Drug dealing may be illegal, but it still follows the laws of supply and demand.
Because drugs are harder to sell in Richmond, prices have gone up. Or, more specifically, the prices have remained consistent for buyers – but the amount of drugs they get for the price is going down; that is, the size of the “rock” has gotten smaller.
According to a Richmond Police Department narcotics sergeant, increased patrols and drug busts have reduced the supply of hard drugs as well as the number of dealers (who’ve been thrown in jail). The dealers have responded to the crackdown by using cellular phones to conduct business rather than dealing openly where they become easier targets for law enforcement.
I stopped by a non-descript brick building in the Manchester district of Richmond to talk with a few narcotics detectives about any changes in the drug market.
They said the current economic slow-down has had a limited effect in reducing the number of drug users – as the drug market involves many low income people who already have a limited income.
One interesting fact: the sorts of drugs found in the region are also changing. Cocaine and marijuana remain the drugs of choice, but Richmond Police are finding more ecstasy and prescription drugs being sold.
Most of the drugs in Richmond come from Atlanta, Philly or New York. Richmond is a demand city, which means drugs here are consumed here and not transported hub-and-spoke style. Often times drug dealers will pool cash to buy larger amounts of cocaine, says Ron Armstead, a narcotics sergeant with the RPD.
Obviously, the business details of the drug trade are murky, but drug entrepreneurs can buy a kilo of cocaine for $15 to $20,000 in major cities. They can then turn around and sell it for a significant profit as they cut or cook the cocaine into rock form. I asked Sgt. Armstead if the drug dealers factor costs like gas for the drives to and from New York into the price of the package. He said that while some of the dealers are very intelligent, they likely are not taking into account the escalated gas expenses when setting their prices.
So, while the profit margin has not significantly impacted prices, the RPD enforcement efforts and other variables have impacted supply in Richmond. And limited supply means inflation for buyers.
Aaron Kremer is the BizSense Editor. He is obsessed with the HBO program “The Wire.”