Understanding the illegal drug supply chain structure: a value chain analysis of the supply of hashish to Europe

The study investigates how the illicit supply chain of Moroccan hashish exported to Europe is organized and how prices are formed along its stages. Motivated by the paucity of transnational analyses beyond retail-level studies and the significant size of Europe’s cannabis market, the paper aims to estimate the value contributed and risks borne by each actor. Drawing on supply chain management and value chain frameworks, the work examines the chain’s network structure, processes, and components under disruption risks from law enforcement. The context includes rising global cannabis use, Morocco’s central role as Europe’s primary external source, increased European domestic cultivation, and constantly adapting illicit channels. The research is important for understanding operations, profitability and risk allocation, informing law enforcement, health, and development policies, and explaining price/quality dynamics that influence consumer outcomes.

Prior research on illicit drug markets has largely focused on retail-level dynamics in the USA and UK, identifying multi-layered distribution (importation, wholesale, middle market, retail) and the roles of hierarchies, markets, networks, ethnicity, and trust (Pearson and Hobbs, 2001; May and Hough, 2004; Desroches, 2007; Murji, 2007). Pricing studies emphasize risk, uncertainty, and institutional context (Ritter, 2006; Moeller and Sandberg, 2019), with notable variation in end-consumer prices across countries (Munksgaard and Tzanetakis, 2022) and relevance of product characteristics and quality to purchase decisions (Zhu et al., 2021). Work on upstream operations includes smuggling costs, unique transaction costs (concealment, corruption), and online markets (Caulkins and Bond, 2012; Basu, 2013, 2014; Holt, 2017). Structural models for cocaine/heroin depict ordered layers (Caulkins et al., 2016). Retail margins appear resilient to enforcement intensity (Thompson and Jeffords, 2019), and demand for cocaine is inelastic downstream (Mejia and Restrepo, 2016). Scarcity from interdiction can raise violence mid-chain (Castillo et al., 2020), and changes in local dealers influence final consumption more than shifts in transnational gangs (Leong et al., 2022). For hashish specifically, studies highlight Morocco’s evolving production (Chouvy and Afsahi, 2014; Chouvy and Macfarlane, 2018) and retail operations, but there remains a gap on transnational supply chain structures, value distribution, and price formation along the chain.

Design: Mixed-methods study combining primary qualitative/quantitative field data with secondary sources. Primary data collection: - Producers: 13 farming families from Rif region towns (e.g., Ketama, Douar Aachouche Tahetani, Takarkouret, Akchour, Beni Hadifa, Tlata Ketama, Bab Taza, Bab Berred, Bni Rzine, Targuist, Mensora, Taounate, Ghafsai) and agricultural technicians. Emic approach with open-ended, free-flowing interviews (15–30 minutes), conducted by a researcher fluent in local language and culture. Notes were taken post-interview and cross-checked. - Trafficking/logistics: Snowball sampling recruited informants involved in transport and smuggling: 2 informants on transport from production areas to Moroccan coast; 10 “juriri juriri” based in Guat el Marssa, Oued Laou, and Sidi Abdeslam (Moroccan coast) on entry to/distribution in Europe. Informants described operations, routes, organizational roles, prices, and costs. Data gathered from producers included inputs, tools, seeds, fertilizers, labor time and costs, depreciation/amortization, packaging, yields, and revenues for traditional (beldiya) vs hybrid/transgenic varieties, enabling cost accounting for inbound logistics and operations (processing/packaging). When input values were unknown, agricultural technicians provided market prices. Supplementary Tables S1–S16 detail fixed/variable costs, labor, raw materials, packaging, amortization, revenues, and profitability by seed type. Secondary sources: - Official statistics/reports: EMCDDA, UNODC, Europol, CITCO. - Investigative media and documentaries covering Strait of Gibraltar trafficking and European distribution (e.g., García-Ferreras, 2018; El País reports; DocumaniaTV, 2019), used to fill gaps and triangulate primary data. - Retail price checks: EMCDDA (2021b), Weedindex, Červený and van Ours (2019). Sampling and validity: Hard-to-reach populations were accessed via snowball sampling (Noy, 2008). External validity was supported by triangulating primary reports with multiple secondary sources. Interviews employed pedagogical and responsive techniques; confidentiality and anonymity were ensured with verbal informed consent. Ethical approval was obtained via the University of Almería’s Code of Good Research Practices. All data and supplementary material are available in the article and institutional repository.

- The Moroccan–Europe hashish supply chain is a long, multi-actor channel spanning origin, entry, and consumption countries, with critical information flows enabling coordination, evasion of enforcement, and resilience. - End-user prices increase by roughly 7000% over production cost along the chain, with most value added downstream after entry into Europe. - Cost structure: high variable costs and limited fixed costs across stages, promoting flexibility but instability and continuous adaptation. - Pricing and quality behavior: reluctance to raise end-user prices contrasted with a higher propensity to modify quality; shift from traditional beldiya to hybrid/transgenic seeds driven by intermediaries increases yields and profitability but alters quality. - Stage earnings/margins (per 1000 kg operations; ranges from analysis and Fig. 8/Table 2): • Strait drug smugglers (Morocco → Spain/Portugal): earnings ≈ 12%. • Wholesaler drug smugglers (Spain/France as hubs distributing across Europe): earnings ≈ 75–78%. • National retailing drug dealers: earnings ≈ 60–61%. • Retail selling (street-level drug runners): earnings ≈ 53–73% depending on market. - Price points (per kg): wholesalers acquire around $1,920/kg; national retail dealers sell to runners at ~$5,400/kg; street-level retail prices average ~$11,420/kg in Spain, ~$13,240/kg in France, and ~$20,000/kg in other European markets. - Transport/logistics: multiple modes (overland freight, maritime—speedboats up to ~3 t per trip, merchant/fishing vessels, mothership transfers—air drops, body packing/stuffing). Spain (Campo de Gibraltar) is a key entry node with rapid, high-risk speedboat runs (~30 minutes, up to ~2000 kg). - Support activities by third parties (haulage, corrupt law enforcement, financial/money laundering services) are integral, typically compensated via bribes. - Farmers sell ~80% of production to processors, retain ~10% for self-consumption and ~10% for own processing/sale. Transgenic varieties yield higher profitability per hectare than beldiya due to productivity. - Margins jump dramatically upon entry into the Iberian Peninsula, indicating a relationship between seizure risk and markups at successive chain levels.

The analysis answers the core question by mapping the chain’s network structure, roles, and flows and quantifying value added and margins at each level. The results show that downstream actors—particularly wholesalers and retailers in Europe—capture the dominant share of value, shaping end prices and quality. Dealers’ coercive power establishes a supply-push dynamic, influencing upstream seed selection (shift to transgenic/hybrid varieties), product portfolio, and quality to meet market demands while managing risk. Information sharing across nodes underpins resilience, enabling rapid adaptation of routes and modes to evade enforcement. The high variable/low fixed cost structure supports flexibility but increases instability, contributing to long channels with many intermediaries. Price escalation downstream is driven less by pure logistics and more by risk premia and intermediary margins. The observed reluctance to raise prices, coupled with willingness to lower/alter quality under scarcity or heightened enforcement, connects operational risk to consumer-level outcomes and health risks. Findings align with literature on the limited effectiveness of targeting higher chain levels, the inelasticity of downstream demand, and the resilience of retail margins despite arrests, suggesting that enforcement at lower levels may have different impacts than upstream interdictions. Overall, the results illuminate how operations and risk management practices explain price formation and the persistence of the supply chain.

This study delineates the Moroccan–Europe hashish supply chain, quantifies value contributions and margins along its stages, and explains price formation and management practices under persistent disruption risk. It shows that prices multiply manyfold from production to retail, with large margins concentrated after entry into Europe, and that the chain’s resilience relies on information sharing, flexible logistics, and dealer-driven supply-push dynamics, including quality adjustments rather than price hikes. Practical implications include guidance for law enforcement and financial investigations, the need for alternative development in producing regions, and health communication about quality-related risks. Future research should: (i) formalize the hashish business model to evaluate strategies and actor value; (ii) analyze the role of information systems in channel resilience and omnichannel-like distribution strategies; (iii) assess strategic alternatives for legal channels’ competitiveness; (iv) examine how seizure risk and dealer concentration affect end prices and product quality amid growing European domestic cultivation; and (v) further test the linkage between enforcement intensity, price inelasticity, and quality shifts.

Research on clandestine markets faces opacity and informant reluctance. Snowball sampling limits randomness and may introduce dependence on initial contacts, affecting generalizability. Mid-chain income values and bribery-related costs are difficult to verify precisely. While multiple secondary sources were used to triangulate primary data, residual uncertainty remains in some operational and financial parameters.