Steve, regarding the price of currently illicit drugs, the "farm gate" price of drugs--what the growers of the plants get--is a fraction of the retail value. At every step of the trafficking process, the product is diluted and each middleman takes a substantial cut.
To give you an idea, the farm gate price of dried coca leaves in Colombia is $1.20/kilo; it takes 375 kg of coca leaves to produce 1 kilo of pure cocaine, so the farmer gets $450. Processing the leaves into cocaine adds to the price, of course, but only to $2,400 for a kilo of 100% pure. By the time the stuff retails in the U.S., that kilo of 100% pure has been cut to 64% purity, which sells at ~$78,000/kilo (so the original kilo of 100% pure fetches ~$122,000). That's almost a 5,000% mark-up, just to get it the cocaine from Colombia to the U.S., distribute and sell it.
The farm gate price of dry opium in Afghanistan is about $86; it takes 7 units of dry opium to produce 1 unit of 100% pure heroin, so the farmer gets ~$600. Processed into 100% pure heroin, 1 kilo costs $4,700 in Afghanistan (though Afghan heroin is generally only 60-85% pure, so 1 kilo of Afghan heroin will cost $2,800-$4,000). In the U.K., a kilo of 60% pure heroin sells for (the equivalent of) $143,400, which translates to $239,000 for a kilo of 100% pure. Again a 5,000% mark-up (a bit more, in fact).
If it were possible to cut out all the middlemen, it has to be possible to get the product to the consumer a lot more cheaply, and we could even pay the farmers a larger cut.
Submitted by Jurjen (not verified) on November 14, 2009 - 1:17am.
Steve, regarding the price of currently illicit drugs, the "farm gate" price of drugs--what the growers of the plants get--is a fraction of the retail value. At every step of the trafficking process, the product is diluted and each middleman takes a substantial cut.
To give you an idea, the farm gate price of dried coca leaves in Colombia is $1.20/kilo; it takes 375 kg of coca leaves to produce 1 kilo of pure cocaine, so the farmer gets $450. Processing the leaves into cocaine adds to the price, of course, but only to $2,400 for a kilo of 100% pure. By the time the stuff retails in the U.S., that kilo of 100% pure has been cut to 64% purity, which sells at ~$78,000/kilo (so the original kilo of 100% pure fetches ~$122,000). That's almost a 5,000% mark-up, just to get it the cocaine from Colombia to the U.S., distribute and sell it.
The farm gate price of dry opium in Afghanistan is about $86; it takes 7 units of dry opium to produce 1 unit of 100% pure heroin, so the farmer gets ~$600. Processed into 100% pure heroin, 1 kilo costs $4,700 in Afghanistan (though Afghan heroin is generally only 60-85% pure, so 1 kilo of Afghan heroin will cost $2,800-$4,000). In the U.K., a kilo of 60% pure heroin sells for (the equivalent of) $143,400, which translates to $239,000 for a kilo of 100% pure. Again a 5,000% mark-up (a bit more, in fact).
If it were possible to cut out all the middlemen, it has to be possible to get the product to the consumer a lot more cheaply, and we could even pay the farmers a larger cut.