticals actually came to fruition, you could end up with an expanded presence of drug trafficking organizations in two, three, or possibly four or more countries, including Bolivia and Argentina, and an influx of revenue and personnel for DTOs, which could paradoxically exacerbate the problem Uruguay supposedly set out to remedy.

Criminal organizations don’t just traffic pot, nor do they only deal drugs. They also derive significant revenues from money laundering, identity theft, human trafficking, arms trafficking, kidnapping, extortion, robbery, murder for hire and even child pornography – and I don’t advocate legalizing any of those activities.

However, in order to have the resources to focus on and combat those harmful illicit activities, the international community needs to develop a more effective approach to the problem of the role of drug use and the drug trade in funding organized criminal activity. All around the world, violent criminal and terrorist organizations are financed in large part by money from the production and distribution of illegal drugs; the Taliban in Afghanistan, the FARC in Colombia, Mexican cartels, US and Canadian gangs.

Instead of criminalizing simple cultivation, possession and distribution and cramming prisons full of low-level dealers and users, governments should work to establish a well-regulated, legitimate market for recreational drugs on both the domestic and international levels. There are also socioeconomic and political considerations to explore – providing alternate economic avenues for people wishing to quit or avoid a criminal lifestyle, educational and career opportunities for young and disadvantaged people, effective police forces and judicial institutions.

For all the ill effects of tobacco and alcohol use, many countries have at least some regulatory infrastructure surrounding the sale of those products. The challenges of abuse, addiction, smuggling, sale to minors and the rest are common to all drugs, even medicines, including many that are now legal and which few would propose banning, like oxycontin, codeine, ritalin and others. As Jeffrey Miron and others have argued, prohibition “almost certainly the worst possible choice” for achieving the stated goals of US and international drug policies.

Nevertheless, that does not mean that Uruguay got it right here. The legalization/nationalization law was unpopular with the country’s people and it seems poorly thought-out from a number of angles. Colorado, on the other hand, has shown some initial success with its private, but heavily regulated market, with some reports claiming it has saved the state upwards of $40 million and brought in over $5 million in tax revenue.

Workable solutions to international problems require international cooperation and consultation. Uruguay seems to have foregone that process in favor of a somewhat radical unilateral approach. As I wrote in October, “[m]y main concern is that this seemingly well-intentioned effort will fail and that will in turn scare off other countries from pursuing decriminalization or legalization efforts in the future.”

A number of high-level government officials from various Latin American nations have voiced support for a new approach to the drug issue. However, the onus is not just on the countries producing and trafficking the substances, but also on the countries that consume those drugs who are responsible for shaping a solution to these problems.

Uruguay’s Legalization Experiment Could Be a Disaster

Forget the nanny state. Get ready for the conservative freak-out about the drug-dealing nanny state.

Uruguay has been moving toward full-on legalization of marijuana recently. Not just legalization, but state-controlled distribution of the drug. According to a recent article by AFP, the bill is expected to become law within the next few weeks and will take effect sometime next year.

I have written more extensively here about why I think legalization is an essential part of winning the fight against drug gangs and cartels, but I see some potential problems with Uruguay’s approach.

The government is going to sell its pot for $1 a gram, slightly below the current black market rate of about $1.40 a gram. The law also limits consumers’ purchases to 40 grams per month per person. People would be allowed to grow up to six plants for personal use (harvests are capped at 480 grams per person per year) or belong to a membership club that could grow up to 99 plants.

I am very skeptical about the enforceability of those provisions. What’s stopping people from selling legally-purchased weed and/or “leftovers” from personal or club harvests to gangs for resale or export? Capping monthly purchases and personal harvests virtually ensures that the black market will persist.

Forty grams a month is a lot of weed, but I’m sure there are people who consume more than that – especially at $1 a gram (for context, US prices run upwards of ten times that amount.) Also, I’m sure that there are people who don’t use pot at all who would be happy to act as “straw buyers” for gangs looking to export the price-controlled product and sell it at massive mark-ups in other countries.

Decriminalization of all drugs in Portugal appears to have contributed to the steep decline in drug abuse and decriminalization of weed in the Netherlands doesn’t seem to have turned the country into a nation of potheads (the Dutch use pot at lower rates than Americans.) Washington state and Colorado are about a year into their legalization experiments and they have not (yet!) descended into chaos.

Still, no country has ever before attempted to legalize, much less nationalize, the sale of pot. Also, the law is unpopular with Uruguayans.

Portugal chose a purely free-market solution (no regulation and no taxation). Colorado and Washington chose more progressive model (some regulation and taxation). My main concern is that this seemingly well-intentioned effort will fail and that will in turn scare off other countries from pursuing decriminalization or legalization efforts in the future.

If you’re trying to solve the drug gang problem, legalization, regulation, and taxation is definitely the way to go. It deprives gangs of revenue, it saves the state from spending on unproductive law enforcement efforts like arresting and prosecuting low-level dealers and users, and it the gives the state a revenue stream that can be put toward harm-reduction programs and more productive aspects of law enforcement.