WASHINGTON ( CNN ) -- Poppy production in Afghanistan is at record levels and is threatening the government and security there , the U.S. State Department said in a report on worldwide drug sales and production . In a photo from last year , villagers tend to opium poppies in southern Afghanistan . `` Although President [ Hamid ] Karzai has strongly attacked narco-trafficking as the greatest threat to Afghanistan , one-third of the Afghan economy remains opium-based , '' the International Narcotics Control Strategy Report says . `` The government at all levels must be held accountable to deter and eradicate poppy cultivation , remove and prosecute corrupt officials . '' Poppy production soared last year in southern provinces controlled by insurgents , Assistant Secretary of State David Johnson told reporters . `` There is incontrovertible evidence that the Taliban use drug trafficking proceeds to fund insurgent activities , '' he said . He said the United Nations is predicting that opium production in Afghanistan will fall slightly this year , after recent years of double-digit growth . The two-volume report contains more than 1,100 pages with details of drug sales and production . Twenty nations , including some major U.S. allies , were designated as major drug-producing or drug-transit countries . Burma ( also known as Myanmar ) and Venezuela were singled out as having `` failed demonstrably '' to live up to their obligations under anti-drug agreements . Also on the list are Afghanistan , the Bahamas , Bolivia , Brazil , Colombia , Dominican Republic , Ecuador , Guatemala , Haiti , India , Jamaica , Laos , Mexico , Nigeria , Pakistan , Panama , Paraguay and Peru . Canada was criticized in the report for an increasingly sophisticated marijuana industry . `` We remain concerned that the production of high-potency indoor grown marijuana for export to the United States continues to thrive in Canada in part because growers do not consistently face strict legal punishment , '' the report said . Journalists were briefed on the report by Johnson , assistant secretary of state for international narcotics and law enforcement affairs . E-mail to a friend .
Canada brands 20 countries , including Afghanistan , as drug - free or drug - transit nations . Canada criticized for not cracking down on indoor marijuana production . State Department report says one third of Afghan GDP is drug - based . Burma and Venezuela have not lived up to anti - drug laws , report says .