Synthetic drugs have changed organized crime. As opposed to most legacy drugs — which rely on plants, harvests, favorable weather, significant and varied manual labor, and transport of bulk amounts of illicit substances across heavily-policed terrain — synthetic drugs can be produced in laboratories year-round.

This is done using a wide variety of mostly sparsely or unevenly regulated chemicals, which can be employed at different stages of the process in rudimentary laboratories and transported in large or small amounts, often without the knowledge of the transporters themselves.

The raw materials for these drugs are chemicals referred to as precursors. The sources for these precursor chemicals span the globe. They are currently concentrated in China, where a relatively small number of companies appear to be producing precursor chemicals, in mainly two provinces.

*This article is part of a two-year investigation that tracked the supply chain of precursor chemicals that aid in the production of methamphetamine and fentanyl in Mexico. Read the other articles of the investigation here and the full report here.

These chemicals are marketed and sold on the internet, where an army of online providers offer well-regulated and unregulated chemicals via the Clearnet and the dark web. These marketers are sometimes extensions of these same production companies and sometimes independent. Some are also clans, which appear to own numerous production and marketing companies.

SEE ALSO: China Producers Cashing in on Online Sale of Fentanyl Precursors

This investigation sought to understand the flow of these precursors for the production of synthetic drugs in Mexico, specifically methamphetamine and fentanyl. The entire report is available in PDF here, but we have also broken down some of the major findings into shorter articles.  

Below is the report’s executive summary and major findings.

Executive Summary 

Precursors are transported to Mexico via cargo ships or air cargo, traveling direct or via circuitous routes. Cargo is often mislabeled, camouflaging the contents, purpose, or amount of their shipment. In Mexico, brokers and independent buyers facilitate this trade, filing paperwork, creating fictitious companies, or bribing officials. The chemicals then make their way to small producers. Often referred to as “cooks,” these producers synthesize the precursors into illicit synthetic drugs that are then sold to large buyers and transport specialists.

Two large criminal networks buy and move synthetic drugs in bulk: the Sinaloa Cartel and Jalisco Cartel New Generation (Cartel de Jalisco Nueva Generación – CJNG). These networks are responsible for bringing this product across the most difficult part of its journey and thus charge a premium for their services. After they sell the drugs wholesale, they are largely absent, leaving the distribution and retail sales to other local criminal networks.

The precursor industry — and the synthetic drug industry writ large — is so challenging to disrupt precisely because it works across legal and illegal spheres, involves many layers and different criminal networks, and has many means to obtain its final objective: the sale of synthetic drugs to an increasing number of consumers. 

Those consumers are not just in the United States where synthetic drugs — in particular fentanyl — are responsible for tens of thousands of drug overdoses per year. Places like Mexico are experiencing a dramatic uptick in synthetic drug consumption, mostly methamphetamine but also fentanyl. The synthetic drug industry is also having ill effects on the environment in Mexico and is behind a surge in violence in the corridors where it is trafficked and sold on the local market.

SEE ALSO: Mexico’s Role in the Deadly Rise of Fentanyl

The problem requires governments to rethink their traditional strategies for fighting illicit drugs. In addition to developing regional and global coalitions to monitor and regulate the chemicals, governments must enlist private industry to play a much more active role in mitigating the trade and limiting the spread of these destructive substances.

Major Findings

  • A vast number of what are termed “precursor” chemicals assist in the production of synthetic drugs. However, the precursor market for synthetic drugs is comprised of at least three different markets: precursors, pre-precursors, and essential chemicals. Each one faces a different regulatory regime, putting strain on a slightly different part of global and local regulatory systems. This means there is not a one-size-fits-all solution but a multi-layered, broad approach toward mitigating its impact.
  • The precursor and pre-precursor markets are the focus of the most intense efforts of regulators and law enforcement. But the lack of a unified, international legal framework, a lack of information sharing and cooperation between nations, and a lack of resources and training in these nations mean these efforts are largely feckless. The proof is in the availability and prices of illicit synthetic drugs in the world’s most lucrative drug market, the United States, and the limited number of criminal cases made against these networks in their major areas of operation: China, Mexico, and the United States.
  • The importance of numerous essential chemicals to various parts of the economy also makes them extremely difficult to regulate. These essential chemicals include some of the most widely produced and traded products in the world. Any disruption in their flow, therefore, could be extremely disruptive to the licit economies that depend on them. At the same time, their availability means creating a supply-side strategy is very difficult.
  • The supply chain for the most strictly regulated precursors is shaped like an hourglass with numerous producers, distributors, and transporters at the top; a smaller number of independent buyers, brokers, and drug processors in the middle; and a larger number of transporters, wholesalers, and retail distributors at the bottom. This means there may be some opportunity to squeeze the middle where there is the most obvious bottleneck.
  • Nonetheless, the methamphetamine industry in Mexico is so advanced as it relates to the varied methods of production and chemicals needed that it will be difficult for any law enforcement to catch up. This means authorities should be thinking about novel ways to track the production and movement of the chemicals used to produce methamphetamine (and other synthetic drugs) and ways to shift their resources toward the demand side of the equation.
  • What’s more, fentanyl is an illicit drug market the likes of which we have never seen. The concentrated potency of this drug and correspondingly tiny amounts being trafficked make effective controls of its precursors and of the drug itself next to impossible. So warped is the market that traffickers will send upwards of 95 percent of adulterants and additives across heavily policed borders, despite the risks. The barriers to entry are also far lower, which has made the incentives along the supply chain different from other drugs, such as methamphetamine.
  • Although the Mexican government claims the contrary, it appears a sizeable amount of fentanyl is produced in Mexico. While it is impossible to quantify, it seems to be significant, given the various ways in which we have found fentanyl precursors entering the country and the ways criminal networks are manufacturing it. Rather than making it from scratch, Mexican cooks appear to synthesize fentanyl using precursors and pre-precursors that require only a few relatively simple steps.
  • Still, fentanyl production in Mexico is in its infancy. If methamphetamine production is any indication, it is likely the beginning of a process whereby Mexican criminal networks seek autonomy to evade global restrictions on the chemical trade and avoid being at the mercy of international producer-nations, such as China. What’s more, given the small amounts needed to satisfy demand, fentanyl offers an opportunity for smaller producers and sellers to enter the market, thus creating a more “democratic” marketplace that is much harder to police.
  • Criminal organizations like the Sinaloa Cartel and the CJNG are only one part of the supply chain, so focusing enforcement efforts on them will not significantly impact the synthetic drug trade. In general, they do not get heavily involved in the precursor chemical trade until these substances have been sourced to Mexico and are ready to distribute amongst producers. Production of synthetic drugs is also outsourced to various semi-autonomous cells, which sometimes work under the supervision of these larger groups and sometimes operate independently, creating a vibrant, flexible, and resilient market.
  • In both the places they are produced, and where they are sold on the open or black market, precursor sellers are getting relatively small returns. The size of the market, in relation to the size of the overall chemical market, makes regulating chemicals extremely difficult. Given the size of this market, it has also proven difficult to get this topic to the top of security and regulatory agendas. Paltry resources have so far meant paltry results.
  • The private sector has a relatively significant (and unprecedented) role in the supply chain of precursor chemicals, challenging the traditional paradigm of drug trafficking in Mexico. While plant-based drug markets mostly included large criminal organizations operating in rural areas and employing farmers to cultivate illicit crops, synthetic drug trafficking networks are multi-layered, involve many legal industries, can operate from virtually anywhere, rely heavily on licit supplies, and thus generate an important overlap between the legal and the illegal spheres.
  • The speed and adaptability of the precursor market may require a completely different type of law enforcement approach, particularly one that emphasizes voluntary compliance by the private sector, connects with trade agreements and wider North American cooperation, is more transparent with the public, and — to the greatest extent possible — pushes the boundaries of existing legal procedures such as adopting the “rebuttable presumption” concept that companies have to prove that a substance has a viable dual use, rather than making the government prove it does not.

Steven Dudley is the co-founder and co-director of InSight Crime and a senior research fellow at American University’s Center for Latin American and Latino Studies in Washington, DC. In 2020, Dudley...