Some countries have experimented with state supply of heroin to addicts - it's actually a really cheap policy and seems to work well: http://en.wikipedia.org/wiki/Heroin-assisted_treatment

Obviously, the taxpayer is footing the bill for this, but total spending reduces (through the reduction in drug related crime).

This is already being done in Portugal. I don't think the new addicts you're imagining would materialize. If you want to do meth, it isn't hard. Legalizing it doesn't make it that much easier. You get addicted to meth because it complements your personality, not because you have access to it.

First, I don't think we'd see a surge of new addiction like you expect. Second, we are already footing the bill for drug addiction, plus the violence it causes, plus the extra policing, plus legal costs, plus incarceration costs. Even with a surge in addiction, we'd still come out far ahead of the current situation.

And yet cigarette use is in decline.