Seized ... A helicopter removes marijuana from national forest in Humboldt County, California. Photo: Washington Post

ARCATA, California: Stiff competition from thousands of small-scale marijuana farmers in the US threatens the bottom line for powerful Mexican drug organisations in a way that decades of arrests and seizures have not, police and pot growers say.

Illicit pot production in the US has been increasing steadily for decades. But recent changes in state laws that allow the use and cultivation of marijuana for medical purposes are giving US growers a competitive advantage, challenging the traditional dominance of the Mexican traffickers.

Almost all of the marijuana consumed in the multibillion-dollar US market once came from Mexico or Colombia. Now as much as half is produced domestically, often by small-scale operators who painstakingly tend greenhouses and indoor gardens to produce the more potent, and expensive, product that consumers now demand, authorities and marijuana dealers on both sides of the border say.

The shifting economics of the marijuana trade have broad implications for Mexico's war against the drug cartels, suggesting that market forces, as much as law enforcement, can extract a heavy price from criminal organisations that have used the spectacular profits generated by pot sales to fuel the violence and corruption that plague Mexico.

While the trafficking of cocaine, heroin and methamphetamine is the main focus of US law enforcement, marijuana has long provided most of the revenue for Mexican drug cartels. More than 60 per cent of the cartels' revenue - $US8.6 billion out of $US13.8 billion in 2006 - came from US marijuana sales, the White House Office of National Drug Control Policy says.

Now, to stay competitive, Mexican traffickers are improving their product and streamlining delivery. Well-organised Mexican cartels have also moved increasingly to cultivate marijuana on public land in the US. This gives them direct access to US markets, avoids the risk of seizure at the border and reduces transport costs.