Crime and Violence

The potential impact of Washington’s legalization of marijuana on Mexico’s criminal organizations

A marijuana grower in Colorado. Photo: Standard Examiner.
A marijuana grower in Colorado tends to his plants. Photo: Standard Examiner.

07/28/14 — The recent legalization of recreational marijuana use in several U.S. states will have short- and long-term effects both in the United States and in neighboring Mexico. On Tuesday, July 8, the state of Washington opened its first recreational marijuana retail store after having approved Washington Initiative 502 in November 2012. According to data provided by the U.S. Census Bureau and Washington State Office of Financial Management, the proposal passed by a 10% margin (55% in favor, 45% against) with a voter turnout of 81.25%. The initiative allows for adults 21 years or older to purchase small quantities up to 1.0 ounce of marijuana and marijuana-related products for recreational use. The legislation will not only allow law enforcement to focus their time and effort on other crimes, but also allow the state to generate new tax revenue for health care, research, and substance abuse prevention. Furthermore, legislators hope it will take marijuana out of the hands of criminal organizations and bring it under a tightly regulated, state-licensed system similar to that for controlling hard alcohol. A similar law passed in Colorado in November of 2012. That state’s first cannabis retailers did not open, though, until January 1, 2014, due to differences in regulation and speed at which each state could attain enough suppliers and pass inspection. While the concept of the legislation is the same in both states, there are some differences concerning sales tax and who can obtain a license to grow, produce, and sell marijuana. Although it is unclear which state will serve as the blueprint for others looking to legalize recreational marijuana, Washington is still in its beginning stages of legalization.

Challenges with Implementation in Washington

Despite Colorado’s and Washington’s legalization of marijuana, there have been many regulatory challenges faced along the way, as evidenced by shortages of supply in the latter that occurred at the grand opening of the first recreational distributor in Seattle, called Cannabis City. Reuters reported that despite limiting customers to 0.2 ounces per purchase, Cannabis City had to temporarily close down just three days after it opened because the influx of customers was so large. Reports indicate that while the store does not intend to limit customers’ purchases in the future, it was necessary to avoid running out of the ten-pound stock that was authorized by the state during the first week of operation. Given that state officials limited production to only 80 growers of 2,600 applicants, many of which still require lab testing before approval, providing adequate supply to meet demand has been a challenge for Washington since the outset of its legalization initiative, the Statesman Journal reports.

Nevertheless, the marijuana business may improve and grow in a matter of time, and if sales in Washington go as well as they did in Colorado’s first month, then Washington is looking at a large payoff. According to the Colorado Department of Revenue, the state of Colorado made $2 million (USD) in tax revenue with only a fraction of their businesses operating during the first month of legal marijuana sales. Recreational marijuana in Colorado is subject to state and local jurisdiction taxes, as well as an additional 15% excise tax. Washington’s law, on the other hand, reports the Statesman Journal, “includes a 25 percent excise tax on marijuana at each point of sale (i.e. grower, processor and retailer).” This means that tax revenue will fluctuate as sales rise and fall, which is a challenge other states with similar proposed legislation may look into resolving in different manners.

Other States Watch Closely

Oregon is the next state looking to legalize recreational cannabis, as voters will consider a statewide ballot initiative in November 2014. Oregon state officials are already taking note of the challenges that Washington is facing, and plan to use a fixed sales tax rate per gram and license more growers if voters approve. Meanwhile, other states such as Rhode Island and California are also considering legalization initiatives similar to those of Colorado and Washington as a means to reduce state budget deficits.

The grand opening of Seattle's Cannabis City on July 8 grew larger than expected crowds. Photo: Jason Redmond, Reuters.
The grand opening of Seattle’s Cannabis City on July 8 grew larger than expected crowds. Photo: Jason Redmond, Reuters.

In addition to tax revenue, proponents argue that a further benefit of marijuana legalization is the reduction of certain costs for the criminal justice system, as marijuana possession arrests (which have accounted for nearly half of total drug arrests in the United States for the past five years) will likely decrease significantly. According to a Denver Post analysis of data provided by the Colorado Judicial Branch, marijuana prosecutions have already significantly decreased since Colorado legalized the drug for persons over 21 years of age, as well as for minors with medical marijuana licenses. Additional evidence reported by the Center on Juvenile and Criminal Justice that supports this claim includes California’s 61% decrease in youth marijuana possession arrests from 2010 to 2011 after a new state law decriminalized the drug, reducing that offense from a misdemeanor to an infraction.

Despite hopes that legalization will reduce organized crime activity, it may not be a perfect solution. For example, as the industry matures in Colorado and Washington, people may continue to look to the black market to attain illegal substances to avoid problems with supply, greater overhead for vendors, and higher prices due to regulation and taxes. The Los Angeles Times reports that the average price of a gram of marijuana purchased from recreational distributors is around $15-$20, about twice as much as the price of marijuana on the streets or in medical marijuana dispensaries. Furthermore the age requirement for legal marijuana is 21, and it is likely that juvenile drug usage will continue to be an issue. Therefore, if the black market maintains competitive prices and comparable quality then juveniles may become the primary revenue source for underground distributors.

What This Means for Mexico

As momentum picks up in the United States to move towards easing restrictions on recreational marijuana use, some are speculating on the effect this may have on Mexican criminal organizations. According to the Instituto Competitivo de México, it is expected that the legalization of recreational marijuana will cut Mexican cartels’ profits by over 20% in just Washington alone, which could amount to $1,327 million (USD) in total revenue for the cartels. On the other hand, a 2010 Rand Corporation study estimated that legal marijuana use in California, a state that consumes about one-seventh of all the pot smoked in the United States, would cost the cartels 2% to 4% of their revenue. Therefore, losing consumers in states such as Washington and Colorado that have significantly less users would have a smaller effect on the cartel revenue. Either way, cartels charge for growing, producing, personal security, and risk minimization strategies, all factors that make the drug more expensive than if the state produced its own. Once states can provide enough supply, some speculate that the criminal organizations will be unable to compete with state approved products within a matter of time.

Colorado, Washington, and any other potential states’ legalization of marijuana will certainly not put cartels out of business, as their revenue sources are diversified and include the trafficking of other drugs such as heroin, cocaine, and methamphetamine, along with revenue generated from human- and weapons-trafficking, kidnapping, extortion, and robbery, among others. Nevertheless, the legalization of marijuana in Washington, Colorado, et. al. will still result in a loss of income to Mexican criminal organizations on some level, though it is unclear how such a shift will affect the security situation in Mexico as cartels continue diversifying their revenue sources.


Author Byline:

This guest post is contributed by Haydee Rojas, student and McNair Scholar at the University of San Diego. She welcomes your comments at her email id: [email protected].



Kilmer, Beau et. al. “Reducing Drug Trafficking Revenues and Violence in Mexico Would Legalizing Marijuana in California Help?” RAND International Programs and Drug Policy Research Center. 2010.

Clark, Edward and Alejandro Hope.“Si los vecinos legalizan: Reporte técnico.” Instituto Mexicano para la Competitividad. October 1, 2012.

Males, Mike. “California Youth Crime Plunges to All-Time Low.” Center on Juvenile and Criminal Justice. October 1, 2012.

Ingold, John. “Marijuana case fillings plummet in Colorado following legalization.” The Denver Post. January 12, 2014.

Messamore, W. E. “Colorado recreational marijuana tax revenue hits $2M in first month.” Independent Voter Network. March 15, 2014.

La Ganga, Maria L. “Marijuana shortages expected on first day of business in Washington state.” Los Angeles Times. June 7, 2014. 

Ferner, Matt. “Almost Anyone Can Have A Marijuana Business In Colorado Starting Today.” Huffington Post. July 1, 2014.

Cohen, Bryan. “Seattle’s first legal pot shop runs out of marijuana.” Reuters. July 11, 2014.

Staver, Anna. “What Oregon can learn from Washington’s marijuana legalization.” Statesman Journal. July 14, 2014.

“Secretary of State Initiative No. 502.” Washington Secretary of State. Last accessed July 23, 2014.

S. Census Bureau and Washington State Office of Financial Management. “Secretary of State Voter Participation Statistics.” Washington Secretary of State. Last accessed July 23, 2014.

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