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What are Illegal Drugs Worth?

Daily Policy Digest

Social Issues

Wednesday, August 08, 2001

Simply because illegal drugs are illegal, they are a highly profitable industry. To begin with, there is no advertising overhead and the raw materials are cheap -- while street sales bring in hundreds of millions of dollars, to put it mildly.

  • A kilo of heroin, 40 percent pure, sells -- in units of less than 100 milligrams -- for up to $290,000 on U.S. streets.
  • The wholesale import prices of both heroin and cocaine are about 10 percent to 15 percent of retail prices in rich countries.
  • In poor countries, the ratio may be more like 25 percent.
Valued only at import prices, the trade is probably worth about $20 billion -- constituting an industry roughly equal to the world revenues of Coca-Cola. But experts estimate that global retail sales are probably around $150 billion -- about half the sales of legitimate pharmaceutical drugs. The figure compares to $204 billion on consumer spending for tobacco and $252 billion for alcohol.

Experts caution that these figures involve much guesswork.

Source: "Stumbling in the Dark," Economist, July 28, 2001.

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