The product they seized was not a drug, does not get you high, and is legal in EVERY state, including this one.  This was a great waste of time and money.  
As for your prohibitionist fairytales, does it bother you that what you are suggesting would only increase the power of the Cartels?  Just like alcohol prohibition last century, all that would is increase crime, decrease respect for the law, and give unbelievable power to criminal organizations.