Drug Policy

Drug prohibition doesn't seem to work very well with many people dying across the world in demand supply places. But there are also problems if the place legalising becomes the object of drug tourism or migration. There is also the issue that opioids are incredibly addictive.

There would certainly be losers, and they wouldn’t be compensated in a Hicks-Kaldor sense, but social welfare would almost surely be higher according to most social welfare functions.

the issue is whether increased use of cannabis would increase the demand for harder drugs.

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Medical risks for some of cannabis are still much disputed. Economic benefits of decriminalisation of just this substance seem fairly small.

Although I have my doubts about the "measurability" of welfare gain, but in my opinion one should be open for a change, try "legalization" out for a certain period, say 5 years, and then evaluate the effects - both in terms of benefits and social costs.

There are good economic arguments in favor of legalization & regulation. But a key question are the effects on use & health of youth and adolescents. For use, mixed evidence. For health, evidence is still developing. Hence, I am uncertain. See some sources below.
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In the Netherlands coffee shops sell cannabis. However, strictly speaking it is illegal to do. The Dutch government tolerates it provided they do not sell hard drugs, engage in tax evasion etcetera. So it is allowed provided they behave.

Regulation is always imperfect