Why We Don't Have Drug Cartels In the US….Yet

Are we ever going to see drug cartels operating in this country the way they do in Mexico? Insight Crime analyzes organized crime in Latin America and offers this interesting analysis of what lies ahead. (Note: Insight Crime is based out of Bogata, Columbia and is funded by Soros’ Open Society Foundation and American University.)

Coming soon to a street near you?

Through repeated business dealings, Mexican drug cartels have reportedly developed a relationship of trust with some Californian prison gangs, such as Nuestra Familia and its associated northern California street gangs. This trust has meant that U.S. groups increasingly take delivery of drugs from their Mexican partners on consignment, instead of paying with cash up-front, allowing the gangs to sell more drugs, more rapidly, with less internal conflict, according to a report from the Oakland Tribune.

Who makes the money?

The structure of the drug trade in the U.S. domestic market is distinct from the largely transit and production-based models seen in Mexico, Central America, and Colombia. According to scholars like Marcelo Bergman of Mexican think tank CIDE, distribution markets are inherently different from production and trafficking markets in terms of the numbers of organizations and individuals involved. Like production, distribution can be manpower-intensive and may require large numbers of employees to deal the drugs. However, the situation in the U.S. is not conducive to large cartels because big structures are vulnerable to being detected and broken up by law enforcement, which is more effective and well-funded than, for example, Mexico’s law enforcement. Highly compartmentalized organizations, like the decentralized network of street and prison gangs, are better suited to the U.S., as a large number of small groups draws less attention from the authorities than one big organization.

There is a lot of money involved (some $29.5 billion*), with the vast majority of profits from the drug trade concentrated in the consumption market, according to the United Nation’s 2010 World Drug Report. The chart (left) gives the estimated percentages of profits at different stages of the drug business in the North American cocaine market and shows how much profit street and prison gangs stand to earn from the business.

The United States doesn’t have large drug cartels because it has vast decentralized networks of street and prison gangs and effective law enforcement institutions that keep these networks compartmentalized through arrest. However, as these gangs learn from their Mexican contacts, and given the vast sums of money at stake, it is possible that U.S. gangs could take on new forms.

* The $29.5 billion figure is derived by adding estimates of “U.S. wholesalers to U.S. mid-level dealers” and “U.S. mid-level dealers to U.S. consumers.”