Why do drug gangs develop sophisticated authority functions in some places and not in others? Comparing two Brazilian cities, Rio de Janeiro and Recife, this article argues that territorially embedded informal authority structures from earlier times, coupled with sporadic and extremely violent policing, encouraged drug gangs in Rio de Janeiro to develop authoritative functions and residents to acquiesce to them. In Recife, by contrast, drug gangs inherited diffuse and territorially independent authority structures and confronted a much less lethally violent police force. Consequently, they failed to find common cause with local residents, and their organizational development was truncated.