By New Frontier Analysts
In recent years there has a been a trend of Mexican nationals smuggling cannabis across the border from California back into Mexico. This has come as somewhat of a surprise, as traditionally cannabis has been smuggled from Mexico into the United States. But medical legalization in California has changed that. California is now the source of abundant quantities of cheap, high quality and legal to purchase cannabis. The difference in quality has been cited as the biggest cause for the shift in flows of black market cannabis smuggling. Mexico lacks high quality cannabis, and is more known for producing lower quality but much cheaper cannabis. But consumers in Mexico are demanding higher quality, and with the reasonable prices and low risk crossing the border, smugglers have taken this opportunity to make serious money bringing top strains to Mexico.
The emergence of this new smuggling pattern exemplifies just how much higher quality cannabis has gotten in areas where it is legal. Mexican consumers are willing to pay higher prices and take greater risks to get their hands on American cannabis because of the quality difference. And if the THC content is that much higher, this may add to concerns expressed by lawmakers and citizens alike regarding potency. Additionally, the fact that the cannabis being smuggled out is likely purchased at dispensaries shows major issues in California’s medical program. It is not a good sign for the state government when foreign nationals are able to purchase what is a restricted commodity. California’s legitimacy is called into question, and many may feel that this shows how inextricably linked black market and legal cannabis trends are.
If Mexicans are purchasing American cannabis from individual smugglers, this will heavily impact cartel revenue streams, as the sale of cannabis is one of the main ways in which the gangs are able to get easy money. This creates the potential for the cartels becoming directly involved in the purchasing and smuggling of American grown cannabis. Mexican buyers also create an increased demand for California cannabis. While cannabis smuggled to Mexico most likely comprises a small proportion of sales in the state, Mexico is not the only destination for smugglers. The total amount of sales that are funneled into smuggling operations can’t truly be gauged since these transactions are not recorded, but this trend is powerful enough that groups have begun to take notice. One major piece of evidence that smuggling is having a serious impact is an increased number of cannabis rehab patients in Mexico. American cannabis is so much more potent than what is usually found in Mexico that users are having hallucinations and becoming paranoid, and dependency is more of an issue. In spite of this, Mexican consumers are still eager to purchase the imported product.
New Frontier Analysts
Our data scientists drill deep with rigorous analytics to provide insight into key trends and market opportunities. We track the state of cannabis and its regulation in all major legal markets.