Your argument seems to rely on the assumption that the black market doesn’t grow when the legal market is eliminated, which every attempt to regulate things in history contradicts.
It only assumes that the black market doesn't grow to the same size as a legal open market. I don't think history disagrees with that. You can look at the cannabis business as just one example. How many VCs were plowing big money into cannabis operations before legalization was on the menu? How does that compare with after legalization?