if all drugs were legalised in America, the pharmaceuticals industry would dominate the market with existing infrastructure to create superior product. that, and the upper management of said companies are already entrenched in the government.
so pharmaceutical companies have superior product, pre-existing infrastructure making for lower costs and pre-existing sales channels - what chance do the cartels have?
regardless, 'the cartels' aren't a congruent group - they tend to hate each other as much as they hate the military groups trying to stop them, which prevents any one of them from gaining a major foothold over the others.