BOOM TIME FOR DEALERS

Business is thriving for drug barons, with research suggesting huge
profits from their operations here.

Last week saw the tragic deaths of two Waterford men who ate cocaine
at a party in the city a fortnight ago. Kevin Doyle (21) and John
Grey (23) fell into comas following cocaine ingestion. Doyle died
last Tuesday, while Grey lost his life yesterday morning.

Model Katy French, who also died last Thursday after being in a coma
for five days, revealed in a newspaper interview in the last
fortnight that she had regularly taken cocaine.

Preliminary autopsy results found traces of cocaine in her system,
while the cause of death was brain damage. While further toxicology
tests will tell the full story, the publicity surrounding the tragic
events has sparked a huge debate about cocaine use in Ireland.

While the public discourse over cocaine and other drug use here has
led to the development of a lucrative industry in media comment and
celebrity confessionals, little is known about the margins of profit
that underpin Ireland's complex illegal drug industry.

Like most products consumed here, drugs that eventually find their
way to a Waterford house party or a socialite's handbag have
invariably travelled from afar, and bear the cost of manufacture,
transportation and payments to distributors.

The introduction of the euro in 2002 made it easier to compare both
wholesale and retail drug prices across Europe, with growing signs
that Irish drug users pay over the odds compared to our nearest neighbours.

Most recent price estimates from the Garda National Drug Unit (GNDU)
put the price of cannabis resin - by far the most widely used illegal
drug in Ireland - at €7 per gram for users here. A gram of herbal
cannabis ,the product of choice for Ireland's growing network of
Irish-based west African gangs, costs users half the price of resin.
Comparatively, a gram of heroin here was priced at €200 in a 2003
study, making it by far the most expensive drug by weight.

However, a key report by the European Monitoring Centre for Drugs and
Drug Addiction last year found that pan-European heroin retail prices
have fallen by 45 per cent in recent years. This decline in price is
almost certainly due to oversupply from Afghan and Pakistani opiate producers.

The same 2003 study indicated that cocaine users shelled out roughly
€70 per gram in Dublin at that time - which would amount to 10 to 12
lines. The price remains more or less the same today.

It is believed that the decision by Colombian drug cartels in recent
years to turn their focus onto Europe and away from the saturated US
market has kept the price at its 2003 level.

A kilogramme of uncut cocaine has a wholesale price of about €40,000
in Spain - about double the US price. Broken down into street dealing
amounts, it can retail for up to €200,000 here, though profits are
dispersed down a food-chain of middle-level and smaller dealers
before this amount of cash will have changed hands.

The valuation of illegal drugs in the Irish market is closely aligned
to comparable markets nearby, mostly in Northern Ireland, Scotland
and Britain. There is close cooperation between Irish and British
drugs gangs, as both groups use the same supply chains to traffic
heroin from Afghanistan, cannabis resin from Morocco via Spain,
herbal cannabis from South America, and ecstasy from Holland. But
numerous analyses of prices paid by drug users here and in Britain
show that Irish drug consumers are willing to pay over the odds for
their illicit fix compared to their neighbours.

With some exceptions, respective costs per weight of heroin, cocaine
and ecstasy were higher here than in London, Glasgow, Cardiff and
Belfast, according to the Health Research Board (HRB),which has led
the way in studying the illicit drugs market here.

The higher prices could have something to do with the higher purity
of some drugs sold on the Irish market. The Forensic State Laboratory
(FSL), in one analysis of heroin seized here, found that purity of
the product was at the upper end of the scale compared to heroin
seized in other European jurisdictions.

Studies have shown purity levels as low as 10 per cent in Luxembourg
and 43 per cent in Spain, whereas two separate analyses by the FSL of
heroin here found purity levels of between 41.3 per cent and 45.8 per cent.

FSL studies indicate that there is a close match between supply and
demand in the Irish heroin market. Tests on heroin seized on the
street for sale and heroin from a larger shipment seized by the
Customs National Drug Unit found only a negligible difference in
purity between what was being brought into the state and what was
being sold on the street - indicating that the opiate is not
significantly diluted by the time the user scores from his dealer.

However, the cocaine market shows no such signs of balance. Different
samples tested at the FSL laboratory vary in purity from as low as
1.8 per cent to highs of 75 per cent, with several studies showing
purity levels in the mid-range.

Such variation has potentially lethal effects for Irish cocaine
users, with harmful constituent mixing ingredients including
ephedrine, various powdered medicines that match cocaine in texture,
rat poison, and even caffeine.

Profits made from cannabis resin depend on largely unknown variations
in the bulk of product sold, which complicate any attempt to figure
out how much is made from trafficking the drug into Ireland from
Spain and Holland.

Most recent figures suggest the user pays roughly €3 0 for a
quarter-ounce (seven grams) of resin. The GNDU estimates that the
wholesale price of a kilo of cannabis resin is around €3,200. The
potential profit from one kilo is massive: if sold at a rate per
gram, the profit made from one kilo is over €11,700.

However, when the kilo is sold off at the more likely quarter ounce
weight, the profit is considerably less, at €980.

The reality of how much money will change hands for one kilo of
cannabis is somewhere between these two figures, with a small army of
low-level dealers buying ounces and selling as much as possible in gram weight.

The total value of the illegal drugs market here is almost certainly
worth hundreds of millions, or possibly in excess of €1 billion.
However, all attempts at calculating the value of the trade come with
the caveat that no one can say they are certain their estimate is correct.

Data drawn from several medical sources suggests there are over
14,000 heroin users in Ireland. The average spend of these users was
calculated in one 2003 survey, which was then used to estimate of the
total retail market for heroin. It indicated that the retail value of
heroin in the Irish market was around €14 million.

However, a separate survey suggested that the value of the Irish
heroin trade that year was €54 million. This second survey was based
on the estimate that drug seizures by police and customs represent
just 10 per cent of the drugs available for sale.

The same calculation technique indicated that the Irish cannabis
resin market had a retail worth of over €370 million (by far the
highest of all drug types), that the retail value of cocaine here was
in excess of €75 million per year, and that ecstasy was worth over
€129 million - although this latter valuation would appear to be
inflated as there were a high number of seizures during the period
covered by the survey.

However, there is considerable disagreement among experts over the
correct formula used to calculate the value of the Irish drugs
market. In particular, it is claimed the calculation that seizures
represent 10 per cent of illicit product in the market is flawed.

One Revenue Commissioners source told The Sunday Business Post there
is "absolutely nothing in terms of a reliable benchmark" to prove or
disprove the widely accepted formula.

If this means of measuring the quantity of drugs in the market is not
accurate, then there is no way of knowing the amount of money being
spent on cocaine, heroin, cannabis or other drugs here - nor is there
any accurate way of knowing the total profits that major drug
retailers in Ireland are making.

The value of Britain's illicit drug economy - to which Ireland is
closely tied - was last month revealed by official figures for the
first time with the disclosure of an internal Home Office estimate
that there are 300 major importers, 3,000 wholesalers and 70,000
street dealers involved in the trade, with a turnover of between
stgUKP7 billion (€9.8 billion) and stgUKP8 billion (€11 billion) per year.

The Home Office research - which was based on prison interviews with
222 convicted drug dealers - suggests the average dealer has an
annual turnover of stgUKP100,000 (€140,000), and that many drug
operations employ salaried staff as "runners and storers" and raise
their heroin prices by as much as stgUKP1,000 (€1,400) a kilo as
demand peaks at Christmas.

Meanwhile, the United Nations Office on Drugs and Crime estimates
that the retail value of the global drugs trade is four times the
wholesale value. Irrespective of the difficulty in calculating levels
of profit in the Irish drugs trade, the business has made some
relatively anonymous figures in the criminal underworld tremendously wealthy.

In an interview 12 months ago with this reporter, Garda chief
superintendent Felix McKenna, the former head of the Criminal Assets
Bureau (Cab), said the assets recovery unit had identified several
major Irish drug importers who had diverted over €120 million into
financial services in the Middle East, as a means of hiding their drug profits.

Despite their best work and international cooperation with law
enforcement units abroad, agencies such as Cab and the GNDU have no
way of knowing whether this sum represents 1 per cent, 2 per cent or
10 per cent of the Irish drugs market profit margin.

Doubtlessly, many multiples of this amount have been made by Irish
drug gang bosses whose businesses, like themselves, are now primarily
based in continental Europe, and whose profits soar irrespective of
the rising gun crime, mental illness and death associated with their
merchandise.