The criminal gangs could choose to undercut the state price. Or they could respond by selling more potent versions of the drugs addicts crave.
That's true and similar things are done with alcohol and nicotine today. But the shops accross the country are well stocked and sell tons of both. This suggest that the majority of the public understand the dangers of buying unknown products from street dealers. You're always going to find some who will take a chance but they are in the minority.
The state could keep the price so low it would be hard for the street dealer to sell lower. The dealer could sell more potent versions but they would probably have to be more expensive. Faced with that, most people would probably opt for the safer, cheaper, albeit less strong state version.
Next the reporter thinks legalization would boost other crime.
History suggests gangs tend to diversify. People-smuggling is already taking a grim toll among young women from eastern Europe. Legalising drugs would put rocket boosters under that repulsive trade in slave prostitutes.
The vast profits from the drug trade help fund the human traffic trade; one illegal trade is easier than the other. So, in fact, legalizing drugs could help cut down on human trafficing. There's no doubt that criminals will branch out if one trade is lost to them. I'm not convinced human trafficing is one of them.
Here's his conclusion.
Legalisation is not the catch-all solution proponents imagine, but there remains a possibility that it might dent the drugs trade more than endless efforts to catch other Mr Bigs who run operations more sophisticated than Gorman’s. It is a debate worth having, although proponents of legalisation might perhaps care to note that Dutch politicians who pioneered some of the most liberal drugs laws in Europe are now seeking to tighten them after discovering that liberalisation was leading to increased drug usage.
The reporter cites no statistics or gives any references for his claim, so it's hard to elvaluate it. But here's an anology I use.
Nicotine is the most addictive substance known to man and yet its consuption has been cut from 60% down to 25% all the while the drug has remained legal. How was this achieved? The medical hazards were well researched and published, nicotine ads were banished, nicotine was de-glorifed by TV and movies, negative effects of smoking ads were aired and there was an education campaign on the dangers of nicotine - nicotine became uncool. All of the money saved from law enforcement, court time and prison costs, could go into similar campaigns.
Add to all of this, the fact that legalization would see the vast majority of dealers disappear and drug money would no longer go to terrorists. While criminals and terrorists may "branch out" into other crimes, the police, courts and prisons would be free to devote their time to these more serious crimes. We'll all be better off this way.