They would have to subsidize it to undercut the Cartels. Naturally - that won’t happen - the State will tax it. Like cigarettes.
But faced with a choice of paying $15 for a (legal easy to get) joint or $5 for a (illegal easy to get) joint, what will people do?
No, they merely have to refrain from taxing it out the wazoo. Moonshine is a negligible part of the alcohol market despite no subsidies for legal alcohol.