They didn't exactly have a legal option to get what they craved. As soon as you criminalize something you relegate all of the 'fringe' to dealing with organized crime.
What they were mainly after was employment as jazzmen, though: IIRC (I'm not an expert) the main connection was originally the shadiness of many nightclub venues, especially during Prohibition.
When the adult population of a country craves something that is (potentially) bad for it then that's an education issue and a medical issue, not a criminal issue.
As the son of an alcoholic I've seen up close what alcohol can do to an individual, even so making it an illegal substance would just have jacked up the budget and risked run-ins with the law (more than there already were).
I don't smoke pot, don't drink alcohol, in general am a pretty boring person (especially when it comes to imbibing mind altering substances in company other than sweet tea) but I support those who do feel the need to do any or all of the above simply because society could not function if all these people were behind bars and every one of them has the reins of their lives firmly in their own hands. It's all about choices and mentality, making these things crimes is not helping anybody and simply drives the problems underground and creates a fertile ground for organized crime to flourish on.
What if it is the idea, to let criminals deal with criminals. It's a circular reasoning if then the organizdd crime is said to be bad because it supplies drugs, that are dangerous and should be controled. I mean, if crime was only about drugs, the user would support the drug supply, i.e. the support. To support the support doesn't sound very unethical. The matter that is supported is the problem.
Sure, there is worse crime that may use drugmoney, but it might and does use legally optained funds after laundry as well. You might argue that the drug problem itself wouldn't flourish any less, if it was legal. I agree with the educational and medical perspective mentioned, but the medical moral is to not self medicate and the educational that the law is always right.
I can't parse all that you're writing, but to answer those parts that I understand:
Organized crime steps in to supply a market simply because there is a lot of money to be made, that's all that it takes. Making a substance illegal drives up the price. If you made milk illegal tomorrow morning there would be illegal milk available at a substantial mark-up the day after and an underground distribution network would spring up overnight. It's simply economics.
Laundered criminal money is still a problem.
The 'drug problem' would definitely be less if all drugs were legal because it would allow those that are in need of help to apply for that help on a medical basis rather than to have to deal with these issues either on their own or through the justice system if and when they get caught.
The 'law is always right' is a funny one, no, the law isn't always right, it simply defines what is legal and what is not, emphatically NOT what is and isn't right, for that we have morals and ethics, not laws.
For example: slavery was never right, even though it was legal at some point.
Legality should follow morality. You argued that it is immoral to prohibit drugs, if that fosters an underground market, because that market is likely violent and otherwise criminal. I say, drug abuse leads to violent or otherwise illegal, or at least immoral behaviour so it's only right to put them users into one bag with hardened criminals. The only market directly fostered by criminalization is the drug market. There are problems like quality control and stigmatization, sure ...
