I don't understand the economic argument for legalization. It will turn the price of drugs into price + taxes. The current complex distribution and supply network doesn't have to pay taxes because they are already illegal, so they'll continue to charge the current price. The average addict will want drugs as cheaply as possible and would probably prefer to buy from someone in their neighborhood as opposed to a pharmacy.
In the case of mexican cartels specifically, I think there is more to it than just drug sales. They control large areas of mexico, entire towns. They're providing services of security and dispute resolution that the government can't or won't because the areas are too poor. Whenever a large portion of a country is ceded to a criminal group (like sicily used to be) unwinding the problem is more complicated than deincentivizing drug sales.
> It will turn the price of drugs into price + taxes
The price of avoiding authorities, not being able to openly use legitimate financing, or other facilities (transportation, storage, distribution chains), and constricted pool of talented employees is very high and currently included in the price. Also, many potential customers are not being served currently because they're not willing to engage in highly illegal transactions.
Even with fairly high taxes, regular corporations would easily be able to deliver product of higher quality and generally better experience not necessarily more expensively. Just like they do with alcohol, tobacco, or chocolate.
>The current complex distribution and supply network doesn't have to pay taxes because they are already illegal, so they'll continue to charge the current price
This is highly unlikely. It's MUCH cheaper to obey the law than not; as I said in another comment, you may notice that, after the U.S. ended alcohol prohibition, almost no one sold alcohol illegally because it wasn't worth it.
Daniel Okrent's book Last Call is pretty good on this subject.
> It will turn the price of drugs into price + taxes. The current complex distribution and supply network doesn't have to pay taxes because they are already illegal, so they'll continue to charge the current price.
Under the current scheme, the street price of drugs represents price + cost of maintaining a standing army + maintenance of baroque, multi-tier, low-capacity, high-overhead supply chain + "hazard pay" level wages for everyone involved in the enterprise.
So just focusing on taxes gives an unrealistic view of the situation. No, they're not paying taxes, but they're paying for scads and scads of other things, and have to pass that cost on to the consumer. This is pure deadweight loss, just as taxes would be. But it's also a relatively enormous loss; it would be very easy to come up with a tax rate that fits in below it. I suspect that anything less than four digits should do the trick, which means that we could even set the rate many times higher than the current rate for cigarettes and be fine.
And the market will not support operating an illegal network that's more expensive than the costs imposed by taxation. Take tobacco: organized crime is absolutely still involved in tobacco smuggling. And with excise taxes on cigarettes in the US averaging over 100%, that shouldn't be surprising. But at the same time, it doesn't seem to be supporting organized crime and associated social costs on anything near the scale we've seen with groups like the Zetas or al-Qaeda.
The illegality also has other problems. For example one is getting justice - you can't take people to court when deals go wrong, the product is adulterated, you were paid with fake money etc. That pretty much leaves violence as an alternative to the legal system.
Another is that it makes treatment and getting off drugs harder because you can't be open about an addiction for fear of losing a job, health care or similar things.
In the case of mexican cartels specifically, I think there is more to it than just drug sales. They control large areas of mexico, entire towns. They're providing services of security and dispute resolution that the government can't or won't because the areas are too poor. Whenever a large portion of a country is ceded to a criminal group (like sicily used to be) unwinding the problem is more complicated than deincentivizing drug sales.