The Deadly Business of Crystal Meth

Posted: 4th April 2011 by Doc in Uncategorized
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Americans probably spend more on getting high on crystal methamphetamine than they do on books or on veterinary care for their pets. That underscores the power that the illegal drug has to wreck the lives of the unfortunate souls seduced by its tremendous addictive powers.

Meth is a surprisingly resilient, multi-billion dollar industry that would make an excellent case study for MBA students. Many of the same concepts familiar to legitimate businesses, such as economies of scale and product pricing are evident in the meth business. Of course, estimating the size of any illegal activity can be problematic since the finances are shrouded in secrecy. Meth is cash business, making it even more challenging Many meth dealers are addicts that sell the drug to support their own habits. The criminals in the business also offer their clients a diverse product line of illicit substances. Meth stands out for many reasons.

In fact, the United Nations has dubbed meth the most abused drug on earth. According to the 2009 National Survey on Drug Use and Health, 1.2 million Americans age 12 and older had abused methamphetamine at least once in the prior year. The number of past month users rose 60% in 2009 after years of declines. First time user rate are up too, underscoring the power of word-of-mouth marketing.

The federal government estimates that Americans spent about $5 billion in 2000 on the illicit substance. Factor in inflation and that would be about $6.3 billion today. Time magazine estimated the value of meth coming in from Mexico, whose drug cartels control the industry, at a “street value” of $20 billion. Half that business is controled by one group dubbed La Familia, Time says, adding that La Familia ironically started as anti-crime group in the 1980s.

However, even though the margins are probably worse than marijuana, the top cash crop, the meth business is a good one because demand continues to rise because the drug is highly addictive. The evidence abounds. In Atlanta, considered the meth world’s answer to Wall Street, the drug goes for about $10,000 to $22,000 a pound. On a retail level, that equals about $80 to $150 a gram. John Carnevale, a drug policy expert, noted that “By the end of 2009, the price per gram of meth reached its lowest point since 2005 ($110.87) and purity during the same period reached its highest level (72.9 %).”

Americans apparently spend more on meth than they do on many legitimate products and services including veterinary medicine ($13.01 billion), books ($11.67 billion) or movies ($10.6 billion). Many legitimate drugs don’t do as well, including medical marijuana which a market researcher valued at a $1.7 billion market. U.S. sales of antipsychotics totaled $14.6 billion in 2009 while $14.3 billion worth of lipid regulators and $9.9 billion worth of antidepressants were sold, according to IMS Health.

What makes meth’s success remarkable area the challenges faced by the criminal organizations. First, there is the overhead. The Mexican cartels often manufacture their drugs in large warehouse-sized super labs. These operations require expert chemists because meth labs that are run poorly can explode. Then there are the transportation costs. One reason why the Mexicans have gravitated to the Atlanta area its location convenient to most of the US Northeast.

“Obviously you have the interstate highway system,” says John Comer, Associate Special Agent in Charge of the Atlanta DEA office, in an interview, adding that the Mexican cartel members are easily able to hide among the region’s surging Latino community. “The one thing they don’t want to do is be obvious.”

They are so much the opposite of the flashy stereotype of the drug dealer that they reportedly will kill any member of their cells that become drug addicts. Comer wasn’t able to verify these rumors but he had heard them.

Meth, originally developed by biker gangs decades ago, is a worldwide problem. The United Nations calls it the most abused drug on earth. Abuse of the drug is soaring even in Myanmar, the repressive dictatorship formerly known as Burma.

Meth arrests in DEA’s Atlanta Region, which includes Georgia, North Carolina, South Carolina, and Tennessee and is at the epicenter of the meth crisis, rose to 30% to 372 in 2010 compared with 2008 . This year, there have been 66 arrests. The DEA seized 1,680 kilograms of meth along the Mexican border in 2007. By 2009, seizures had soared 180% to 5,197 kilograms.

Officials in the United States thought they had the problem solved with the passage of the 2005 Combat Methamphetamine Enhancement Act which made it more difficult for people to acquire cold medicine containing pseudoephedrine, a key precursor in meth. About 40 states have laws restricting the sale of pseudoephedrine. Mostly, they require consumers to fill out some paper work to buy certain types of cold medicines. Mexico even banned imports of the meth precursor in 2007. Though meth lab seizures declined for a while, they have started to creep back up because dealers have figured out how to outsmart the law’s controls, as Carnevale noted in a recent report.

Meth producers and users have become savvy to the laws and found alternative production methods. The large-scale domestic meth labs prevalent during the past decade are beginning to rebound.
This increase is primarily due to organized “smurfing” efforts, where producers hire a network of individuals to purchase pseudoephedrine in legal quantities at multiple locations. …. Also, small-scale labs, which comprise the majority of domestic meth production, now employ the “shake and bake” method. This method requires only a few handfuls of cold pills, several noxious, but easily available household chemicals, and an empty two-liter soda bottle.

Some experts argue that pseudoephedrine should only be available via prescription. That may be a step in the right direction but addicts are motivated customers who have shown a knack for finding weaknesses in legal barriers to prevent them from getting high. People begin their addictions at about 19 years of age, which ironically is just about the time that many legitimate companies try to cement brand loyalties.

At first, the drug was popular in rural communities in places like Tennessee and Georgia. Most of these business people are addicts, who deal to support their own habits. The Mexican cartels are no threat to these small-timers because there is so much demand that there is plenty of business for everyone. It’s kind of like the Prius or the iPad2.

Meth’s cost to society are in the tens of billions when things such as lost productivity, health care and incarceration costs are considered. A 2009 Rand Corp. study pegged meth’s costs to society at between $16.2 billion and $48.3 billion. Of that, about $1 billion can be attributed to costs incurred by society when one or both parents of a neglected child are addicts.

“Our estimates are limited to children who are removed from their homes by the foster-care system, so these costs are likely an underestimate of the full burden of meth abuse,” Rand says. ” Substance abuse is a key contributing factor in two-thirds of those removals, though we must make some assumptions about the specific role of meth. The largest contributor to these costs is the medical, mental, and QoL (Quality of Life) losses suffered by children ($502 million), though the burden on the foster-care system is similar in size ($403 million).”

There are other costs as well. Scientists have not proven that there is a link between meth use and violence though there is evidence that many who abuse the drug do commit violent crimes. Officials in Contra Costa County, California found that methamphetamine use was involved in 89 percent of the domestic violence police calls . There are many cases of meth addicts murdering children and losing all sense of right and wrong. Three children recently died in a fire in the Atlanta area from a fire in a meth lab at their homes. Their mother, who is accused of meth trafficking, was allowed to attend their funeral, the Atlanta Journal-Constitution says.

In Oklahoma, six members of law enforcement officers were murdered by meth addicts. One man was charged recently with teaching his underaged sons to make the drug. Some people are even foolish enough to film their meth exploits on YouTube.

“People who are high on meth… they are paranoid,” says Mark Woodward, spokesman for the Oklahoma Bureau of Narcotics. ” Nothing compares to meth in terms of the overall damage it causes to society.”

http://247wallst.com/2011/04/03/the-deadly-business-of-crystal-meth/

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