Sorry, but I just can't agree with this. The laws are there, the government says they still apply and have zero interest in any sort of repeal or reduction of illegality. Every attempt to push forward a more sensible policy say on Cannabis, in particular, is shot down. Eg the recent response on [1].
The police might be turning a blind eye (in some regions more so than others) to some possession but it is still illegal and you still run the risk of someone deciding to charge or fine you. If you're caught in possession multiple times you will end up in some sort of trouble, however minimal [2]. Actually getting hold of the these drugs involves interacting with actual criminals and I doubt they're submitting tax returns on the profits.
If anything this unclear muddy state is in my opinion much worse - it's a complete mess purporting to be the moral highground.
[1] https://petition.parliament.uk/petitions/200021
[2] https://www.met.police.uk/globalassets/foi-media/policies/de...
Plus, as long as drug trade remains illegal, you have secondary problems such as bribery of officials, gang violence.
AFAIK, we do not have anything like asset seizure in Germany. And the prison system over here is much less privatized / industrialized, so is not exactly a profit center.
A well-staffed, well-trained law enforcement apparatus is fairly expensive, too.
And consider that without proper treatment, widespread drug use incurs costs that do not show up on government budgets as such. Drug-related crime (theft, burglaries, etc.) comes to mind.