TL;DR: Cartels are making too much profit to police our way out of the opioid epidemic.
Let’s talk about the economics of illegal opioids. Why are the cartels diving into selling opioids in the USA like there is no tomorrow? You might be shocked to learn that there is a lot of money to be made. You probably will be shocked to learn how MUCH money there is to be made.
So let’s look at the street prices of various illegal opioids:
- fentanyl (Mexican cartel acetyl fentanyl)
Let us make some reasonable assumptions:
OK so let’s first talk about oxycontin. The street price of oxycontin in the USA is right around $1 per milligram. So our addict is spending $160 /day for diverted oxycontin. Governments have clamped down on providers so the supply of oxycontin, which used to be as abundant as buffalo on the Great Plains, has dried up. No more oxys from your doctor.
Opiods are physically addictive. When you get cut off, your body actually gets sick. Imagine having a really bad case of the flu. Now imagine drinking 8 Red Bulls every 8 hours while you are that sick. Now imagine that for weeks on end. That’s dope sick. And you can make it all go away with just another hit. Are you getting the dynamic here?
So our addict asks around and finds enough heroin every day to replace their 160 mg/d oxycontin habit. Do the math and it works out that your average dime bag of heroin at 25% purity will substitute almost perfectly. So our addict’s habit is met at $10 per day, not $160 per day. So for 1/16 of the cost, heroin now substitutes for the hard to get and expensive oxycontin that our addict’s doctor is no longer providing.
How can anybody stay in business by selling heroin this cheaply? Let’s look at the economics of heroin, Mexican cartel fentanyl, and carfentanyl. The price of a kilo of each of these at the source is about US$3000. So our cartel has to move it across the border, distribute it, dilute it down to street strength, make the dime bags, and sell them. So how much money do they make at the final point of sale on the street corner from a kilo of each of our opioids?
Heroin purity at the street in the US averages around 25% (when I was a med student at Detroit General Hospital in the mid 1970s, the average purity of street heroin was 3%. So $10 dollars today buys you over 8 times as much heroin. How’s that drug war working guys?). Doing the math, our $3000 kilo of heroin is worth $400,000 which gives us a profit of 133 times. This amount of profit allows everybody at every step of the supply chain to make from 2 to 10 times their investment. But wait, it gets better.
Our friends in the Mexican cartels are now synthesizing acetyl fentanyl, which is about 15 times more powerful than heroin. They cook it up just like they cook up methamphetamine (btw, our War on Meth has led to the Mexican cartels taking over this market, dropping meth prices to 1/6 of what they were. That’s not a typo: we are getting way better meth at way cheaper prices as a result of our Drug War). And you don’t have to pay farmers, extract morphine gum etc, so there is way lower overhead on the production end for acetyl fentanyl.
So let’s do the math for a $3000 kilo of acetyl fentanyl at the source. You only need 1.67 mg of acetyl fentanyl to get the same effect as the 25 mg of heroin in our dime bag above. That’s why it’s so easy to OD on fent, it is hard for dealers to measure it accurately enough not to kill their clients. Our kilo of acetyl fentanyl made into equivalent dime bags and sold is now worth $5.98 million. That’s 1996 times its material cost. Now you understand why the cartels are starting to move fent more than heroin. You make over 10 times the profit per kilo of product moved. But wait, it gets even better.
Carfentanyl is an opioid that was developed for large animal veterinary work: it literally is used to put elephants to sleep. Both China and Mexico are supplying carfentanyl to the US market. Carfentanyl is about 3000 times more potent than heroin. Again, that’s not a typo: carfentanyl is three THOUSAND times as potent as heroin.
So let’s make up our standard dime bag, this time with carfentanyl as the opioid. It turns out that you need only 8 MICROgrams of carfentanyl to get the same blast that you get from 25 mg of heroin. Carfent has been found in lots of ODs because dealers’ scales don’t measure micrograms. University science labs are now locking up their hi-sensitivity scales because dealers are paying big cash for them.
So let’s make up an equivalent bunch of dime bags of carfent and sell them, shall we? Our revenue from a $3000 kilo of carfentanyl sold as dime bags on the street is now $1.25 billion dollars. Yet again, this is not a typo: that’s 1.25 billion with a B . Our multiplier is now a healthy 62,500 times material cost. You can smuggle enough carfentanyl inside a lipstick tube to replace 100 kilos of heroin.
You can lock up as many addicts and cartel leaders as you want. You can interdict as many carloads or even truckloads of product that you want. You can jail as many bankers that launder money as you want (JK: the Wachovia and HSBC bankers that laundered billions of Sinaloa Cartel money had their bonuses delayed 6 months. Human Rights Watch, where are you?) There is so much money in this business that someone else will always be willing to step up.
So let’s stop this nonsense talk about our Drug War, shall we? The way we stop this is to decrease demand for these drugs at the consumer level. We know how to do this. It works, even in the USA. We need to demand a real solution to these problems before another generation is lost.