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Research Questions

  1. What is the scope and the size of Internet-facilitated drugs trade?
  2. What is the role of the Netherlands in Internet-facilitated drugs trade?
  3. What potential avenues for law enforcement for detection and intervention exist?

The potential role of the Internet in facilitating drugs trade first gained mass attention with the rise and fall of Silk Road; the first major online market place for illegal goods on the hidden web. After Silk Road was taken down by the FBI in October 2013, it was only a matter of weeks before copycats filled the void.

Today, there are around 50 so-called cryptomarkets and vendor shops where anonymous sellers and buyers find each other to trade illegal drugs, new psychoactive substances, prescription drugs and other goods and services. But it is not just the obscure parts of the Internet where drugs are on offer. There are numerous web shops, easily found by search engines, which offer new psychoactive substances, often labelled as 'research chemicals'.

The Netherlands occupies a crucial position in European illicit drug markets. Data from the European Monitoring Centre for Drugs and Drug Addiction suggested it is the main producer of MDMA, ecstasy and herbal cannabis and a key distribution hub for cannabis resin and cocaine. Whether the pivotal role of the Netherlands also extends online, has yet been unclear.

The Netherlands Ministry of Security and Justice commissioned RAND Europe to provide a firmer evidence base to this phenomenon and, in particular, the role of the Netherlands. This report analyses the size and scope of Internet-facilitated drugs trade both on the so-called clear and hidden web, paying special attention to the Netherlands, and delineates potential avenues for law enforcement for detection and intervention.

Key Findings

Monthly revenues from drugs on cryptomarkets are in the double-digit million dollars

Of all products and services on offer, this study found that 57 per cent of listings across the eight analysed cryptomarkets offered drugs. The results indicate that these cryptomarkets generated a total monthly revenue of $14.2m (€12.6m) in January 2016, $12.0m (€10.5m) when prescription drugs and alcohol and tobacco are excluded (lower-boundary estimate). An upper-boundary estimate for monthly drug revenues via visible listings on all cryptomarkets would be $25.0m (€22.1m) and $21.1m (€18.5m) when prescription drugs and alcohol and tobacco are excluded. Cannabis, stimulants and ecstasy were responsible for 70 per cent of all revenues on the analysed cryptomarkets. No information was identified on revenues on the clear net. The values are based on EUR/USD exchange rate of 1.14 as of April 2016.

Cryptomarkets are not just an 'eBay for Drugs'

Large 'wholesale' level transactions (those greater than $1,000) are important for cryptomarkets, generating nearly one quarter of overall revenue both in September 2013 and in January 2016. Based on these findings it is likely that many cryptomarket customers are drug dealers sourcing stock intended for offline distribution.

Most revenues are generated by vendors who indicate they are operating from Anglo-Saxon countries or Western Europe

Most vendors appeared to be operating from the United States (890), followed by the United Kingdom (338), and Germany (225). Vendors indicating they ship from the United States generated 36% per cent of all drug revenues within our sample. Other Anglo-Saxon (Canada and the United Kingdom) as well as Western European countries (the Netherlands, Germany, Spain, France) also generate substantial proportions of revenues.

Revenues from vendors operating from the Netherlands are by far the largest on a per capita basis

Revenues to vendors reporting to operate from the Netherlands on cryptomarkets accounted for 8 per cent of total drug revenues. On a per capita basis, revenues to vendors operating from the Netherlands were 2.4 times higher than those from the United Kingdom and 4.5 higher than those from the United States.

Vendors and buyers on online markets seem to have similar characteristics

Traditional investigation techniques applied in the drug chain, postal detection and interception, online detection and online disruption are potential law enforcement strategies in the detection and intervention of Internet-facilitated drugs trade. In addition, international cooperation and coordination (and the accompanying legal challenges), capacity and resources and (technical) capabilities could play a facilitating role in deploying the different strategies to tackle Internet-facilitated drugs trade.

There are four broad categories of modes of detection and intervention

Traditional investigation techniques applied in the drug chain, postal detection and interception, online detection and online disruption are potential law enforcement strategies in the detection and intervention of Internet-facilitated drugs trade. In addition, international cooperation and coordination (and the accompanying legal challenges), capacity and resources and (technical) capabilities could play a facilitating role in deploying the different strategies to tackle Internet-facilitated drugs trade.

Table of Contents

  • Chapter One

    Introduction

  • Chapter Two

    Methodology

  • Chapter Three

    An introduction to Internet-facilitated drugs trade

  • Chapter Four

    The size and shape of Internet-facilitated drugs trade

  • Chapter Five

    Shipping routes

  • Chapter Six

    Actors involved in Internet-facilitated drugs trade

  • Chapter Seven

    Detection and intervention of Internet-facilitated drugs trade

  • Chapter Eight

    Conclusions

  • Appendix A

    Drug categories

  • Appendix B

    Search protocol

  • Appendix C

    Overview of studies that collected quantitative information on online drug markets

  • Appendix D

    Bibliography of identified literature

  • Appendix E

    List of interviewees

  • Appendix F

    Interview topic guide

The research described in this report was prepared for the Netherlands Ministry of Security and Justice, Research and Documentation Centre (Wetenschappelijk Onderzoek- en Documentatiecentrum, WODC) and conducted by RAND Europe.

This report is part of the RAND Corporation research report series. RAND reports present research findings and objective analysis that address the challenges facing the public and private sectors. All RAND reports undergo rigorous peer review to ensure high standards for research quality and objectivity.

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