If its legalized, it can still generate vasts sums of tax revenue. Look at how much tax money tobacco and alcohol bring in.
The issue you mentioned regarding taxation applies to both tobacco and alcohol as well - you can grow your own tobacco and make your own alcohol. Many people who smoke marijuana may have no interest in growing their own - the same way many tobacco smokers don't grow their own. Although, the point could be made that marijuana is probably a much easier plant to grow.
Furthermore, legalization does not necessarily allow people to grow for the purpose of selling. For example, it is legal to make alcohol for personal consumption but illegal to sell it.
Within a few years, though, they'd probably catch on that they can accomplish the same means via more traditional trusts and regulatory capture. They'll have to, before the market price drops through the floor, killing off their revenues.
Not throwing advocacy one way or another, just an observation on the cartels' likely follow-up response.