Who gets the money from drugs?

The illegal drugs trade is worth a hell of a lot of money - £200bn, in fact. But where does it all go? The Mix get to grips with some simple economics to find out.

It's a £200 billion trade - but where does the money go?

So you’ve bought a gram. Or an ounce. Or a couple of pills for you and your mates. You’ve met your dealer, handed over some cash, and that’s your night out sorted. But it’s very difficult to track who is getting the money and how much they are getting – all we can say for sure is that your cash isn’t going to legitimate business peeps, rather straight into the hands of criminals.

How does the pricing of drugs work?

The selling of drugs works just like any other market. It’s all down to supply and demand: if demand goes up because there’s a shortage in supply or a drug suddenly becomes incredibly popular, then the price goes up as well. Yet if there’s loads of a particular drug floating about, it gets cheaper.

Drugs are illegal and getting them into this country takes a fair amount of effort (including stuffing things up one’s botty). The more difficult it is to get that drug into your clammy, excited hand, the more it’s going to cost you. So if your upper/downer of choice is made in a foreign country, it’ll be pricier because you’ve got to pay all the traffickers who worked tirelessly to get it to you.

How much is cocaine priced up?

Coke is notoriously expensive – especially considering you’re likely to be snorting only 30% cocaine and 70 % caffeine pills and talcum powder. The coca plant can only grow in South America, therefore the only way to get it up the noses of Europeans is to smuggle it in. This may account for some of the hefty price tags, but as Tom Feiling, author of The Candy Machine: How Cocaine Took Over the Worldexplains, there’s a ridiculously high mark-up as well.

He says: “A British cocaine wholesaler told a Home Office prison survey of cocaine importers that prior to his arrest, he was buying and selling 60kg of cocaine a week. He would buy from Colombian suppliers in Spain for £18,000 a kilo, and sell it in the United Kingdom for £22,000 a kilo. Once broken down into grams for retail sale, that kilo would most likely have netted him £50,000, but like most importers, he preferred to sell his consignment on. It would pass through several pairs of hands with the profit being distributed along the way.”

How much does this mark-up affect you and how much you pay? Put it this way: when you buy coffee, the difference in price between the beans picked off the plant and the blend sold in your local supermarket is 223%. Sounds steep? The difference in price between a gram of cocaine fresh out of a Colombian factory and that gram you bought Friday night is 15,800%! Shocking, huh?

What affects the price of heroin?

Most of the world’s heroin – over 90% – is produced in Afghanistan. Its production is controlled by the Taliban and other organised crime gangs who use their monopoly of the market to their own advantage.

This makes opiates more expensive, and there’s still the smuggling process to up the price. Most of the UK’s heroin is smuggled to us through Pakistan, where every trafficker gets a cut for the part they play in getting it here. This process has a huge effect on your wallet. Figures from UN World Drug Report 2010 show a kilo of heroin is worth $2,400 in Afghanistan, but that same kilo is worth $44,300 once it reaches the UK.

Is home-grown cannabis cheaper?

If a drug doesn’t need to be sneaked into the UK via cargo ship, dodgy postal package or up a drug mule’s private parts, you would assume it’s going to be cheaper.

However, it’s not that simple. Drug suppliers and dealers are always looking for ways to make more money, so taking drugs which don’t need importing doesn’t necessarily drop the price; instead it can affect the type of drug you are getting.

According to the UN, cannabis is increasingly being grown indoors so the plant can prosper despite crappy English weather. This method also produces several high-yield harvests a year, meaning an increasing amount of the weed you are smoking is home-grown. But because factory-farmed cannabis is much more potent, dealers can charge a higher-price for this new super-skunk.

Where’s all the MDMA gone?

MDMA can be produced pretty cheaply with the right scientific know-how, instruments, and combo of chemicals. This has meant ecstasy tablets and pills have always been a relatively affordable way to pep up a weekend of raving. But these days getting your hands on real MDMA is increasingly difficult. The EU has got much stricter on regulating the chemicals used to produce it – and ecstasy factories are struggling as a result.

This MDMA drought hasn’t made the pills more expensive. Instead, the pills look like and cost the same as ecstasy, but they don’t actually have much MDMA in them – if any at all.

This has caused MDMA-appreciators to seek alternatives of their beloved E. Former legal high mephedrone produces similar affects to ecstasy and temporarily filled the gap until it was made illegal in 2010. Since then, tricksy chemists have created new legal highs that mimic the effects of MDMA. These replacements stay relatively cheap until the Government catches up and legislates against them – drastically reducing the amount available, so the prices go up again. Supply and demand, supply and demand.

Photo of money and white powder by Shutterstock.