The Cartels want the Drugs to be illegal

Illegal drugs cartels make huge amounts of tax-free money. If you don’t believe me, I know a small one-man operation that makes £11,000 every three months. Profit. If the ‘legalise drugs’ debate were to start again in the UK, and said one-man operation who I know had any business sense, that one-man operation would fight and protest legalising the drugs. As it happens, said person is a liberal without any business sense and would love drugs to be legal. But my one short-sighted friend is not the point here.

Drugs are expensive for two reasons (I use the word “expensive” in a particular sense here. I mean “expensive” in the same way you’d use the word “profitable”. A thing is expensive to a buyer when it is profitable to a seller. That differs from the proper use of the word “expensive” because I am ignoring the part of the price that is down to the cost of the raw materials and other manufacturing costs). The two reasons they are expensive are a limited supply and because of the risk of selling them. Politics affects these factors.

Because drugs are illegal, the risk of selling them is high; you run the risk of being put in prison or fined heavily (in some countries) or killed (in other countries). The cost reflects that risk i.e. the cost is higher. Because drugs are illegal they are harder to grow or transport, therefore the supply is low. Low supply means high price. But neither of these high prices show the cost of the raw materials, which are often are cheap as wheat or corn (as they’re mostly derived from plants).

This is the first reason that dealers want drugs to be illegal: that is exactly what makes the industry profitable. But there are more reasons. Let’s say the government does legalise drugs and then makes current known dealer registered salespeople of drugs. Those people and their products will now be regulated: the government will make sure the salespeople are selling the least harmful version of the drugs (e.g. marijuana with high CBD content, to stop long-term psychological damage), make sure the industry doesn’t sell to or market to children (the same thing we do with alcohol). These make the processing of a drug more expensive, and limit the market. Neither of these are good things to a profit margin.

Lastly, in this trite argument I’m putting forward, legalising drugs will mean the local businesses can start-up. I could grow marijuana and undercut my friend. Then we would both have to lower our prices to get customers. That, then tax, means we’d be making much less money than my friend does now.


2 thoughts on “The Cartels want the Drugs to be illegal”

  1. In Grade 11 economics a friend and I presented an assignment that got us both an A+ and a weeks suspension: We (the Australian government) would grow opium, a whole lot of opium and flood the global market with free product for 5 years. After that period we would have forced all competition out and would have successfully gained an enormous (addicted) market of new users… then, as a monopoly, we’d start selling it.

    1. You deserved the suspension, you had a good idea someone else hadn’t already capitalised in; “free thought”. That’s just evil.

      I think your model influenced real industry…
      I think I’m right in saying Nestlé did do that with powdered milk and breast milk; they offered the powdered milk for free until the competition (breast milk) literally dried up, and then suddenly powdered milk had a price.

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