My latest estimates of how drug legalization would affect government spending and tax revenue are here.  A quick summary:

The report estimates that legalizing drugs would save roughly $48.7 billion per year in government expenditure on enforcement of prohibition. $33.1 billion of this savings would accrue to state and local governments, while $15.6 billion would accrue to the federal government. Approximately $13.7 billion of the savings would results from legalization of marijuana, $22.3 billion from legalization of cocaine and heroin, and $12.8 from legalization of other drugs.

The report also estimates that drug legalization would yield tax revenue of $34.3 billion annually, assuming legal drugs are taxed at rates comparable to those on alcohol and tobacco. Approximately $6.4 billion of this revenue would result from legalization of marijuana, $23.9 billion from legalization of cocaine and heroin, and $4.0 billion from legalization of other drugs.

Two things to note:

The overall magnitudes are not huge; legalization would not materially affect the U.S. fiscal situation.  And only about one-third of the savings comes from marijuana, the only drug with any chance of being legalized in the near future.

The fact that legalization would reduce government expenditure and raise tax revenue is among the least significant arguments for legalization.  Far more important benefits are increased freedom for drugs users, reduced crime, improved public health, greater respect for civil liberties, and lower violence and corruption in source countries.

Aside: See here for a different proposal to legalize and tax "vice" (bottom paragraph).  Thanks to Bruce Barlett for the pointer.