The last few lines of the article Kevin linked below explain the problem with Amsterdam’s policies: drugs are not, in fact, legal.
The area has been a centre of prostitution for hundreds of years.
Prostitution was legalised in the Netherlands in 2000, formalising a long-standing tolerance.
Marijuana is technically illegal in the Netherlands, but prosecutors will not press charges for possession of small amounts. Coffee shops are able to sell it openly.
The same is true of heroin and etc: police generally don’t go after users too hard but continue to vigorously pursue interdiction and attack the flow of money.  The paradigm simply does not work and it’s easy to see why.
Consider if rather than repealing Prohibition, America had instead only avoided prosecuting individual drinkers, and allowed some taverns to serve otherwise illegal liquor products. The entire production side of the alcohol industry would have remained an operation of organized crime, and all the corruption and violence necessarily attendant in a scheme that revokes an individual’s right to the mechanisms of enforcement of his property rights and safety in a consensual transaction would have continued unabated. And, unregulated, such enterprises would have often produced a product with toxic, even lethal ingredients, and those injured would have had no recourse to the producer (who could have no legitimate standing in the eyes of the law, a prerequisite for any sort of civil liability).
The only people such a scheme benefits are the illegal drug producers, who best prosper by being the most violent and ruthless of their competitors and often have little notion of regular commercial enterprise. Put Taliban-supported opium growers or Colombian narco-terrorists up against farmers in Iowa or Nebraska and they would lose every time – but we’ve granted them a monopoly, so they don’t have to compete with honest folk. And so such evil men are swimming in money, in order that we might sanctimoniously pat ourselves on the back and declare we’re helping people by using the violent force of the state to dictate what competent adults can and cannot put in their bodies of their own free will.
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How about responding to my post in the comments? I’m sick of new posts that are simply comments on earlier posts.
Seemed a bit lengthy for a comment, esp. with the cite.  Hell, it’s longer than both your posts put together. Also, it’s more of a general exploration of why Prohibition fails than a direct response to assertions in your post.
Consider if rather than repealing Prohibition, America had instead only avoided prosecuting individual drinkers, and allowed some taverns to serve otherwise illegal liquor products.
That’s pretty much what happened during the height of Prohibition. Purchase and personal use were never banned, and enforcement against retail distribution was spotty at best. The only serious enforcement of Prohibition was against large-scale production and smuggling.
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