Mexican Marijuana Farmers Are Losing Profits in Light of U.S. Legalization

January 4th 2016

As the legal marijuana market continues to expand in the U.S. — reaching 23 states and Washington, D.C. — Mexican growers are starting to feel the pinch.

Legalization efforts have spurred American cannabis cultivation, driving competition that has made illegal pot farms less profitable in Mexico.

RELATED: The Surprising Effect Legalized Marijuana Is Having On Ruthless Mexican Drug Cartels

While it is difficult to determine exactly how much state-level legalization has impacted marijuana grow operations in the neighboring country, several recent reports suggest that lenient laws regarding the cultivation, use, and sale of marijuana the U.S. have led more people to abandon the black market and embrace legal dispensaries. That's had a dramatic impact on local farmers throughout Mexico.

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"Small-scale growers here in the state of Sinaloa, one of the country's biggest production areas, said that over the last four years the amount they receive per kilogram has fallen from $100 to $30," the Los Angeles Times reported. "The price decline appears to have led to reduced marijuana production in Mexico and a drop in trafficking to the U.S."

Between 2009 and 2013, U.S. Customs and Border Protection seized around 1,500 tons of marijuana at the border. But in 2014, that figure suddenly dropped to about 1,085 tons.

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The number of federal raids on marijuana farms in Mexico is also down. In 2010, the country eradicated about 44,000 acres of cannabis, the Mexican attorney general's office said. This year, only 12,000 acres were destroyed.

The federal policy of marijuana prohibition made it more profitable for farmers in Mexico to grow the illegal crop, even after the government attempted to curb cannabis cultivation by paying agricultural workers for farming legal crops. Due to competition from legal dispensaries in the U.S., however, Mexican drug cartels have had to pay farmers less for marijuana, making it less appealing for them to operate in the illegal market.

There is one other factor contributing to the rise of America's marijuana industry over Mexico: the quality of cannabis is higher in the U.S.

"Mexican marijuana is deemed lowest on the totem pole and very few people who consider themselves aficionados or connoisseurs would admit to smoking it," High Times writer Danny Danko told The Times. "It's typically brown, pressed tightly together for transport, and full of seeds. Access to better quality American cannabis has led many to turn their backs on imports from Mexico and beyond."

RELATED: Why Mexico Is Only Allowing 4 People to Grow Weed

In fact, one anonymous DEA official said that the federal agency has seen increasing instances of high-grade marijuana being trafficked into Mexico from the U.S.

"I don't really have a sense of the amount or scale, but we have seen instances of it occurring," the official said.

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