Ron Paul, a congressman and doctor who was the 1988 Libertarian presidential candidate, had great insight into the drug war. I first heard this approach from him.
Nearly all of the cost of illicit drugs is risk cost. People must be paid well to risk going to jail. Risk is proportional to volume of product in cubic inches, cubic feet, etc. This creates a strong economic pressure to increase the dollars per cubic inch value of illicit drugs. This is why illicit drugs generally evolve into more concentrated and toxic forms with the passage of time.
The opposite trend is seen with legal drugs. We see decaffeinated coffee, low nicotine cigarettes, non-alcoholic beer, etc. gaining an increasing market share. This is because people come to enjoy the taste and social process of using these drugs even in the absence of drug effects.
Imagine that caffeine were made illegal. At first coffee would be smuggled and brewed in secret. Then dealers and smugglers would realize that they could get more dollars for the same risk by handling caffeine instead of coffee. Addicts would develop ways of consuming the concentrated caffeine to avoid the risk of brewing coffee. Pushers would encourage caffeine addiction to add to their markets. After a while people would be smoking caffeine in pipes, snorting it up their noses, and shooting up liquid caffeine. We would be struggling to save our school children from the menace of crack caffeine.
Today, with legal caffeine, we have businesses offering free coffee in waiting rooms just to make addicts comfortable. We have caffeine candies sold in convenience stores to any child who wants them, but few do. We have thousands of square miles of coffee and tea plantations feeding a huge global market of millions of caffeine addicts with no more crime than the production of corn.
Caffeine is a powerful drug, ask any pharmacist. The only reason it is not a major source of crime, violence, and social disruption is that it is completely legal. The drugs that are destroying our society should be handled the same way we handle caffeine, nicotene and alcohol. I have seen a lot of people under the influence of many different drugs. The only ones who create problems for themselves or others are under the influence of alcohol, usually hard liquor. Alcohol is more harmful and disruptive than all the illicit drugs but we tried alcohol prohibition and decided we were better off without it. Prohibition makes drugs dangerous, makes crime pay, and makes the government tyrannical. It should be ended for the same reasons alcohol prohibition was ended.