You won't find the statistics on state economic reports, but make no mistake: Drugs are as much a part of Florida's business landscape as theme parks and citrus groves. Most of the 124 tons of cocaine shipped through the Caribbean in 1997 landed in Florida, for distribution throughout the Eastern seaboard. From Miami, high-level trafficking employees coordinate the smuggling of drugs into the U.S., negotiate sales and direct the laundering of the profits. Central Florida has become a major distribution hub and test market for methamphetamine and especially for heroin, which killed more central Floridians last year than homicide.
It's difficult to put hard numbers on the drug trade (drug traffickers don't exactly file reports with the Labor Department), but University of Miami business professor Robert Grosse estimates that cocaine traffickers in Florida, including wholesalers and low-level dealers, earn in the neighborhood of $5.4 billion a year. While much of that money is repatriated to Colombia, Grosse puts annual direct investment and spending in Florida by cocaine minions at about $2.7 billion, including everything from basic living expenses to real estate and capital investment. Florida-grown marijuana, using conservative economic models, adds another billion dollars a year to the state's economy.
Even though law enforcement confiscates substantial amounts of drugs -- 69,346 pounds of cocaine and 67,855 pounds of marijuana from Florida's ports alone last year -- those seizures amount to little more than a cost of doing business to drug traders. "We've always been outresourced," Mazzilli says.
Evolution
As the drug trade has sewn itself into a big -- if clandestine -- part of the state's economic fabric, it has taken on an increasingly button-down character that bears little resemblance to the violent and glamorous image it projected in the 1970s. Then, the famed alliance of cocaine trafficking networks known as the Medellin cartel used simple innovations like transporting coke in bulk via private airplane (as opposed to using couriers to smuggle small amounts at a time) to become the Microsoft of the drug trade. Beginning in 1977 with offices in the Ocean Pavilion apartments in Miami Beach, the "company" eventually snared an estimated 80% market share and employed a reported 8,000 in the U.S. Top executives were rewarded accordingly: Pablo Escobar and Jorge Luis Ochoa were catapulted onto Forbes magazine's wealthiest lists; dealers, who could earn as much as $1 million per shipment, flaunted their wealth with Lamborghinis, Rolexes and lavish parties. Those also were the days of wide-open violence, such as a 1979 midday machine gun shootout at Dadeland Mall that wounded two innocent bystanders.
By the late '80s, however, law enforcement had caught up with the Medellin cartel, and by 1995 all its top leaders were either dead or jailed. But as the Medellin group faded in importance, the bosses of a rival cocaine conglomerate watched and took notes. Brothers Gilberto and Miguel Rodriguez-Orejuela, one a banker, one an attorney, figured out that flashy living and indiscriminate violence were bad for business. Their Cali cartel, named for the city in southwestern Colombia, developed a more sophisticated -- and much more corporate -- culture. The Rodriguez-Orejuelas organized their operation into divisions: distribution, finance, legal affairs. They disguised their cocaine in cargo containers bringing legitimate goods -- from concrete posts to appliances to broccoli -- into the Port of Miami, a method still preferred today. They used a computer to store intelligence on their rivals. They hired top accountants to control the finances.
The man identified as the chief financial officer for the Rodriguez-Orejuelas testified in a 1998 money laundering trial that the cartel moved an average of five tons of cocaine per month into the U.S., netting about $48.6 million on sales of $67.5 million, for a 72% profit margin -- results that would have landed the Cali cartel 35th on last year's Florida Trend Top 250 public companies list, bigger than companies like Stein Mart and Ivax Corp.
Pendulum
The Cali bosses' business skills included the ability to respond nimbly to changing market conditions -- even to the point of rewiring entire product distribution routes when pressure from law enforcement intensified or contracts with existing suppliers got too expensive. Notice that headlines announcing big cocaine seizures in south Florida became almost nonexistent in the mid 1990s? There's a reason: After the 1992 arrest of a significant "regional vice president" in North Miami Beach, the organization concluded that it was time to shift operations elsewhere. Miami would remain home to the top echelon of cartel employees, but the cartel began a long-term contract with Mexican drug traffickers to fly the bulk of Colombian cocaine into Mexico and truck it across the U.S. border. The DEA estimates that in 1995 just 30% of seized cocaine came through the Caribbean; the rest came through Mexico.
The pendulum is now swinging back toward south Florida, however. The cartel became disenchanted with the Mexican transportation suppliers because the Mexicans got greedy, demanding one kilo of cocaine for every kilo shipped. Worse, paying the Mexicans in cocaine gave them product to sell through their own distribution channels -- the Colombians realized they had created a competitor. Roughly three years ago, Miami-based cocaine executives (cops call them "cell leaders") decided to move distribution back to familiar ground. The result: Cocaine seizures in Florida are way up this year, with most of the drugs traveling via Caribbean nations, particularly Bimini, Haiti, the Dominican Republic and Puerto Rico. Last year, about 47% of cocaine coming into the U.S. arrived through the Caribbean, compared with 30% four years ago. According to the DEA, south Florida is re-emerging as the major drug destination it was in the 1980s.
The Rodriguez-Orejuelas, meanwhile, are now in jail in Colombia -- although some believe they continue to coordinate their massive drug business from behind bars. But their legacy of quieter, gentler drug dealing endures. Today's traffickers drive family sedans and eschew mini-mansions for nice but nondescript suburban homes. "They're living more in Weston than Coconut Grove," a DEA spokeswoman observes. Ileana Cabeza, recently found guilty of helping to sell up to 20 kilograms of cocaine, is a Miami dentist.
Diversification
While dealing with logistics and relationships with distributors, cartel leaders also have been contending with a troubling threat: declining demand for their core product. The Office of National Drug Control Policy reports that 6.4% of Americans use illegal drugs, down from 14.1% in 1979. Cocaine has borne the brunt of the decline, with the price of a kilo falling from a peak of around $65,000 wholesale to between $14,000 and $18,000 today.
The cartel's response? Expand the product line, which explains the dramatic resurgence of heroin in the U.S., particularly in Florida. Mazzilli, who worked south Florida as an agent between 1977 and 1986, recalls chatting during that period with a Colombian drug dealer who was formulating a plan to grow poppies in South America. The R&D plan included importing lab technicians and chemists from the Far East to teach the Colombians how to process the poppies into heroin.
More than a decade later, "It's hit us," Mazzilli says. Colombian drug traffickers are now using central Florida, primarily Orange and Osceola counties, as a major distribution hub and test market for their heroin.
Why Orlando? Its connection with Puerto Rico, historically a major trans-shipment point for cocaine and, now, heroin. Thanks to a Puerto Rican population in central Florida of about 125,000 and a proliferation of direct San Juan-Orlando flights, Colombian traffickers can blend in.
Couriers fly into Orlando International Airport, carrying condoms full of heroin in their bellies or a kilo sewed in between two pairs of underwear. More often, the traffickers stick to their preferred method of hiding drugs in massive cargo containers that move by the thousands into south Florida ports. Local dealers then drive the stuff north. For example, in the case of alleged dealer Rafael Ramirez, the DEA says, the heroin came into Miami where it was taken to a hotel to await pickup by one of Ramirez's couriers for transport to Orlando.
Why heroin? Simple economics: Wholesale prices for heroin fall in the $85,000 per kilo range, six times that of cocaine. Both to undercut other suppliers and create a market, the Colombians discount the drug in Orlando, which leads to cheaper retail prices for consumers: $20 for a bag compared to $40 and $50 in other markets. Colombians also are throwing in a few kilos of heroin with their cocaine shipments at no extra cost and selling heroin on consignment to encourage demand. It's an effective strategy. Police say heroin use in Orange and Osceola counties has reached epidemic proportions. Last year, more people died of heroin overdose than by homicide.
Orlando-based heroin is starting to turn up in other parts of the Southeast U.S., indicating that central Florida is becoming the Miami of heroin. Between heroin in Orlando and Mexican methamphetamine in Polk County, central Florida is now considered such a major drug center that the federal drug control office last year designated it one of 20 High Intensity Drug Trafficking Areas (HITDA), making area law enforcement eligible for increased funding and staffing. (South Florida became one of the first HIDTAs in 1990.)
Over the next few years, expect heroin to take on an increasingly high profile in Florida as Colombian heroin traffickers expand their market share. But cocaine, despite the decrease in demand, isn't going away. Huge shipments continue to pour into the Caribbean, en route to Florida. Mazzilli says that Colombian producers of coca, which is processed into cocaine powder, plan to nearly double their production in the next year or two, to about 300 tons. In late March, the DEA and the U.S. Coast Guard seized 400 kilos of cocaine in the Caribbean sea, where airplanes drop buckets of the stuff onto high speed power boats.
Florida isn't likely to see a return of the drug boom times of the 1970s. But as long as demand exists, Florida will remain a part of the production and distribution system of those who supply illegal drugs. And the drug business will continue to be a significant part of this state's economic landscape.
Business Matters
Although their product is illegal, bosses in the illicit drug business have many of the same concerns as any other corporate executive.
Cash Flow
Probably the No. 1 problem for drug traffickers is handling the cash from drug sales. In the drug business, there's no such thing as a non-cash transaction, and most purchases are made with small bills. Drug smugglers are constantly inventing new ways to store and ships bundles of 5s, 10s and 20s without anyone taking notice. It's no easy task. Consider: In twenties, $1 million weighs 110 pounds. Before drug traffickers can enjoy their ill-gotten gains, they have to find a way to get them into legitimate bank accounts without arousing notice from either banks or law enforcement. South Florida's role as a major financial and money laundering center continues to plague police and policymakers (see story, page 70).
Transportation
Getting the product where it needs to go, undetected, requires different approaches. Dealers in methamphetamine, or speed, generally truck the stuff cross-country from California or Texas across Interstate 10 and down I-75 into Polk County. They also use simpler methods, such as overnight mail. For $15 or less, a pound of powder can be delivered overnight to Bartow. (The U.S. Postal Service, not Federal Express, is preferred because the sheer volume of USPS mail means less scrutiny.) That $15 investment pays off big. A pound of meth that fetches between $5,000 and $7,000 in the Southwest can bring $16,000 in central Florida -- that's the premium on 3,000 miles and the risk of being caught.
Security
Before marijuana grower William Nock was arrested, someone broke into one of his grow houses in St. Augustine and stole 23 plants, costing him at least $18,000 in lost profits. On the other hand, losing product to law enforcement seizure is an accepted cost of doing business. To prevent one seizure from ruining an entire organization, large-scale drug dealers use several different people for the same task, and none of those people know the identities of the others. That way, one arrest won't affect the rest of the operation.
Legal
The bills can be extraordinary. The Cali cartel paid for lawyers for their associates, mostly to ensure they didn't cooperate with the police. Visits to a Texas trafficker in the early '90s cost $75,000; representing another in Miami, $350,000.