How profitable is methamphetamine dealing in Australia?

Abstract

Introduction: The illicit drug trade is the largest in value among global illicit commodities, at some $320 billion US dollars, according to the UN World Drug Report. Endeavours to control such a large illicit market would be enhanced by improved understanding of the economics of the trade. However, due to its illicit nature many aspects of the illicit drug market are largely unknown. This study explored one economic aspect of illicit drug dealing, profitability, with the aim of developing a better picture of the financial gains from illicit drug dealing. Methods: Data were obtained from judges sentencing remarks, key informants from law enforcement, and other published reports which detail the prices paid for methamphetamine in Australia. The financial margins attained from non-crystal methamphetamine dealing in Australia were calculated by examining the best fit for the relationship between prices and quantities: in this case a power law. Results: If it is assumed that a single deal is divided (“cut”) between 4 times and 20 times before selling to the next customer, the mark-ups can range from 24% to 59%. The mark-ups appear low compared with those found in US research, but similar to those found in UK research. Conclusions: To our knowledge, this is the first attempt to analyse profitability of methamphetamine dealing in Australia. The findings of this study will help in understanding the motivations and decisions of drug dealers, and potentially assist drug law enforcement agencies to design better strategies to dismantle supply chain linkages which generate excessive profits.