There is lots of evidence supporting needle exchanges as good for harm reduction. See Scotland, Netherlands, and many other EU countries.
Another one to watch is Oregon, where they did the decriminalization bit, but I think without the shift in funding to social services. Haven’t dug much here. (I think “reduce policing, increase social services” is the most sympathetic interpretation of what the moderate Democrats were thinking when they initially supported the “defund the police” slogan, which is now associated with more radical policies that are toxic to the center.)
There is a risk of “no true Scotsman” in the following point, but this is really an extremely radical policy proposal, at least it looked so until a couple years ago; there aren’t actually good examples end-to-end. So I think we need to employ epistemic humility and do local iterative experiments to prove it out (the advantage of the federal model in the US is a federal decriminalization would result in 50 natural experiments as states passed their own laws.) I don’t want to concede too much uncertainty though, the harms of criminalization are objectively very high, so you’d need to measure very high costs from the proposed new policy which I’m very skeptical that you’d see.
This point seems plausible, are there any sources that might prove it?
Also your point about racial discrimination might be a good utilitarian argument for it's better to let those racially discriminated against free alongside some folks who were also upto other crimes... The replies have definitely given me more food for thought.