A new report from the London School of Economics examines the detrimental effect of the War on Drugs and includes a chart that shows the incredibly high markups on heroin, cocaine, and marijuana.
In Colombia, for example, it’s cheaper to produce a gram of cocaine than a pound of coffee, and the profits end up being much higher because it’s an illegal drug sold on the black market.
By the time that cocaine reaches the U.S., it sells for as much as $US175 per quarter-gram on the street.
This chart below compares legal exports, including coffee and silver, to illegal drug exports to highlight the drastic difference in price as the products move down the supply chain.
The high cost of illegal drugs is driven by prohibition, the report notes.
“The increase in price as cocaine moves down its distribution chain utterly dwarfs that of coffee or silver,” the report states. “Cocaine prices increase by more than $US100 per gram. Silver and coffee bean prices increase by less than $US0.10 per gram — a difference of three orders of magnitude.”
This is striking considering that by the time cocaine leaves Colombia, it’s in its final form and doesn’t really need to be processed between export and retail sale.
The illegal drug trade has fuelled tremendous violence in Latin America. Presidents of Uruguay, Brazil, Argentina, Bolivia, Guatemala, Colombia, and Mexico have called for policy makers to rethink drug prohibition, according to The New York Times.
The Times points out that hard drugs like heroin and cocaine might be too harmful to legalise. However, the U.S. still might be able to reduce drug cartel profits by helping addicts instead of jailing them.
Business Insider Emails & Alerts
Site highlights each day to your inbox.