By Beatrice E. Rangel
Now that the Mexican Supreme Court has cleared the path to decriminalize Cannabis, the road is clear for a new trade relationship between the United States and the Aztec country. Indeed, as David Ricardo quite aptly put it, the new crop is bound to take over the best land given the value of the product to be tilled while pushing away low price products to less bountiful land.
All in all, profits will be surface from cannabis production while flying away from pineapples, avocados and tomatoes. Cannabis producers will then become the spearhead of innovation in agriculture, playing the role of 18th century established landowners in Britain.
R&D will be deployed in this economic activity to give rise to more appealing, productive and decorative species capable of surpassing the virtues of the already known sativa, indica and ruderalis.
A similar development will take place in Colombia where the Supreme Court has already decided that growing, processing and trading drugs to finance political causes is not a crime as part of the settlement with the FARC. Given that soon there will be a peace agreement and that from the ashes of war several political parties will emerge, the incentives to engage in drug production are high as are the needs to invest in political organization and electoral campaigns.
Next there is Colorado where cannabis was decriminalized a while ago and where the state is already seeing cannabis plantations sprout all over its geography, creating severe economic distortions and the return to cash trade. To be sure, national and international regulations do not allow the deposit of drug proceeds in a bank. School expulsions are on the rise on account of cannabis use colliding with public and private schools statutes. And while about US$10 million in weed taxes have been distributed among city halls, the cost of security has also increased for most cities in light of the increasing inflow of non-residents that wish to enjoy the pleasures of the product.
As these three cannabis production nodes grow and stabilize themselves -- perhaps joined by Puerto Rico as it searches for ways to plug its financial crisis -- a very interesting trade corridor should emerge in the Americas. One that goes from the American heartland to the Colombian plains with a stopover in Mexico and the Caribbean.
This trade corridor will most probably grow under the impeccable economic logics explained by David Ricardo who forecast back in 1800: “Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each.”
And what seems to be most beneficial to each producer is to engaged in competitive production of diverse species of cannabis to satisfy a growing US demand. I bet Mr. Ricardo did not foresee such an splendid application of his trade theory.Beatrice Rangel is President & CEO of the AMLA Consulting Group, which provides growth and partnership opportunities in US and Hispanic markets. AMLA identifies the best potential partner for businesses which are eager to exploit the growing buying power of the US Hispanic market and for US Corporations seeking to find investment partners in Latin America. Previously, she was Chief of Staff for Venezuela President Carlos Andres Perez as well as Chief Strategist for the Cisneros Group of Companies.
For her work throughout Latin America, Rangel has been honored with the Order of Merit of May from Argentina, the Condor of the Andes Order from Bolivia, the Bernardo O'Higgins Order by Chile, the Order of Boyaca from Colombia, and the National Order of Jose Matías Delgado from El Salvador.
You can follow her on twitter @BEPA2009 or contact her directly at BRangel@amlaconsulting.com.
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