As far as I know, the term started being used because drug trafficking organizations used to operate just like the dictionary definition of the word “cartel”. They don’t really operate that way anymore, and to understand why I need to explain a bit of the history behind it. Keep in mind I’m not a researcher, just someone interested in the history of the Mexican-American drug war and this is my take on things.
Back in the seventies and eighties, drug baron Miguel Ángel Félix Gallardo was the head of the Guadalajara Cartel. Under the auspices of the Mexican government, Félix Gallardo kept the peace by dividing México into territories (or plazas) that each of the then existing organizations could use as they saw fit. They operated pretty much as a true dictionary cartel. That’s why there was relatively little drug violence in México in those times. Full-out turf wars like the ones we see now between rival organizations were practically unheard of, and while there could be some violence, disagreements were usually negotiated between the concerned parties.
Unfortunately for them they made the stupid decision to kill undercover DEA agent Enrique Camarena in 1985. This brought the full weight of the American government on the Guadalajara Cartel and the agreements between the cartel and Mexican law enforcement could no longer be sustained. Félix Gallardo was captured, and the Guadalajara Cartel disbanded around 1989. The different organizations that had until then cooperated under Félix Gallardo (Sinaloa, Tijuana, Beltrán-Leyva, Gulf, Juárez, etc) started to operate autonomously.
So, they no longer operate as a true cartel in the dictionary sense of the word. The reason people (and the organizations themselves) keep on using the term is simply because it stuck. As you note, it doesn’t really make sense to call modern drug trafficking organizations “cartels”, which is why American law enforcement agencies tend to use terms like Drug Trafficking Organization (DTO), Transnational Criminal Organization (TCO), among others.