http://en.wikipedia.org/wiki/Drug_policy_of_Portugal

History

In 2001, Portugal became the first European country to abolish all criminal penalties for personal drug possession. In addition, drug users were to be targeted with therapy rather than prison sentences.[6]
Regulation

Individuals found in possession of small quantities of drugs are issued summons. The drugs are confiscated, and the suspect is interviewed by a dissuasion commission including a civil servant, a psychiatrist, and an attorney.[7][8]
Drug trafficking remains illegal and is prosecuted.[7]
Results

A study by Glenn Greenwald [[commissioned by the libertarian Cato Institute) found that in the five years after the start of decriminalization, illegal drug use by teenagers had declined, the rate of HIV infections among drug users had dropped, deaths related to heroin and similar drugs had been cut by more than half, and the number of people seeking treatment for drug addiction had doubled, while usage in the EU continued to increase, including in states with "hard-line drug policies."[3]
Since Portugal's policy reform in 2001, the rates of overdoses and HIV cases have been reduced significantly.[9][10][11]