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That is the “legal, but with regulations, make it not bother anyone else” part.
Illegal simply means that if you have/consume said substance, there would be legal consequences (fines, imprisonment).
These restrictions and rules of use don’t make the drug itself illegal, they just make it illegal to use in certain scenarios.
Yeah, sure, but it’s obviously a matter of degree. Ketamine is illegal to use in certain scenarios and also a front-line medical treatment. Chocolate, OTOH, has absolutely no restrictions that I’m aware of. I admit that I’m just nitpicking language choice here, though, and there was no need for me to say anything