- Take note that there is much uncertainty in the estimates of RAND as no one regularly scans a bar code each time a bag of coke is sold.
- The actual price that street-level consumers pay also varies with purity, location, and many other factors.
The market for illicit drugs in the United States is extremely large. New estimates from the RAND Corp. by the White House estimated that in 2010 alone, the U.S. spent $109 billion on illegal drugs including marijuana, heroin, methamphetamine, and cocaine.
- Approximately, $109 billion is spent by heavy users annually, who often get high.
- The figure has been calculated with a minimum of 21 days in a month usage.
- Although the total amount spent remained somewhat stable from 2000-2010, the substance combination has already changed.
- The use of cocaine has already gone down while marijuana use increased.
- Meth peaked by the middle of Augusts, yearly.
Take note that there is much uncertainty in the estimates of RAND as no one regularly scans a bar code each time a bag of coke is sold.
Criminal enterprises do not have to fill out these economic data surveys. What the researchers tried to do is to provide estimates for the illicit drug market through extrapolating user demand and not by creating estimates depending on drugs that have been seized by law enforcers.
Much of the uncertainty is the inevitable consequence of attempting to measure the sale of something that is being sold in hidden markets as well as the behavior of consumption of regular heavy users of illicit drugs. It should be noted that coca passes through a number of stages with value added at every step to produce cocaine.
For every kilo of pure cocaine, a ton of fresh coca leaves are needed. Wainwright revealed to the Business Insider that when coca leaves are dried out, it tends to weigh less. A ton of coca leaves cost around $400-500 in Colombia alone. On the other hand, farmers who process coca leaves into a base paste offer the resulting formula to drug traffickers and earn $900 per kilo.
Once the paste is made into cocaine and transported north, it can cost anywhere between $10,000-20,000 per kilo depending on the destination location. By the time cocaine reaches dealers, it can be worth $70,000-80,000.
The actual price that street-level consumers pay also varies with purity, location, and many other factors.
Cocaine is often diluted and cut into grams. The markup of a pure kilo of cocaine is gigantic reaching around $150,000. Overall, you may have to pay anywhere from a few hundred dollars to hundred thousands. It is for this reason why profits from this business are sky-high.
Experts also noted that pressure eradication efforts on sources of cocaine may have minimal impact on consumers. They explain that eradicating coca plants in the source country Colombia will only double the price of coca leaves; for example from $400 to $800.
With all the added costs, the average U.S. buyer may have to pay $150,400 for a pure kilo of cocaine. He also noted that increasing the costs of raw materials by 100 percent will only increase the final product lesser than 1 percent.