The Billion-Dollar Innovation Threat

Cartels are among the most deeply violent organizations in the world. In early 2025, the U.S. designated eight cartels as foreign terrorist organizations or FTOs. The designation appears driven by an intent to build greater investigatory and prosecutorial tools around mitigation of violent cartel activity in the U.S. While some continue to debate the implications of the designation, the new classification merits further study.

We do anticipate that with the new FTO designation, the eight cartels will be a key focus of the U.S. government and will therefore be treated as FTOs. This may signal a U.S. shift from a defensively minded posture to one more offensively minded with increased effort against these entities both in and outside of the U.S. Second, by treating cartels as FTOs, research suggests that cartels will begin to adopt more behaviors similar to FTOs. We expect to see cartel counter attacks that could mirror the tactics and targets of more traditional FTOs such as the Islamic State, the Houthis, and al-Qaida. There is a history of counterattack responses from cartels such as the 2015 shooting attack on a Mexican army helicopter by the Jalisco New Generation cartel or the 2019 coordinated attacks that overcame Mexican security forces when the son of the Sinaloa kingpin was captured.

Accurately assessing revenue for any criminal organization is difficult, as many assets are hidden from public and government view. Yet some rough comparisons are possible. At its 2014 peak, the Islamic State produced a notable $1 billion annually through various illicit activities. Today, their strength is reduced — about $10 million to $30 million, estimated. In contrast, the recently designated FTO, Sinaloa cartel, produces approximately $3 billion (with the upper-bound estimate of $39 billion) annually. A 2014 study suggested that cartels earned more than $25 billion from the drug market alone, and a 2011 study suggested annual revenues of $35 - $45 billion collectively. As such, rough estimates suggest that cartels have, conservatively, double the resources of traditional FTOs, with some estimates reaching more than five times the amount.

What is the role of resources in innovation? Given limited direct research on the role of resources for innovation in the terrorism space, we can draw on analogous phenomena from the field of organizational psychology. In the organizational innovation literature, for example, there is a longstanding myth of the garage startup — that companies like HP, YouTube, and Apple emerged from Spartan beginnings. The reality, however, is that most companies start within companies (i.e., not in garages) and those that do not often have a significant financial backer or are extensions of existing businesses. Yet this garage startup myth persists as an illustration of the false belief that innovation is resource independent and simply the result of grit, commitment, and motivation. Back-of-napkin idea sketches can be cheap, but building, making, and deploying a novel idea is not. The research here is clear: Resources matter when it comes to bringing an idea to life.

Cartels have resources. A lot of resources. See the breakdown below.

Traditional FTOs

The Islamic State: $1 billion (2014 peak) $10-30 million (presently); al-Qaida: $2-20 million (upper-end estimates includes all al-Qaida affiliates), Boko Haram: $5-10 million, according to a 2014 news report.

Notable outliers given their state-sponsored linkages

Houthis: $2-3 billion (2023); Hezbollah: $700 million (2019)

Recently designated FTO cartels

Sinaloa: $3-39 billion (2025); Jalisco New Generation: $8-12 billion (2018); Gulf Cartel: $100-300 million (at its peak around $10 billion); Los Zetas (splinter group designated is now Cartel del Noreste): $200–500 million (2018); Mara Salvatrucha (MS-13): $30 million (2017); (others that are designated as FTOs do not have annual revenue estimates).

Cartels have already shown what their resources can do when it comes to innovation. They have pioneered the use of submersibles, been leaders in drone use for criminal activity, advanced engineering with tunnels, been leaders in synthetic drugs, made advancements in criminal cryptocurrency, built and designed advanced narco tanks, and led on cutting edge surveillance tactics. The shift in focus, however, will be redirecting established innovation capacity not on distribution and management of their criminal enterprises, but on protecting their assets in the U.S. through violent action akin to more traditional FTOs. Most of the cartel innovation has been focused on facilitating their criminal enterprises, which may mean they are easier to anticipate and ultimately disrupt. As they are increasingly treated as FTOs, cartels’ innovative skills and resources, will be turned toward protecting their profit margins via more malevolent ends.

Think of it this way: Sinaloa is Apple, Netflix and Waymo. The Islamic State? Blockbuster, Kodak, and Yahoo. The U.S. and broader homeland security enterprise must shift from anticipating stopping less sophisticated approaches like sweat-soaked underwear bombs to facing customized, high tech drones. We must be prepared for the malevolent innovation of a well-resourced, motivated, and embedded adversary. (more failures because of a lack of resources) these groups will have fewer misses.

As the U.S. prepares to take on cartels with increased focus, it is imperative that we are open eyed to the novelty of the tactics, techniques and procedures that are likely with this collective, dispersed, and dynamically aligned adversary. Cartels are innovative. They are heavily resourced, and they have sizable criminal enterprises to protect though any means necessary.

In short, they are likely the most formidable terrorist organizations the U.S. government’s defense and security apparatus have ever faced.

To have a hope of disrupting these well-resourced and demonstrably creative threat actors, it may not be enough to simply apply the instruments remnant from the war on terror —even though the USG still uses the most powerful military and border security resources in the modern world. If these newly designated FTOs have relative resources far superior to those of our lesser adversaries of the past, it follows that we too should increase our investment in this fight at a rate relative to what we spent to degrade lesser terrorist organizations. With the new opportunities afforded from these new designations also comes greater responsibility to restore our own sense of ingenuity as a disruptive innovator against these malevolently innovative adversaries.

Sam Hunter is the senior scientist and director of academic research for the National Counterterrorism Innovation, Technology, and Education Center (NCITE), a Department of Homeland Security academic center of excellence based at the University of Nebraska at Omaha.

Gina Ligon is the director of the National Counterterrorism Innovation, Technology, and Education Center (NCITE), a Department of Homeland Security academic center of excellence based at the University of Nebraska at Omaha.