In general I agree with the legalization and taxation and more money being spent on treatment of addicitons.
But one thing I still question is the notion that if you take away the drug business that the crime and violence stops along with it.
Perhaps the addict can buy cheaper and does not need to steal to support a habit. But the drug dealers themselves? Criminals are people who want to take the risks and make the big bucks. If it's not drugs, most will probably make a switch to some other form of illegal trade. You might eliminate the small-time dealers who make enough to support their personal habit, but the ones who are willing to commit real crimes are probably not going to go get an office job and live happily ever after. If they were willing to do that, they'd have paid for an education and gone the risk-free route as soon as they could afford to. Perhaps by legalizing the drug trade these people will start in (as stated) the tax-free smuggling trade. Or maybe they'll start holding up people or breaking into homes, increasing violence.
When you have people who are so economically depressed and their only option is to take the big risk, even if it means becoming a criminal, they will do it. You're just eliminating one way to take the risk without eliminating the base of the problem. That is a poor class of people without a lot of other options.
And granted, some of this problem will move to other countries. What of the South American people who make a living in the drug trade? What does it do to their overall economy? Legal drugs may allow them a new cash crop helping them. But I think more money is pumped into their economy with the illegal trade than a legal one could provide. Now you've got a bunch of new people pissed off at the US and ready to become the next wave of terrorists - and a lot closer to us too.