Economics of Drug Policy and the Drug War
- Federal Drug Control Spending by Function FY2013 through FY2017
- Estimated Federal Drug Control Spending By Function for Fiscal Years 2003-2017
Page last updated June 6, 2020 by Doug McVay, Editor/Senior Policy Analyst.
41. Money Laundering and Mexican Drug Trafficking Organizations
"Mexico is a major drug producing and transit country. Proceeds from the illicit drug trade leaving the United States are the principal source of funds laundered through the Mexican financial system. Other significant sources of illegal proceeds being laundered include corruption, kidnapping, extortion, piracy, human trafficking, and trafficking in firearms. Sophisticated and well-organized drug trafficking organizations based in Mexico take advantage of the extensive U.S.-Mexico border, the large flow of legitimate remittances, Mexico’s proximity to Central American countries, and the high volume of legal commerce to conceal transfers to Mexico. The smuggling of bulk shipments of U.S. currency into Mexico and the repatriation of the funds into the United States via couriers or armored vehicles, trade, and wire transfers remain favored methods for laundering drug proceeds. Though the combination of a sophisticated financial sector and a large cash-based informal sector complicates the problem, the 2010 implementation of U.S. dollar deposit restrictions reduced the amount of bulk cash repatriation back to the United States via the formal financial sector by approximately 70 percent, or $10 billion. According to U.S. authorities, drug trafficking organizations send between $19 and $29 billion annually to Mexico from the United States, though the Government of Mexico disputes this figure. Since 2002, Mexico has seized a total of more than $500 million in bulk currency shipments."
"International Narcotics Control Strategy Report: Volume II, Money Laundering and Financial Crimes" (Washington, DC: US Dept. of State Bureau for International Narcotics and Law Enforcement Affairs, March 2014), pp. 161-162.
42. US Counternarcotics Spending in South and Central America
"However, during fiscal years 2000-2005, the United States provided about $6.2 billion to support counternarcotics and related programs in the source and transit zones (see table 1).12 In the source zone, U.S. assistance supports eradication and interdiction efforts and related programs for alternative development and judicial reform, primarily in Bolivia, Colombia, and Peru. In the transit zone, the United States provided about $365 million in assistance—primarily to El Salvador, Guatemala, Haiti, and Mexico —to support interdiction and other law enforcement programs."
"Drug Control: Agencies Need to Plan for Likely Decline in Drug Interdiction Assets, and Develop Better Performance Measures for Transit Zone Operations," Government Accountability Office (Washington, DC: USGAO, Nov. 2005), GAO-06-200, pp. 10 and 23.
43. Diversion and Fraud
"According to law enforcement reporting, some individuals and criminal groups divert CPDs [controlled prescription drugs] through doctor-shopping and use insurance fraud to fund their schemes. In fact, Aetna, Inc. reports that nearly half of its 1,065 member fraud cases in 2006 (the latest year for which data are available) involved prescription benefits, and most were related to doctor-shopping, according to the Coalition Against Insurance Fraud (CAIF). CAIF further reports that diversion of CPDs collectively costs insurance companies up to $72.5 billion annually, nearly two-thirds of which is paid by public insurers. Individual insurance plans lose an estimated $9 million to $850 million annually, depending on each plan’s size; much of that cost is passed on to consumers through higher annual premiums."
National Drug Intelligence Center, Drug Enforcement Administration, "National Prescription Drug Threat Assessment," (Washington DC, April 2009), p. 20.
44. State Prison Costs, 2001
"Correctional authorities spent $38.2 billion to maintain the Nation?'s State correctional systems in fiscal year 2001, including $29.5 billion specifically for adult correctional facilities. Day-to-day operating expenses totaled $28.4 billion, and capital outlays for land, new building, and renovations, $1.1 billion.
Stephan, James J., "State Prison Expenditures, 2001," Bureau of Justice Statistics (Washington, DC: US Department of Justice, June, 2004), p. 1.
45. Wholesale Price of Heroin in the US and Around the World
According to the United Nations Office on Drugs and Crime:
In the United States in 2015 (the most recent year for which data are available), the wholesale price of black tar heroin ranged from $12,000 to $100,000 per kilogram; the wholesale price of South American heroin ranged from $10,000 to $100,000 per kilogram and the price of southwest Asian heroin ranged from $50,000 to $85,000 per kilogram.
In Mexico in 2015 (the most recent year for which data are available), the wholesale price of heroin was $35,000 per kilogram.
In Colombia in 2015 (the most recent year for which data are available), the wholesale price of raw opium was $694.50 per kilogram; the wholesale price of illicit morphine was $3,746.10 per kilogram; and the wholesale price of heroin was $5,523.90 per kilogram.
In Hong Kong in 2015 (the most recent year for which data are available), the wholesale price of heroin ranged from $47,603.70 to $51,152.10 per kilogram.
In Thailand in 2015 (the most recent year for which data are available), the wholesale price of opium ranged from $519.70 to $779.50 per kilogram; the wholesale price of heroin ranged from $9,146.30 to $12,472.30 for 700 grams.
In Afghanistan in 2015 (the most recent year for which data are available), the wholesale price of raw opium was $150 per kilogram; the wholesale price of heroin was $2,229.50 per kilogram; and the wholesale price of high purity heroin was $3,294.50 per kilogram.
In Pakistan in 2015 (the most recent year for which data are available), the wholesale price of raw opium ranged from $322 to $439 per kilogram; the wholesale price of illicit morphine ranged from $600.90 to $1089 per kilogram; and the wholesale price of heroin ranged from $2,469.50 to $3,468.10 per kilogram.
Drug Prices Report: Opioids. Region: Americas. Retail and wholesale prices and purity levels, by drug, region and country or territory. United Nations Office on Drugs and Crime. Data retrieved via UNODC Statistics at https://stats.unodc.org on June 1, 2018.