Is This The Most Profitable Export Route In The World?

Forget the WTI-Brent spread in oil – the best commodity arb in the market today might instead center around the global marijuana trade.

As the chart below (courtesy of Statista) shows, prices of cannabis differ wildly around the world and these differences are intensifying as more countries and regions (particularly in North America and South America, where Canada just became the second country to legalize weed sales) remove the legal restrictions from a product that was for decades confined to the black market.

Whereas Latin American countries (like, say, Colombia, for example) tend to have low prices per gram of marijuana, countries in the Far East – where penalties for possession and sale of the drug remain among the stiffest in the world – still sport incredibly high prices, as smugglers demand “hazard pay” for the fact that being caught smuggling illegal drugs can earn one a death sentence in Singapore and a multi-decade prison term in Seoul.

All of this begs the question: Would it be worthwhile to smuggle marijuana from Quito, the capital of Ecuador, where marijuana prices are among the lowest in the world, to Tokyo, where the price-per-gram is among the highest?

Clearly, smugglers, who move drugs like marijuana and cocaine from South America to far-flung regions of the world, are more than happy with the risk-reward profile.

The annual ABCD Cannabis Price Index offered a city-by-city price breakdown, which can be viewed in full here.

Shown: Marijuana being cultivated in a US lab.

For enterprising drug dealers, there are plenty of arb opportunities within the US, as prices between states where weed has been legalized or decriminalized diverge from states where prohibition remains unchallenged. The price-per-gram in Denver is just $7.79, compared with $18 in Washington, DC – more than twice as much.

So while ‘exporting’ your Colombian weed to the United States may be ‘simple’ – it is four times more profitable to ‘export’ it to Japan…