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11.28.2016

The Economics Behind the Illicit Drug Trade

illicit drug tradeAlthough the illicit drug market has a very complex system of production and distribution, it still follows very simple economic rules of supply and demand. Regardless of where drugs come from or how much they cost, as long as people are still seeking them someone will find a way to capitalize on their plight.

The Drug Enforcement Administration’s System to Retrieve Information from Drug Evidence (STRIDE) database is a program that collects information regarding all aspects of illegal drugs. This can include market price and drug purity. These two variables help explain what is going on behind the drug dealing scenes on the streets. For instance, STRIDE has been able to show investigators that drug prices tend to decline over time. There are a few potential causes for this decline, but one interesting one has to do with substitution. When certain regulations, law enforcement changes and laws get enacted regarding a certain drug, many users will switch to something else. This means that the demand for the original drug has dropped, thereby decreasing the price. This type of information can show investigators if policy-changes are working, and what drug the addicts have shifted their attention to.

Another important factor when it comes to analyzing drug trends is purity. Purity, as it relates to illegal drugs, means how much actual drug (like pure heroin or pure cocaine) are in the drugs being sold to buyers. Most of the time when someone buys drugs off the street, they are buying very little pure drug, and a lot of additives. Investigators are able to measure the purity of confiscated drugs to determine the current purity levels of the drugs reaching customers.

When policy makers and law enforcement can look at data, like that provided by STRIDE, and see different drug trends across the country, they are better equipped to handle the problems. However, the wildcard in the illegal drug trade has been the pharmaceutical influence. Prescription drugs have become such a problem in the U.S. and are creating as much, if not more, havoc in America. This shows that whether the drug started out as something legal or not isn’t enough of a deterrent for users.

One of the arguments of harm reduction advocates is that if you legalize all drugs, then it will remove some of the value because supply will be plenty and instead more money will be available for treatment and prevention programs. We will probably never know if this would work, but we could divert more funding away from the law enforcement side of the problem and instead invest it into providing more education and rehabilitation services.

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Season 3, Episode 31: 29 Years of Recovery w/ Andy V.