You should put whatever you want in your body as long as it brings no harm to me, and I should be able to do the same if I don't harm you.
There's nothing wrong with a currency being used for illegal transactions; that's its purpose. Until bitcoin, all illegal activity was done with fiat currencies, and no one lost sleep over it, nor did they lose trust in the currency for that reason.
The main issue with this train of thought is that you as an adult won't purposefully swallow or inject anything detrimental to your body unless it is intended to fight with something even more detrimental. And no one should tell you what to do and what not to do as you yourself claim. But it is not so with kids who don't yet fully understand the consequences of their actions and don't bear responsibility either.
Here's where the government steps in.
Yes agreed, that would be for adults and adults would be responsible for their kids. For kids, at least for me, and I grew up in Canada - as I child I wasn't informed about drugs as a kid. Instead, we were fear mongered that trying anything would turn you into a helpless heroin addict. Everything was negative about it rather than being informative. The problem with keeping drugs illegal is that it is much easier for kids to get a hold of, than something that is legal and regulated (like cigarettes or alcohol).
And for where the government steps in, they actually step in for all of society and prohibition of (some) drugs is for adults, regardless of the reason, and especially targeted to ethnic minorities (in North America). Many highly addictive drugs remain legal because big pharma has lobbied for it (oxycontin for example) which doctors prescribe. Then you can have a guy that didn't take care of his health, maybe smoked a pack of cigarettes a day with no physical activity that ends up with cancer, and is prescribed cannabis. You can have another healthy guy that smokes cannabis and goes straight to jail without harming anyone. I wouldn't agree with a law that would make these situations possible.
Most people are very misinformed about drugs unless you look to science, and very few people do - this thread would be a great example of that.