Small-Denomination Paper Currency as the Focus of Supply-Reduction Drug Policy

• Author: Eric Hains,Thomas J. Bernard
• Published date: 01 March 2001
• DOI: 10.1177/0887403401012001001
• Date: 01 March 2001
• Subject Matter: Journal Article

CRIMINAL JUSTICE POLICY REVIEW / March 2001Bernard, Hains / SUPPLY-REDUCTION DRUG POLICY

Small-Denomination Paper

Currency as the Focus of

Supply-Reduction Drug Policy

Thomas J. Bernard

Pennsylvania State University

Eric Hains

Pennsylvania State University

Efforts to impede the supply of illegaldrugs and the laundering of illegal drug money

have been expensive and largelyineffective. The authors propose that supply-reduction

drug policy concentrate on impeding the reintroductioninto the banking system of the

largevolumes of small-denomination paper currency (primarily $1, $5, $10, and $20

bills) generated in street-level drug sales. Such highly focused policy might better

achieve the supply-reduction goals of the “war on drugs” advocates and the harm-

reduction goals of drug legalization advocates.

Government policies that respond to illegal drugs are often described either

as supply reduction or demand reduction (Moore, 1983). Demand-reduction

policies—prevention and treatment—are less controversial but also less

important as measured by the proportion of governmental resources they

consume. Supply-reduction policies dominate the government’s efforts

against illegal drugs, and those same policies generate considerable contro-

versy.Critics argue that the supply-reduction policies of the current “war on

drugs” generate more harm than the illegal drugs themselves and that these

policies should be replaced by “harm-reduction” policies that include the

legalization of at least some drugs. Other critics take less extreme positions,

suggesting a range of alternatives such as targeted supply-reduction efforts

(e.g., crack cocaine as opposed to marijuana) or de facto or partial legaliza-

tion (e.g., marijuana as opposed to crack cocaine). Still others favor shifting

resources from enforcement to treatment, arguing that treatment is less

expensiveand more effective (e.g., “A Better Approach to Drug Offenders,”

2000; Nieves, 2000). Despite this spectrum of alternatives, there is still

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© 2001 Sage Publications, Inc.

considerable polarization in the debate between supporters and critics of the

current war on drugs, and the debate itself seems largely deadlocked.

Our Basic Proposal

We believe that the current drug policy debate would benefit from some

creative thinking that breaks out of the current spectrum of alternatives. As

an example of such a policy,we propose an alternate supply-reduction pol-

icy that focuses on the large quantities of small-denomination paper cur-

rency generated in street-leveldrug transactions. Drug traffickers face a par-

ticular problem in disposing of this bulky paper currency. The Treasury

Department, for example, estimates that each kilo of cocaine generates

three kilos of paper currency, primarily in the form of $1, $5, $10, and $20

bills. Robinson (1996) comments that “Drug traffickers don’t count their

money, they weigh it” (p. 217). One million dollars in $20 bills weighs

about 110 lbs., whereas the same amount in $1 bills weighs more than a ton.

Large-scale drug operations regularly produce and must dispose of such

quantities of bills. There are numerous methods to reintroduce this bulky

paper currency into the legitimate financial system, but all of them are

time-consuming and labor intensive, and all of them expose the traffickers

to considerable risk. For example, recently a police officerand his wife were

arrested for driving from New York to Miami on at least six occasions with

duffel bags stuffedwith small-denomination cash to be turned over to repre-

sentatives of a Colombia drug operation (Feuer, 2000). Rather than bother

with $1 bills, drug traffickers sometimes sell them in quantities for 50 cents

each or simply burn them (Sabbag, 1997).

Our argument is that this is the point at which the drug supply chain is

most accessible and most vulnerable, and we suggest that governmental

resources be heavily focused on this one single point rather than spread

across the entire drug supply chain. Consistent with goals of the defenders

of the present war on drugs, we argue that this focused, concentrated policy

would be more effective than current supply-reduction policies at reducing

the supply of illegal drugs. Consistent with the goals of the critics of the war

on drugs, we argue that this policy would be more effective than legalization

in reducing the harm that results from using illegal drugs themselves as well

as the harm that results from policies of the current war on drugs.

We recognize that this proposal may be too radical for policy makers to

consider seriously.However, our overall goal is to suggest that there may be

creative and innovative alternative drug policies besides those arrayed on

the spectrum between continuing the present war on drugs or moving

4 CRIMINAL JUSTICE POLICY REVIEW / March 2001