How many "legal" business are backed by and laundering money for illegal business?
Coffee, diamonds, cocoa are backed by slavery. Probably more, but those are well-known.
I think its very missleading to state all "illegal" money goes to terrorism or supporting other crime
Not
all "illegal" money goes to supporting terrorism. Consider the enviro-friendly hippy who grows weed and tomatoes. He uses money to pay for stuff he needs. People smoke his weed, and there is harmony.
Rereading my cited passage, it makes clear and perfect sense!
when you purchase a black market item, you may be supporting some other form of crime.
The problem is, it's hard to say where the end consumer's money goes. This is another opportunity cost: the cost of not knowing where your money ends up. This "cost" has a lower overall impact on the market than the cost of getting busted, though.
But some money does go to supporting other crime.
Among legal business, there is a lot more information. Some examples are "fair trade" cocoa/coffee, DeBeers

, CA certified organic. There's a lot more reliable information that is readily available. You're unlikely to get such info from an illegal source.
Its the people that make this country great, not the government.
Then why are we loosing freedoms? Such great people wouldn't allow this to happen, would they?
Who doesn't care about steroids being illegal? They who don't use steroids. It's a similar mentality to sin-taxes and to a lesser extent "It's not in my backyard" mentality. In some regards, it parallels the scape-goat mentality.
Criminalizing behavior practiced marginally and by few is accepted. Making racist/anti-gay remarks could get you in a lot of trouble, socially. I guess it's about social thought patterns and the tendency to accept the norm. These things take time to change, I think.
So where I see the root of the problem is in social mentality. Government is a symptom, not a cause.
I've never studied sociology, though I think now that I should. Any book recommendations?