The Bureau of Alcohol, Tobacco, Firearms and Explosives told The Arizona Republic that most of the ammunition used by the cartels comes from the United States.
"Fifty rounds might cost you 15 bucks here," said Jose Wall, senior trafficking agent for the agency in Phoenix. "But sell them in Mexico, I'll bet you can make $45."
Hundreds of thousands of rounds of ammunition are purchased each year from online retailers, big-box stores and at gun shows in Arizona and other Southwest border states and then are smuggled across the border.
Over the past five years, seizures of ammunition at Arizona's six ports of entry along the Mexican border have risen steeply, from 760 rounds in fiscal 2007 to 95,416 in the fiscal year that ended Sept. 30.
That reflects both a stepped-up effort by U.S. Customs and Border Protection to check southbound vehicles for guns and bullets and a rising demand for ammo by drug cartels.
One factor that enables the smuggling is the relative ease with which bullets can be bought in the United States. There are few restrictions on the number of rounds someone can buy.
In Mexico, ammunition is strictly regulated and possession of even a single illegal round can lead to prison.
Laws in the U.S. that once treated ammunition sales as rigorously as gun sales were repealed in 1986 and haven't been re-enacted.
Under current federal law, buyers must be U.S. citizens and have no felony convictions. Anyone over 18 can buy rifle ammunition, and anyone over 21 can buy handgun ammo.
But the decision to sell 10, 100 or even 10,000 rounds of ammunition is left up to the individual retailer. Sellers don't have to record the transaction or report the buyer to authorities under federal law.
Gun dealers say there is no reason to implement new restrictions. They say most buyers have legitimate reasons for buying ammunition in bulk, including firearms instructors and sports enthusiasts taking advantage of discount prices.
"I don't see anything wrong with it," said Don Gallardo, manager of Shooter's World in Phoenix. "Should we restrict someone from buying 10 cases of beer versus one case of beer?"
Federal authorities say the lack of restrictions has turned Arizona into an ammunition warehouse for Mexican drug lords, who only have to find ways to get it across the border.
Joe Agosttini, assistant port director in Nogales, said U.S. Customs and Border Protection agents began concentrating on guns and ammunition about two years ago, leading to a rise in the number of seizures.
He said before 2009, agents relied on a method called "pulse and surge," which means they ran searches for a limited number of hours at various entry points.
Now, in Nogales, searches are done 24 hours a day, seven days a week at the Dennis DeConcini Port of Entry and 16 hours a day at the Mariposa Port of Entry.