I was in the room as the World Economic Forum hosted The Drugs Dilemma, the Forum’s first-ever debate on drug policy, at Davos this year. The panelists presented the situation: hundreds of thousands killed in drug-related violence, historically unparalleled incarceration and increasing drug use worldwide.

Kofi Annan explained: “Drugs are bad and have destroyed many lives, but wrong governmental policies have destroyed many more.” He and Kenneth Roth, Human Rights Watch executive director, urged leaders to admit that criminalization causes more harm than good and that the world needs a fresh approach to drug policy. They’re right, but not only for that reason.

As the world moved online and the Internet matured, a new front in the war on drugs has emerged. Having built a home in the deep Web – the vast, hidden realm that houses the net’s overwhelming majority – a growing portion of the illegal drug trade now exploits technologies and trends that governments, militaries and activists themselves rely on.

Tor, for instance, is an anonymizing deep Web browser that enables whistle-blowing, censorship evasion and independent journalism, particularly in regions under oppression of free speech. Originally conceived by the US Navy, Tor was later used to disseminate ideas and coordinate movements during the Arab Spring. Then there are the various cryptocurrencies, digital mediums of exchange that, alongside Tor, created the ideal conditions for the trade of illicit goods and services.

The most recognized example of such a marketplace is the Silk Road, which entered mainstream media after the FBI seized it in October 2013. In just two and a half years, the Silk Road transformed from an experiment into a powerful business, facilitating sales between 60,000 customers and vendors per day and generating US$ 1.2 billion in revenue, all on a peer-to-peer (P2P) basis.

Closure of the site did not curtail access to online drug markets. It took the FBI two and a half years to pursue the Silk Road, yet once the site was closed, other sites with even stronger security were up and running within days.

On the panel, President Santos of Colombia described this “balloon effect” in geographic terms: when Colombia reduced its cocaine production by 60%, production simply moved to neighbouring countries. Roth of Human Rights Watch explained: “The way to stop the balloon from shifting is to puncture the balloon. You puncture it by destroying the market, and you do that by decriminalizing.”

Without decriminalization, drug markets will continue to exploit emerging technologies, a reality that leaders must recognize. According to a study published in the peer-reviewed journal Addiction, the Silk Road enabled 18% of drug users in the US to get high, with similar figures for Europe and Australia. As anonymity-protecting technologies and currencies become common, the number of online drugs purchases is likely to rise.

We can compare other pioneering industries for evidence. Amazon and eBay – once intimidating for the average Joe – are today universally accepted. More important yet is what happens when virtual markets transition from P2P to business-to-consumer (B2C) models. When eBay made this shift it became a US$ 14 billion company and enabled countless powerful businesses to forge new distribution channels worldwide.

If cartels overtake the black markets and integrate B2C distribution, it would lead to grave consequences. Twice, the Silk Road’s top administrator used the site to contact presumed hitmen (actually undercover FBI agents). Imagine what gangs could do if running such markets. One way to prevent finding out is eliminating a key source of income for organized crime by decriminalizing drugs.

After 40 years, we still cannot grain ground on the drug war in the physical world, so what strategy could succeed on a virtual battlefield? Of course, governments could deploy greater law enforcement online. However, applying enforcement principals from the physical world in new digital realms is not only impractical – it’s impossible. There are no physics in software; perceived limits are constantly surpassed and paradigms reinvented.

In the US, taxpayer dollars fund Tor (via the State Department) and serve to dismantle it (via the NSA). As we quarrel among ourselves, we risk allowing cartels to establish themselves in the new digital terrain. We risk losing the modern building blocks of democracy, because they happen to be useful for illicit purposes, too.

The humanitarian reasons offered by the panel of The Drugs Dilemma may be the ultimate cause to reconsider current policy, but I believe the urgency has been understated. As digital B2C drug distribution becomes cartel-to-user, the humanitarian case may grow even stronger.

Watch The Drugs Dilemma: Consequences for Society, Politics and Business

Author: Terence Steinberg is Curator of Minneapolis Hub of the Global Shapers Community. Follow on twitter @Steinberg_T

Image: A dog stands near packs of marijuana confiscated in Cali REUTERS/Jaime Saldarriaga