I'm not convinced the government or its agents would become a new cartel, because most of these drugs are simple to produce: it's prohibition that keeps them expensive. A drug like marijuana could support a profitable industry (given the number of potential users) but I don't see why the government has to be directly involved in producing it. It only needs to tax and regulate.

I wonder if the use of drugs like meth that are too destructive in themselves to legalize would increase if softer drugs were legalized. I take it as given that the legalization of soft drugs would inevitably increase their use, who knows by how much. Would marijuana still be a gateway drug in this scenario?