The retail value of the illicit drug market in Italy: a consumption-based approach

Abstract

This study estimates the retail value of the illicit drug market in Italy from a consumption-based approach. The illicit drugs considered in this analysis are heroin, cocaine, cannabis (herbal and resin), amphetamines and ecstasy. Results show that the value of the illicit drug market in Italy is much less than previously estimated and quantified at € 3.3 bn. Heroin and cocaine retain the biggest markets in terms of revenues, while cannabis is the most-consumed illicit drug. Synthetic illicit drugs account for roughly 10% of the illicit drug market. Conclusions offer some suggestions as to how uncertainties about estimates of the illicit drug market can be reduced.

Keywords:

• illicit drug market
• estimates
• consumption-based approach
• retail value
• drug consumption
• organised crime

Acknowledgements

I would like to thank Thomas Loughran, Theodore Wilson and Daren Fisher for their help and suggestions.

Notes

^1. UNODC, World Drug Report 2013, 1.

^2. UNODC, World Drug Report 2012.

^3. Truman and Reuter, Chasing Dirty Money.

^4. Paoli, “The Paradoxes of Organized Crime”; and Williams and Florez, “Transnational Criminal Organizations and Drug Trafficking.”

^5. Reuter, Disorganized Crime; Paoli, “The Paradoxes of Organized Crime”; Reuter and Haaga, The Organization of High-Level Drug Markets; and Paoli, Illegal Drug Markets in Frankfurt and Milan.

^6. Pearsons and Hobbs, Middle Market Drug Distribution; and Kenney, “The Architecture of Drug Trafficking.”

^7. Paoli, “The Paradoxes of Organized Crime,” 67.

^8. Gambetta and Reuter, “Conspiracy Among the Many.”

^9. Kleiman, When Brute Force Fails.

^10. Kilmer et al., “Bringing Perspective to Illicit Markets.”

^11. UNIDCP, World Drug Report; SOS Impresa, Le mani della criminalità sulle imprese, 2011; and Syal, “Drug Money Saved Banks.”

^12. Reuter, “The (continued) Vitality of Mythical Numbers”; and Woodiwiss and Hobbs, “Organized Evil and the Atlantic Alliance.”

^13. Singer, “The Vitality of Mythical Numbers”; and Reuter, “The (continued) Vitality of Mythical Numbers.”

^14. Pudney et al., “Estimating the Size of the UK Illicit Drug Market”; Bramley-Hanker, Sizing the UK Market for Illicit Drugs; Legleye, Lakhdar, and Spilka, “Two Ways of Estimating the Euro Value”; Casey et al., Assessing the Scale and Impact; Connolly, The Illicit Drug Market in Ireland; Center for the Study of Democracy, Serious Organized Crime Threat Assessment. 2010–2011; Moore et al., Monograph No. 09; Wilkins et al., The Socio-Economic Impact; Wilkins et al., “Estimating the Dollar Value”; ONDCP, What America’s Users Spend; and Werb, Nosyk, and Kerr, “Estimating the Economic Value.”

^15. UNODC, World Drug Report 2005; Kilmer and Pacula, Estimating the Size of the Illegal Drug Market; UNODC, Estimating Illicit Financial Flows; and Trautmann, Kilmer, and Turnbull, Further Insights into Aspects.

^16. Baldassarini and Corea, “How to Measure Illegal Drugs”; Canzonetti, “Il mercato”; Kilmer and Pacula, Estimating the Size of the Illegal Drug Market; Di Censi et al., Il mercato illecito della droga; Fabi, Ricci, and Rossi, “Segmentazione e valutazione del mercato”; Transcrime, Gli investimenti delle mafie; Sallusti, “Estimating Cocaine Market in Italy”; Rossi, “Monitoring the Size and Protagonists”; and Caulkins, Kilmer, and Graf, “Estimating the Size of the EU Cannabis Market.”

^17. For the sake of brevity methods, data and assumptions are not detailed in this article (just doing this would require a full length article). Those interested in the details of the analysis can make specific reference to the mentioned papers.

^18. Kilmer et al., “Bringing Perspective to Illicit Markets”; and Kilmer and Pacula, Estimating the Size of the Illegal Drug Market.

^19. Legleye, Lakhdar, and Spilka, “Two Ways of Estimating the Euro Value.”

^20. Pudney et al., “Estimating the Size of the UK Illicit Drug Market.”

^21. Caulkins, Kilmer, and Graf, “Estimating the Size of the EU Cannabis Market.”

^22. Saviano, Gomorrah.

^23. Saviano, “Vi racconto l’impero della cocaina”; and Saviano, Zero Zero Zero.

^24. SOS Impresa, Le mani della criminalità sulle imprese, 2009.

^25. Santino, “Mafia and Mafia Type Organizations”; and Calderoni, “The Structure of Drug Trafficking Mafias.”

^26. Zuccato et al., “Cocaine in Surface Waters.”

^27. ONDCP, Drug Availability Estimates in the United States.

^28. MacCoun and Reuter, Drug War Heresis.

^29. See note 10 above.

^30. Transcrime, Gli investimenti delle mafie.

^31. Caulkins, Kilmer, and Graf, “Estimating the Size of the EU Cannabis Market”; van Laar et al., “Cannabis Market”; Frijns and van Laar, “Amphetamine, Ecstasy and Cocaine”; Trautmann, Kilmer, and Turnbull, Further Insights into Aspects; Rossi, “Monitoring the Size and Protagonists”; and Rossi, “New Methodological Tools,” 201.

^32. UNODC, Estimating Illicit Financial Flows.

^33. Kilmer and Pacula, Estimating the Size of the Illegal Drug Market.

^34. See note 33 above.

^35. EMCDDA, Cannabis Production and Markets in Europe.

^36. See note 56 above.

^37. See note 51 above.

^38. See note 56 above.

^39. See note 63 above.

^40. Ibid.

^41. Mascioli and Rossi, “La stima delle popolazioni nascoste.”

^42. Paoli, Greenfield, and Reuter, The World Heroin Market.

^43. Kilmer and Pacula, Estimating the Size of the Illegal Drug Market; and Kilmer et al., “Sizing National Heroin Markets.”

^44. EMCDDA, Monitoring the Supply of Heroin to Europe.

^45. For example, benzoylecgonine (BEG) is the main derivate of cocaine consumption. About 45% of the cocaine consumed is excreted via urine as BEG. Concentration of BEG (nanograms/litre) are multiplied by the water flow rate (m³/day). BEG load is than transformed in cocaine and reported on the population served by the sewage system in grams/day/1000 inhabitant.

^46. Casey et al., Assessing the Scale and Impact.

^47. EMCDDA reports values for overall problem drug users, injecting drug users and opioids drug users but not for cocaine.

^48. These pertain the estimate of the population served by the sewage system, degradation of drug residues in the wastewater and back-calculation from residues to pure drug.

^49. Thomas et al., “Comparing Illicit Drug Use”; and Reid et al., “Estimation of Cocaine Consumption.”

^50. Rossi, “New Methodological Tools.”

^51. Zuccato and Castiglioni, “Consumi di sostanze stupefacenti.”

^52. These are: Potenza, Gorizia, Merano, Pescara, Bari, Verona, Nuoro, Cagliari, Bologna, Terni, Palermo, Florence, Milan, Perugia, Turin, Naples, Rome

^53. Last-year users consider those who consumed the drug in the previous 12 months but not in last month.

^54. EMCDDA, Cannabis Production and Markets in Europe, 239.

^55. Kilmer and Pacula, Estimating the Size of the Illegal Drug Market; Werb, Nosyk, and Kerr, “Estimating the Economic Value”; and Magura, “Validating Self-Reports of Illegal Drug.”

^56. van Laar et al., “Cannabis Market.”

^57. Clements, Pricing and Packaging; Caulkins and Padman, “Quantity Discounts and Quality Premia”; and Desimone, “The Relationship Between Illegal Drug Prices.”

^58. Caulkins and Paucula, “Marijuana Markets.”

^59. Clements, Pricing and Packaging; and Caulkins and Paucula, “Marijuana Markets.”

^60. Caulkins and Paucula, “Marijuana Markets”; and Kilmer and Pacula, Estimating the Size of the Illegal Drug Market.

^61. Werb, Nosyk, and Kerr, “Estimating the Economic Value”; and Caulkins and Paucula, “Marijuana Markets.”

^62. See note 33 above.

^63. Frijns and van Laar, “Amphetamine, Ecstasy and Cocaine.”

^64. EMCDDA, Problem Amphetamine and Methamphetamine Use in Europe, 18.

^65. See note 63 above.

^66. Ibid.

^67. See note 33 above.

^68. See note 63 above.

^69. Ibid.

^70. See note 10 above.

^71. van Laar et al., “Cannabis Market”; and Frijns and van Laar, “Amphetamine, Ecstasy and Cocaine.”

^72. See note 21 above.

^73. Other countries, i.e., Australia, have a response rate to survey on drug consumption similar to that reported for Italy.

^74. Gfroerer, Lessler, and Parsley, “Studies of Nonresponse and Measurement Error”; Decorte et al., Drug Use: An Overview.

^75. Given a response rate of approximately 13% and the fact that the EMCDDA has not accepted its results, the GPS 2010 is not considered in this analysis.

^76. Zuccato et al., “Changes in Illicit Drug Consumption Patterns”; and EMCDDA and EUROPOL, EU Drug Markets Report.

^77. EMCDDA, “EMCDDA Statistical Bulletin 2013.”

^78. See note 30 above.

^79. The impact of retail seizure on the total quantity of drug available (drug consumed plus seizure) is residual: heroin (4%), cocaine (7%), cannabis (11%), amphetamines (0%), ecstasy (0.1%).

^80. For amphetamines and ecstasy the average between the low and high values has been considered.

^81. Information on annual spending cannot be estimated for cocaine since cocaine users have not been estimated.

^82. Caulkins et al., Marijuana Legalization; Casey et al., Assessing the Scale and Impact; van Laar et al., “Cannabis Market”; and Frijns and van Laar, “Amphetamine, Ecstasy and Cocaine.”

^83. See note 30 above.

^84. See note 33 above.

^85. See note 19 above.

^86. See note 44 above.

^87. The retail price for white heroin in 2011 is € 63, while for brown heroin it is € 42.

^88. Zuccato et al., “Changes in Illicit Drug Consumption Patterns.”

^89. Kilmer and Pacula, Estimating the Size of the Illegal Drug Market, 43.

^90. See note 63 above.

^91. Baldassarini and Corea, “How to Measure Illegal Drugs”; Canzonetti, “Il mercato: quantità, consumi, valori”; Kilmer and Pacula, Estimating the Size of the Illegal Drug Market; Di Censi et al., Il mercato illecito della droga; Fabi, Ricci, and Rossi, “Segmentazione e valutazione del mercato”; Transcrime, Gli investimenti delle mafie; Sallusti, “Estimating Cocaine Market in Italy”; Rossi, “Monitoring the Size and Protagonists”; and Caulkins, Kilmer, and Graf, “Estimating the Size of the EU Cannabis Market.”

^92. Fabi, Ricci, and Rossi, “Segmentazione e valutazione del mercato”; Rossi, “Monitoring the Size and Protagonists”; and Sallusti, “Estimating Cocaine Market in Italy.”

^93. See note 21 above.

^94. Kilmer and Pacula, Estimating the Size of the Illegal Drug Market; and Caulkins, Kilmer, and Graf, “Estimating the Size of the EU Cannabis Market.”

^95. Costa Storti and De Grauwe, “Special Issue”; and Storti and De Grauwe, “Globalization and the Price Decline of Illicit Drugs.”

^96. See note 21 above.

^97. Fabi, Ricci, and Rossi, “Segmentazione e valutazione del mercato.”

^98. Rossi, “Monitoring the Size and Protagonists.”

^99. Sallusti, “Estimating Cocaine Market in Italy.”

^100. See note 97 above.

^101. See note 99 above.

^102. See note 63 above.

^103. See note 33 above.

^104. See note 56 above.

^105. Kilmer et al., “Sizing National Heroin Markets.”

^106. See note 97 above.

^107. Di Censi et al., Il mercato illecito della droga.

^108. See note 97 above.

^109. See note 98 above.

^110. See note 107 above.

^111. Wiessing, Vicente, and Hickman, “Integrating Wastewater Analysis.”

^112. Caulkins and Paucula, “Marijuana Markets”; and Wiessing, Vicente, and Hickman, “Integrating Wastewater Analysis.”

^113. van Laar et al., “Cannabis Market,” 153.

^114. See note 98 above.

^115. Bouchard and Tremblay, “Risks of Arrest Across Drug Markets.”

^116. Carla Rossi, “Epidemiological Indicators to Evaluate Drug.”

^117. Tremblay and Lacoste, “De L’insertion Sociale Des Marchés Urbains.”

^118. Reuter, MacCoun, and Murphy, Money from Crime.

^119. Fendrich et al., “The Utility of Drug Testing”; Caulkins, Kilmer, and Graf, “Estimating the Size of the EU Cannabis Market”; and Kilmer and Pacula, Estimating the Size of the Illegal Drug Market.

^120. EMCDDA and EUROPOL, EU Drug Markets Report; and Zuccato et al., “Changes in Illicit Drug Consumption Patterns.”

^121. Relazione annuale al Parlamento sull’uso di sostanze stupefacenti anno 2011.

^122. Goldstein, “Improving Policing.”

Additional information

Notes on contributors

Luca Giommoni

Luca Giommoni is a PhD candidate in Criminology at the Università Cattolica of Milan and a researcher at Transcrime – Joint Research Centre on Transnational Crime, Università Cattolica of Milan and Università degli Studi di Trento (www.transcrime.it). His research interests include organised crime and drug market.