Your world can't exist. Crime goes hand in hand with all those activities, because they appeal to our basest nature. For the sake of space, I'll just address the heroin aspect. People addicted to heroin become unable to function without being high, and lose the strength they need to deal with life outside of dope. Therefore they can no longer stay gainfully employed, and can't supply themselves with heroin. So they steal what others have in order to get a fix. If you arrest them for their crimes (we'll assume the judicial system supports rehabilitation of criminals), the rest of society has to pay for their room and board while they get cleaned up from their heroin habit, which infringes on our freedom to spend our money as we choose. For that matter, rehabilitating the heroin user deprives the heroin distributor of income. Can't have the government regulate heroin either -- rights would necessarily be infringed.
For all the "realistic"-sounding trimmings on your arguments, they spring from the juvenile fantasies of someone who just doesn't like being told what to do.
But you're so damned intelligent. I hope you're using that brain for something more than utopian rants.