In 1996, major changes occurred in the illicit drug trade, many of which resulted from aggressive drug law enforcement. Despite certain positive changes, drug gangs in Mexico continued to transport cocaine to the United States and increased their involvement in U.S. domestic cocaine distribution. These gangs also continued to produce heroin, marijuana, and methamphetamines for the U.S. market. In major urban areas and in many smaller cities and towns as well, drug distribution in the United States was accompanied by homicides and drug-related violence. Colombian drug cartels continued to dominate all aspects of the cocaine trade, from acquisition of cocaine base to cocaine production and drug transport to wholesale distribution in the United States. These organizations were serviced by a complex infrastructure that transported cocaine by land, sea, and air conveyances. Potential cocaine production was estimated to be 760 metric tons in 1996. Operation Breakthrough, a coca cultivation and cocaine base processing research project managed by the Drug Enforcement Administration, estimated actual cocaine production of 700 metric tons in 1996, down from 715 metric tons in 1995. The amount of cocaine seized worldwide exceeded 200 metric tons in 1996. Colombian drug cartels and drug trafficking organizations in Mexico cocaine distribution in the United States. The price of cocaine remained relatively stable, ranging from $10,500 to $36,000 per kilogram. Heroin was supplied to the United States from Asian and Middle Eastern countries, Mexico, and South America. Virtually all heroin produced in Mexico was destined exclusively for distribution in the United States. The U.S. heroin market, however, was dominated by Southeast Asian and South American heroin. Heroin from Southeast Asia ranged in price from $95,000 to $210,000 per kilogram, while heroin from South America ranged in price from $85,000 to $185,000. Expansion of the methamphetamine trade in 1996 was driven primarily by the extensive involvement of Mexican criminal organizations. Marijuana was the most widely abused and readily available illicit drug in the United States, and Mexico was the major foreign source of marijuana. Marijuana prices varied in relation to potency, availability, and source of origin. Commercial grade marijuana sold for between $200 and $4,000 a pound during the first 9 months of 1996. The report discusses the diversion of legitimately manufactured controlled substances and drug money laundering. Tables and figures