The debate as to whether to criminalize or decriminalize the use of mind-altering, health-threatening drugs turns on an assessment of the costs attending each policy. When drugs are illegal, the bill consists of law enforcement costs (crime, corruption, and extensive and intrusive policing), welfare costs (poorer health, lost wages, higher unemployment benefits, more aid to families with dependent children, and various treatment and prevention programs), and the moral costs (debased and degraded people). When the drug is legal, the bill will consist primarily of the welfare costs and moral costs. In determining which bill will be higher, the crucial variable is the number of people using drugs under the two scenarios. Assuming the continued illegality of certain drugs the most cost-effective control strategy must focus on both drug supply and demand. Assessments of strategies for reducing the drug supply suggest that intervention in local markets is likely to be more effective than international supply interdiction. Demand reduction should encompass the modification of subjective states conducive to drug use (prevention and treatment) and the structuring of objective conditions to deter drug use (make drugs more difficult to find and buy and increase the chance of arrest). 28 references