In my July 13 On Security column about the Mexican government's anti-cartel policy, I discussed how the dynamics of the cocaine trade affected the historical trajectory of Mexican organized crime. In short, cocaine provided cartels with unprecedented quantities of cash that they then parlayed into power. Starting in the 1980s, Mexican criminal organizations began fighting over the immense profit pool produced by the lucrative trade in powder, and this infighting has continued in one form or another to this day.
But cocaine was merely the first of several drugs that were game changers for Mexican organized crime groups. The latest of them, fentanyl (and related synthetic opioids), is the most profitable yet, and is rapidly becoming the deadliest drug for users north of the border.
Mexican criminals have been incredibly flexible and adaptive in terms of the drugs they supply to the massive illegal narcotics market in the United States. Much of this flexibility naturally comes in response to consumer demand for certain types of drugs. But enforcement and interdiction also heavily influence the activities of Mexican drug-trafficking organizations. Increased disruption of Caribbean cocaine-trafficking routes, for example, led Colombian cartels to rely more heavily on Mexican groups to move their product over land into the United States. This change transformed the Mexicans into a critical link in the cocaine supply chain and allowed figures such as Gulf cartel leader Juan Garcia Abrego to demand larger profit cuts.
Methamphetamine is another good example of Mexican cartels recognizing and seizing business opportunities created by market forces and enforcement activity. U.S. law enforcement action targeting industrial-scale methamphetamine labs in California's Central Valley, and state and federal legislation such as the Combat Methamphetamine Epidemic Act of 2005, made it increasingly difficult to manufacture methamphetamine in the United States. Mexican criminal organizations, especially several Sinaloa cartel affiliates, recognized the opportunity presented by these developments and dramatically expanded their methamphetamine production in response. They also improved the quality and purity of the drug, compared to the product made by smaller operations in the United States. As a result, methamphetamine for sale on American streets became better, cheaper and more widely available.
Sinaloa cartel lieutenant Ignacio "Nacho" Coronel even became known as the "king of crystal" due to the large quantities of methamphetamine his organization produced. Unlike cocaine, which they had to purchase from Colombian producers or, more expensively, Central American middlemen, Mexican cartels could produce methamphetamine from relatively inexpensive dual-use precursor chemicals. So, though the cartels had been making good money in the cocaine trade, methamphetamine was even more profitable, since the cartels could control the lion's share of the profit pool. And groups that had strong connections to Chinese chemical providers and could oversee the flow of chemicals through Mexico's ports had a competitive advantage. Indeed, the rise of Tierra Caliente organized crime groups such as La Familia Michoacana, the Knights Templar and the Cartel de Jalisco Nueva Generacion occurred largely because they controlled Mexico's ports and the methamphetamine trade.
Fentanyl: Low Costs, Big Profits
Lately, the U.S. Drug Enforcement Administration (DEA) has cracked down on pill mills prescribing opiates in the United States. As a result, people addicted to opiates have turned to alternatives such as Mexican black tar heroin. Mexican growers have planted record amounts of opium poppies in recent years, and the large influx of Mexican heroin to the United States has filled the coffers of growers and traffickers. Mexican heroin was strong, plentiful and inexpensive. And Mexican organizations also pioneered new distribution methods, even delivering heroin to the homes of users. One no longer had to travel into inner cities to obtain the drug, and heroin use expanded in all strata of society.
However, poppy cultivation is limited by geography. In Mexico, poppies grow best along the Sierra Madre Occidental mountain chain, on ridges above the 1,000-meter mark (3,280 feet) where the air is dry. So, there is a finite amount of space where opium poppies can be planted, and these locations are not difficult for the Mexican government to find and eradicate. Mexico has a relatively gentle climate and poppy growers ordinarily can manage two harvests of opium gum a year, but heroin production is nevertheless limited. It takes about three months for an opium poppy to mature and produce opium gum.
Fentanyl and other synthetic opiates, on the other hand, are not bound by geography or growing cycles. Fentanyl can be produced anywhere a laboratory can be set up, such as a warehouse in an industrial park, a home in a residential area or a clandestine lab in the mountains. It can be synthesized as long as there is access to the required precursor chemicals, which are almost exclusively imported from China. Fentanyl is also relatively inexpensive to produce — the DEA estimates it costs about $3,300 to produce 1 kilogram (2.2 pounds). It is also very potent, so a little goes a long way. According to the DEA, fentanyl is some 50 times more potent than heroin — and carfentanil is 100 times stronger than fentanyl. This makes the drug a smuggler's dream due to its compact nature. Smuggling 1 kilogram of fentanyl into the United States is, from a dosage standpoint, essentially the same as smuggling in 50 kilograms of heroin, and 1 kilogram of carfentanil is roughly the equivalent of 5,000 kilograms of heroin.
Due to fentanyl's strength, 1 kilogram can fetch more than $1 million on the retail drug market, making fentanyl the most profitable drug the Mexican cartels are trafficking. Fentanyl's inexpensive nature is why drug dealers have attempted to pass it off as various more expensive narcotics, such as "China White" heroin for example, or pressed it into pills to mimic pharmaceutical opiates such as oxycodone or hydrocodone. The potency of fentanyl, carfentanil and other derivatives also seriously increases the risk overdose. Dealers processing the drugs for sale on the street often struggle to accurately dispense the very small doses required — and small mistakes in dosage can be deadly. In fentanyl, a deadly dose is measured in milligrams — one thousandth of a gram. In carfentanil, a deadly dose is in micrograms — one millionth of a gram. When dealing with such microscopic amounts placed into a medium purporting to be heroin or a pharmaceutical pill, it isn't hard to see why miscalculations are made and why so many users are overdosing.
Fentanyl is also relatively easy to synthesize; the chemists who work in Mexico's more complex methamphetamine labs have little problem manufacturing it. And given America's appetite for opioids, fentanyl is poised to become the latest in a line of drugs offering a competitive advantage to the organizations that produce them. As in the methamphetamine trade, those that control Mexico's ports are in the best position to benefit from the fentanyl trade: The same networks that produce and smuggle methamphetamine precursors can be used to bring fentanyl precursors into the country.
All Mexican cartels are able to smuggle some finished fentanyl from China and some quantity of the drug's precursors, but as fentanyl's popularity grows, the organizations that control the ports and have close ties to Chinese chemical providers will be able to produce the largest quantities with the most consistency. In terms of the current cartel landscape, this means that Tierra Caliente-based organized crime groups are the largest beneficiaries of the fentanyl trade — much as they have benefited the most from the methamphetamine trade. Indeed, synthetic drugs have largely fueled the rapid growth of the Cartel de Jalisco Nueva Generacion.
The Mexican navy assumed security responsibility for Mexico's ports in June, but the ports are rife with corruption and it is going to be a tall task for the navy to put a substantial dent in the flow of precursor chemicals and other contraband. Thus the ports will continue to be valuable possessions.
As with the fighting we have seen over lucrative smuggling corridors on the border, it is likely that other organizations will attempt to challenge the Cartel de Jalisco Nueva Generacion's control of Pacific coast ports such as Manzanillo and Lazaro Cardenas, as well as Veracruz on the Gulf Coast. With the amount of money at stake, any challenge is likely to be met with force and could result in significant intercartel violence. And of course, such potential for violence is of major concern to the many legitimate businesses that use Mexican ports for shipping.