The problem at the Party level is that practically made it their ONLY issue. And I admit, the legalization rationale does sound ridiculous standing on it’s own, until you quantify it within an overall movement toward smaller, less intrusive government, and the elimination of the welfare state as a whole.
The Libertarian Party has failed to craft that message as part of the broader move toward smaller government. Purists are only good at picking one issue and running with it...they typically don’t have the mental depth to make it part of a broader strategy, nor are they adept at effectively communicating that strategy. And the Libertarian Party has been controlled by rather unrealistic purists for some time now, since the early 80’s.
The Libertarian Party has failed to craft that message as part of the broader move toward smaller government.
That's because the LP is trying to sell easy, because older libertarians have had to face worse than you guys. Compared to the smearing they used to face, "LIBERALtarian" is pretty mild. Remember when Gore Vidal called Bill Buckley a crypto-Nazi? Older libertarians faced that kind of smear too. They had to become inured to being taunted as "right-wing extremists."
So, when the hippies showed a little sympathy to libertarianism, it's no surprise that the libertarians jumped right in. An issue like drug legalization makes libertarians look permissive - the opposite of the 'authoritarians' they were smeared as.