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Billions have been spent in the decades-long war on drugs, and yet the international trade in illegal drugs is thriving. Drug use has actually gone up and narcotrafficking has made some Latin American countries like Honduras and Mexico among the most violent places on Earth.

Now the tiny nation of Uruguay is challenging the value of waging war against all drugs. In that country, it's been legal to smoke one's own homegrown marijuana. And recently, the president proposed of putting the state in charge of producing and selling marijuana. Annie Murphy has more.

ANNIE MURPHY, BYLINE: South of Brazil, tucked next to Argentina, sits Uruguay, a country of just three million people. The capital, Montevideo, looks like a throwback to the 1940's or '50's and looks out over the Atlantic. Today, there's a big storm. And like everyone in the city, Adrian Gonzaga and Felipe Castro are taking the day off. They have a business together and usually work outside installing fiber optic cables. But since the weather's bad, they're having tea with friends, eating toast with strawberry jam and smoking a joint.

(LAUGHTER)

UNIDENTIFIED MAN: (Foreign language spoken)

MURPHY: They've known each other since childhood. When they were teenagers, they tried pot together, which they got by trading tickets to a school dance. They didn't feel the effects and didn't smoke again for a few years. When they did take it up, Gonzaga says they decided to grow it themselves.

ADRIAN GONZAGA: (Through Translator) There's a difference between marijuanas. The marijuana that you grow yourself isn't the same as the stuff you buy.

MURPHY: He says that what you buy is low quality. And when you go through a dealer you become part of the illegal drug trade. Like many countries in the region, Uruguay's seen an increase in violent, drug-related crime and the DEA has announced it's reopening an office here.

Uruguayan officials say they consider marijuana a milder drug than coke or heroin. They believe that if pot were legal they could spend more time cracking down on hard drugs. Julio Calzada is the secretary general of the National Committee on Drugs. He says the closest thing they have to a model is Holland.

JULIO CALZADA: (Through translator) The thing is the Dutch system has this cynical, or hypocritical element, because the state controls the places you go to consume, but it looks the other way when it comes to how those places get marijuana. And it's really important to worry about that, because those people are still buying on the black market.

MURPHY: Calzada says the key is regulating the market. And he believes the easiest way to do that is to have the state in on all aspects of it, growing and selling to registered users. But congressman Luis Lacalle Pou favors a model where people grow their own pot and money never changes hands.

LUIS LACALLE POU: I don't think we have to start running when we don't know how to walk. Cultivation, for me, is starting to walk.

MURPHY: Adrian Gonzaga agrees.

GONZAGA: (Foreign language spoken)

MURPHY: He shows me the pot he harvested recently, which he keeps in these spotless glass jars. In a lot of ways, Gonzaga is like any proud small producer. He could almost be showing off a special cheese or some ripe tomatoes at a farmer's market.

GONZAGA: (Through Translator) It's different when you know your plants, when it's marijuana you've had since it was a seed. This one's fresher, lighter, it has a little more citrus, too.

MURPHY: Whether citizens will be buying from the state or growing their own is still being decided. But two things are clear: Uruguay wants to try something radically different. And no one here seems worried about what the U.S. might think about it. Drug official Julio Calzada.

CALZADA: (Through Translator) The reality now is that American hegemony is being questioned more and more, economically and culturally. And that means new openings for certain debates.

MURPHY: For NPR News, I'm Annie Murphy in Montevideo.

(SOUNDBITE OF MUSIC)

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