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Comment by tormeh | Hacker News Reader

Well, you can't really be a small cartel. Even if the other businesses are profitable, a cartel needs a certain size to pay for constant expenses like bribes, armed forces etc. Politicians and the police don't give you a discount because you're small and people still need to be just as intimidated even though you're doing less shit.

Just removing one illegal activity might knock the sum value of dangerous, illegal activities below the threshold where cartels can work.

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Just to add some more. The legalization of pot hurts cartel's income. I read somewhere, that pot accounts for 60% of the cartel's profit in a multi-billion dollar industry! I mention this because of the recent trends in the US where states are beginning to legalize it. I'm sure they weren't too happy to hear that Oregon and Alaska legalize it as it only takes part of the profit away. Once the US is fully legalized, it won't be a hugely profitable business anymore so they will hurt. This means less profits, which means less power for them. With less power, then perhaps there will be less violence in Mexico?

What would stop the cartels from investing in legal storefronts and capturing profits regardless? (This certainly shouldn't be construed as an argument for the morass we have now, just an interesting aside.)

Nothing would stop them, but there would less of an incentive in such business considering the profits wouldn't be as enormous as they are now in the underground market. Profits are huge because the supply is low (and risky) and the demand is high. Legalization, I would think would bring up the supply, after all it would be legal to farm it in mass-production just like tobacco, dropping prices significantly.

Presumably nothing if the money they use to invest is considered legitimate.

Nevertheless, it really seems logical that as a society we should prefer that market competition occurs legally in a open and free market rather than violently in an illegal and black market. The difference between the two types of economic activity is tremendous.

It's certainly logical but my question is if it will actually impact Mexican cartel revenue as much as some people claim.

If the alternative to cartel weed is industrially-farmed weed propping up another unholy conglomerate I'm not sure either is better.

Has anyone done a comparison of the death rate from unholy conglomerates and the Mexican drug cartels?

Are you asking because you plan on doing so? I'd be interested to hear what you find. Here's something to get you started: http://online.wsj.com/articles/j-p-morgan-fined-92-million-b...

Many of the states that have legalized marijuana require that no part of that trade cross state borders (including growing it, packaging it, investing in it, etc.) (This may be true of all the states that have legalized it, but I'm not sure.)

So the Mexican cartels can neither sell the stuff they grow in Mexico in the states nor own the storefronts legally. Doesn't mean they can't do it illegally (they seem to be good at hiding their illegal activity, after all) but they can't go legit.

My assertion is that, with the backing of enterprises raking in 12 figures annually, it's within their operational capability to obtain all the necessary parts to do exactly that.

To be fair, I think it's entirely possible that there are enough savvy businessmen in the cartel to realize that it's wisest to prepare for any number of likely outcomes of legalization. Just imagine Goldman Sachs with more beheadings.

They're already heavily invested in Bay Area real estate according to my contacts.

The cartels power is centered in Mexico. They can't monopolize USA storefronts.

What do Americans use to buy drugs? Hint: It's US dollars.

sketchy drug dealers on street corners

There isn't as much profit in doing a legal activity.

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