I should have placed an "or" between the two, as I meant them to be separate solutions. In defense of scenario 1, any shift in the ratio of those who do drugs to those who don't, would be statistically insignificant. Those who would do drugs, more than likely, are already doing them anyway, regardless of legality. Legalization would simply take funding from the violent cartels and street gangs, as well as provide us tax dollars. This will never happen though, because of the vast number of drug related law enforcement jobs that would be lost, as well as the lack of social acceptance. Scenario 2, will never occur either, as I stated in my original post, due to social / political fallout. The demand part of the market will NEVER be eliminated, so until our government grows some cajones, this will continue to be a problem.
Swoop
The money saved by not funding the obviously ineffectual "War on drugs" could be added to the tax revenue generated by legal sales to cut your taxes, or at least put toward lowering the deficit. Legalization would lower overhead, transportation and risk costs which would lower the sale price which in turn would lower the profit margin .
Third, legalization would give competing retailers a forum to settle disputes in court rather than through killings and drive by's.
Those who argue otherwise are simply indoctrinated to believe lies that ignore the history of the turn of the century when these items were perfectly legal. Remember, Coca-cola was originally formulated with Cola nuts, and Cocaine.