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How the Sinaloa cartel is using Chinese chemicals to fuel America’s opioid crisis

Significantly more fentanyl is caught at the U.S.-Mexico border than at the post office.

by Keegan Hamilton
Jan 8 2019, 4:35pm

BADIRAGUATO, Mexico — The region that produced Sinaloa cartel leader Joaquín “El Chapo” Guzman is known as The Golden Triangle, in reference to the fields of opium poppies hidden deep in the rugged Sierra Madre mountains where three states intersect. Generations of farmers here have sold their harvest to the cartel to be transformed into heroin and shipped north. But the once-lucrative crop suddenly lost its value.

Golden Triangle farmers say the Sinaloa cartel has stopped paying a premium for opium gum, the viscous brown goo that’s extracted from poppy plants and processed into heroin. Addiction rates are still soaring in the U.S., but the cartel has found a way to meet demand for heroin that doesn’t involve fields of poppies.

One 49-year-old man from the small village of Tameapa, who asked not to be identified because he owns a poppy farm, knows exactly why his crop is selling for so little: “It’s because of the synthetic drugs.”

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Powerful synthetic opioids such as fentanyl were involved in more than 40 percent of the record 70,000 fatal overdoses in the U.S. in 2017, more deaths than car crashes, gun violence, or HIV have ever caused in a year. President Donald Trump has repeatedly blamed China for flooding the U.S. with fentanyl through the international mail system, but the reality is more complicated. There’s growing evidence that illicit fentanyl is being produced primarily in Mexico in clandestine cartel labs, with precursor chemicals sourced from China.

The farmer in Tameapa had a salt-and-pepper goatee and he flashed a smile full of gold teeth recalling the old days when a kilo of goma would fetch 35,000 pesos, or around $1,800. Now he’s lucky to get a third of that. He sat in a white plastic chair on the patio of a modest home. Gesturing in the direction of his poppy field atop a nearby plateau, he explained the situation in Sinaloa.

“It's like if a company would’ve died,” he said. “There's no money, no economy, nothing. It was our only source of income. And now it's over. All that people want here is to work.”

There have been at least three documented fentanyl lab seizures in Mexico since 2006. The two most recent cases were in Sinaloa in 2017 and in the border city of Mexicali in September, when authorities found 20,000 fentanyl pills and arrested two men, including a Russian national. DEA spokeswoman Katherine Pfaff told VICE News the agency is “extremely concerned about fentanyl entering, transiting, or originating from Mexico.”

“Numerous criminal investigations led by domestic DEA offices have developed information regarding the production of fentanyl in Mexico,” Pfaff said, noting that “ongoing bilateral investigations” with other agencies have also produced evidence that fentanyl is being manufactured in Mexico.

And yet the focus remains on China. At the G20 summit in December, U.S. President Donald Trump praised Chinese President Xi Jinping after the Chinese government announced that all “fentanyl-like substances” would be controlled. The effort is intended to counter rogue chemists who attempt to skirt drug laws by creating new varieties of fentanyl.

But the move by China is unlikely to have much impact on the U.S. opioid crisis. Fentanyl, along with its primary variants and main precursors, has been a controlled substance in China for years, and it’s unclear exactly how or when the new regulations will be implemented or enforced. A former DEA agent said China is “merely seeking to create the appearance of cooperating with U.S. officials,” while not making reforms that might slow economic growth, in a recent report to Congress from the U.S.-China Economic and Security Review Commission.

Read more: China raids fentanyl factory but remains silent on wanted kingpins.

Jeremy Douglas, chief of the United Nations Office on Drugs and Crime (UNODC) for Southeast Asia and the Pacific, told VICE News that even if China were to halt fentanyl production, other Asian countries would quickly fill the void.

“I would not be surprised to see more diversity in sources and increased illicit production as a result of the change,” Douglas said, “It’s likely, given organized crime’s behavior and as we’ve seen with other synthetics.”

While Trump recently signed legislation intended to make it more difficult to ship fentanyl internationally via the postal system, the role of Mexican cartels in flooding the U.S. with cheap fentanyl has largely been overlooked. Federal prosecutors in El Chapo’s case referenced his suspected involvement in fentanyl manufacturing in the lead-up to his trial, but so far jurors have only heard about poppy fields in the Sierra Madre and heroin emanating from the Golden Triangle.

El Chapo got his start growing poppies as a teenager, but as his Sinaloa cartel empire expanded, the organization pivoted to synthetic drugs, primarily methamphetamine, made with ephedrine and other chemicals sourced from Asia. And as the demand for heroin grew, the Sinaloa cartel leveraged those connections to obtain the chemicals to make fentanyl.

For years, heroin markets in the U.S. were loosely divided by the Mississippi river. Mexican organizations such as the Sinaloa cartel were known to supply the West with lower-purity “black tar” heroin, while Colombians supplied the East with more refined “China white” powder. But amid upheaval in the Colombian underworld and exploding demand for opioids among Americans addicted to prescription painkillers, the dynamics of the opioid market in the Western Hemisphere shifted abruptly. Mexican heroin cooks now produce both black tar and China white heroin, supplying all of the United States.

Dan Ciccarone, a University of California San Francisco professor who studies the opioid crisis, believes that the Sinaloa cartel turned to fentanyl as a way to “boost” heroin in areas where users were accustomed to white powder. That hypothesis is backed up by data that shows fentanyl deaths concentrated in the Midwest and Northeast.

“The Sinaloa cartel said,‘We learned how to make this pure product, but we can’t make enough of it,’” Ciccarone said. “We’re going to have to boost it, dilute it, spread it out, with fentanyl in order to feed the East Coast.”

Data from Customs and Border Protection suggests far larger quantities of synthetic opioids are coming across land borders than through the mail from China. According to testimony delivered to Congress last May, Customs and Border Protection seized roughly 240 pounds of fentanyl from “express consignment carriers” such as FedEx in the 2017 fiscal year, and another 92 pounds that smugglers attempted to ship through the postal system. Over the same time period, CBP seized more than twice as much fentanyl — approximately 853 pounds — at ports of entry along the Mexican and Canadian borders.

Read more: How fentanyl gets to China from the U.S.

The most recent data available for the 2018 fiscal year shows that CBP made fentanyl seizures of 1,357 pounds at points of entry, plus 338 pounds confiscated by Border Patrol agents away from official crossing points. Some analysts note that Mexican-sourced fentanyl is less pure than direct shipments from China. It’s also possible that U.S. law enforcement is better at catching fentanyl shipments at border crossings than in the mail. But the sheer volume has convinced Ciccarone that cartels supply the majority of illicit fentanyl in the U.S.

“It’s a fraction,” Ciccarone told VICE News. “The postal system is a fraction of the cartel system.”

And because Mexican-produced fentanyl is mixed with heroin or pressed into pills meant to resemble popular painkillers like Vicodin and OxyContin, it’s also contributing the most to the opioid crisis death toll. Users of fentanyl-spiked drugs are left unaware of the potency, which dramatically increases the risk of overdose.

The cartels have strong economic incentives to push fentanyl. The DEA estimates that it costs about $3,300 to make one kilo of fentanyl, but according to sources involved in the drug trade in Culiacán, Sinaloa, who spoke VICE News on the condition of anonymity, cartel cooks charge as little as $2,000 per kilo.

Pure kilos of fentanyl are said to sell to mid-level dealers in Culiacán for around $45,000, then mixed with heroin and stretched into eight or nine kilos of blended product, which retail for $35,000 per kilo in Los Angeles or over $50,000 on the East Coast. And those are just wholesale prices — the profits increase exponentially when the kilos are further diluted and sold in smaller doses on the street. By comparison, a single kilo of regular heroin typically costs $28,000 to buy and ship across the border, where it sells for around $60,000.

The striking cost difference boils down to labor. With the necessary chemicals and one skilled cook, the cartel can crank out multiple kilos of fentanyl every week. Regular heroin production, by contrast, depends on the seasonal poppy harvest, which requires collecting opium gum from various farmers, haggling over the price per kilo, and still paying a cook to refine the gum into heroin.

According to poppy farmers in Sinaloa, it takes about 10 kilos of opium gum to produce one kilo of refined white-powder heroin or six kilos of gum to make one kilo of black tar, which is less pure. Poppy fields produce around 450 kilos of opium gum per hectare, meaning cartels have a finite supply of the main ingredient in heroin. With fentanyl, there are no concerns about growing seasons or crop eradication by the Mexican military. As a result, farmers, the lowest-level people on the drug supply chain, are getting cut out of the market.

Opium gum prices are plummeting across Mexico, not just in Sinaloa. In Guerrero, another mountainous state known for poppy cultivation, prices have reportedly dropped from 16,000 to 9,000 pesos per kilo. In response, farmers have started pushing for the government to legalize poppy cultivation so that Mexico can domestically manufacture painkillers. Newly elected President Andres Manuel Lopez Obrador has expressed support for such a move.

Pfaff, the DEA spokesperson, said “there are a variety of potential reasons for falling gum prices” in Mexico, including increased fentanyl trafficking and a supply glut of poppies. According to the DEA, poppy cultivation in Mexico “increased significantly in recent years,” peaking at an estimated 32,000 hectares in 2016, enough to produce 81 tons of pure heroin.

Farmers in Sinaloa said they would jump at the opportunity to legally grow poppies, but they would just as gladly switch to another crop that would provide the same level of income they earned prior to the arrival of fentanyl. Many farmers in the Golden Triangle used to grow marijuana but saw the value of that crop plummet with the spread of legalization in the U.S.

Another poppy farmer in Tameapa said he hopes to convince the cartel to begin investing in opium gum again by pointing out how many people are dying of overdoses in the U.S. The farmer said he’s waiting for the U.S. to take action so the cartels will decide it’s no longer worth the risk to make fentanyl.

“That's why it's killing people, because it's stronger,” the farmer said. “The cartels will say, ‘The fucking government is after us, so let's smuggle the other one.’ That's when the price for original heroin will go up and things will go back to normal.”

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