Cultivating, processing & producing drugs shouldn't be legal in the first place. Governments create cartels by making it illegal. In Mexico, cartels also run local some governments, states & also control many activities such as cattle sales, used auto parts, metals, meat, fish, flowers, etc... if you dare to buy from an unauthorized supplier or sell to someone other than them, you are beaten, extorted, or killed. On top of that they also kidnap, steal and require monthly payments to let businesses operate.

Terrorism is state funded and preventing laundering won't do much.

Laundering helps people in countries like Mexico, where a large part of the tax revenue goes into the hands of few. Why fund a state that is run by gangsters?