If you dry up a source of funding, you reduce teh damage they can do.
Maybe minimally, but you also have to factor in the damage, or effects that come from legalizing it.
When you legalize something, that means businesses will focus on it's production. It will be out there for cheaper, and will negate the illegal side of things, but it will also be everywhere... every drug store, corner market, liquor store, etc. Instead of being smuggled into the country bit by bit, it will be trucked in. Instead of people buying it for large amounts of their check, they will be able to buy a lot more for fairly cheap. Usage will increase dramatically. As someone pointed out earlier in the thread, kids will sneak it from their parents stash, or have someone else buy it for them.
If you are a user, and this is what you want, more drug for your dollar I can see why you want this to happen.
Illegal drugs will still be out there, we will just have more of the hard drugs out there. We would be changing the field to step one being coke, or crack or something instead of pot. Pot would then be lumped in with cigarettes and alcohol.
I just don't think legalizing it is going to solve the issues people think they will.
It's also not a one to one comparison to say it worked in Portugal.
Portugal is in a different situation, under different laws, with different citizens.
There may be some similarities, but it is definitely not one to one.