General

In my notes from February 2015, I wrote this under the heading Drug War 2.0:

If they legalize pot but still want to fund black ops they need to ramp up opium.

Then on my January 2016 show, The Year Ahead, the first prediction I made was this (starting at around 5:00 in hour 1):

I began to suspect that we might have a shift towards emphasizing heroin when I saw that George Soros was behind the legal pot movement…Obviously the establishment is sanctioning this trend in the different states for pot to be legal and that got me puzzling, because I read somewhere that 70% of the illegal drug trade is pot. (Now it’s hard to get the real stats.) And at the same time I have read plenty about how the illegal drug trade does fund black ops—CIA operations that can’t get Congressional funding–the most famous example of which is Iran-Contra…I thought the pot being legal has to be replaced by something else like heroin, which by the way has grown tremendously more now in Afghanistan since we took over from the Taliban than before…Or if the black ops money doesn’t get replaced then maybe the funding structure will be different, so the CIA will take a back seat and the NSA will do some of that stuff because the NSA gets funded directly. So I just feel like the heroin thing has a much bigger backstory than you’re gonna think, and it will be in the news more–kind of like free advertising…I think we will hear more of that [story] as the year progresses.

As I’ve noted before (see The Ferguson Effect), I’m not saying predicting an outcome is proof of causation, but it certainly supports the proposed thesis. My thesis in all these cases is the same: these are not unintended consequences, but foreseeable consequences that are either inevitable or intentional. So forgive me if I differ with Don Winslow, who, in one of this week’s WSJ Notable & Quotable, offers a “free market” explanation for the reported rise of heroin coinciding with the legalization of pot…

Notable & Quotable: How Marijuana Begat Heroin
‘Looking at the American drug market as it existed, Guzmán and his partners saw an opportunity.’

The article starts:

Okay, I’m going to say it: The heroin epidemic was caused by the legalization of marijuana.

Not too far off–I would say, “The heroin epidemic was caused by the same people who arranged for the legalization of marijuana.”

Weed was a major profit center for [the dominant cartel in Mexico, the Sinaloa], but suddenly they couldn’t compete against a superior American product that also had drastically lower transportation and security costs.

In a single year, the cartel suffered a 40 percent drop in marijuana sales, representing billions of dollars. Mexican marijuana became an almost worthless product. . . . Once-vast fields in Durango now lie fallow.

According to Winslow, in a move of “classic market economics,” Sinaloa decided to undercut pharmaceutical pricing on opiods by leveraging “some of the best poppy fields in the world.” But it was US government policy that provided the underserved market Sinaloa needed to make up lost pot revenue:

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