Economics of Drug Policy and the Drug War

36. Treatment - 3-16-10

"Domestic enforcement costs 4 times as much as treatment for a given amount of user reduction, 7 times as much for consumption reduction, and 15 times as much for societal cost reduction."

Rydell, C.P. & Everingham, S.S., Controlling Cocaine, Prepared for the Office of National Drug Control Policy and the United States Army (Santa Monica, CA: Drug Policy Research Center, RAND Corporation, 1994), p. xvi.

37. Drug-Related Public Expenditures in the EU


"Economic analysis can be an important tool for policy evaluation, although the limited information available on drug-related public expenditure in Europe represents a major obstacle and makes comparison between countries difficult. For the 16 countries that have produced estimates since 2002, drug-related public expenditure ranges from 0.01% to 0.5% of their gross domestic product (GDP). From the information available, it appears that the largest share of drug-related public expenditure is allocated to drug supply reduction activities (Figure 4.4).
"Public expenditure on supply reduction includes, among other things, expenditure on drug-law offenders in prisons. The EMCDDA calculated a range of estimates, where the low estimate considers only those prisoners who have been sentenced for a drug-law offence and the high estimate also includes pre-trial prisoners who may be sentenced for a drug-law offence. Applying these criteria, European countries spent an estimated 0.03% of GDP, or EUR 3.7 billion, on drug-law offenders in prison in 2010. Including pre-trial prisoners, the estimate rises to 0.05% of GDP or EUR 5.9 billion."

European Monitoring Centre on Drugs and Drug Addiction, "European Drug Report 2014: Trends and Developments" (Lisbon, Portugal: EMCDDA, 2014), p. 70.

38. Estimated Savings from Legalizing Drugs in the US

"The report estimates that legalizing drugs would save roughly $48.7 billion per year in government expenditure on enforcement of prohibition. $33.1 billion of this savings would accrue to state and local governments, while $15.6 billion would accrue to the federal government. Approximately $13.7 billion of the savings would results from legalization of marijuana, $22.3 billion from legalization of cocaine and heroin, and $12.8 from legalization of other drugs."

Miron, Jeffey A., PhD, "The Budgetary Implications of Drug Prohibition," (February, 2010), p. 1.

39. Drug Control Expenditures Through the 1990s

"The most recent figures available from the Office of National Drug Control Policy (ONDCP) indicate that, in 1999, federal expenditures on control of illegal drugs surpassed $17 billion; combined expenditures by federal, state, and local governments exceeded $30 billion. What is more, the nation's so-called 'drug war' is a protracted one. The country has spent roughly this amount annually throughout the 1990s."

National Research Council, National Academy of Sciences, "Informing America's Policy on Illegal Drugs: What We Don't Know Keeps Hurting Us" (Washington, DC: National Academy Press, 2001), p. 1.

40. Money Laundering and Mexican Drug Trafficking Organizations

"Mexico is a major drug producing and transit country. Proceeds from the illicit drug trade leaving the United States are the principal source of funds laundered through the Mexican financial system. Other significant sources of illegal proceeds being laundered include corruption, kidnapping, extortion, piracy, human trafficking, and trafficking in firearms. Sophisticated and well-organized drug trafficking organizations based in Mexico take advantage of the extensive U.S.-Mexico border, the large flow of legitimate remittances, Mexico’s proximity to Central American countries, and the high volume of legal commerce to conceal transfers to Mexico. The smuggling of bulk shipments of U.S. currency into Mexico and the repatriation of the funds into the United States via couriers or armored vehicles, trade, and wire transfers remain favored methods for laundering drug proceeds. Though the combination of a sophisticated financial sector and a large cash-based informal sector complicates the problem, the 2010 implementation of U.S. dollar deposit restrictions reduced the amount of bulk cash repatriation back to the United States via the formal financial sector by approximately 70 percent, or $10 billion. According to U.S. authorities, drug trafficking organizations send between $19 and $29 billion annually to Mexico from the United States, though the Government of Mexico disputes this figure. Since 2002, Mexico has seized a total of more than $500 million in bulk currency shipments."

"International Narcotics Control Strategy Report: Volume II, Money Laundering and Financial Crimes" (Washington, DC: US Dept. of State Bureau for International Narcotics and Law Enforcement Affairs, March 2014), pp. 161-162.