That actually a very smart move. By legalizing it all, cartels won't have any sources of income because superprofits would disappear.
Ummm I think the narcos are going to take control of the market anyway, either legal or illegally... In fact, by legalizing drugs, they are giving the cartels the option to "come clear" and to declare and have their money clean almost instantly.
I doubt they will lose any profit, but, how knows? Maybe legalization is the way to the peace in Mexico. And yes, we absolutely need some peace.