When you can make a profit off something and put man against man that's capitalism.
There are people profiting off the labor of others in a centralized economic system as well.
In a free market economy, however, most economic transactions are voluntary and based on a mutual distribution of some form of value. My employer attempts (that is, success is not assured) to profit from my labor and I profit from either their capital or their profit.
That's not to say that all economic transactions are pleasurable or even sufficient at all times for all people, but it's been clearly demonstrated that both labor and ownership more often get what they want in a market economy when they are free to mutually determine the value of products, services, and labor, as opposed to a centralized economy where this is decided by an outside body.
Of course today's capitalism not what it's supposed to be by what's his name (last name Smith) who came up with the ideology. If you told most people his ideals for capitalism he'd be called a commie today.
Many contributors to classical liberal economic and social ideas had some anti-economic establishment or possibly leftist notions in them, including John Stuart Mill and Thomas Paine. But that did not make them advocates for broad-based centralized economic planning as a self-described Communist would want. They were not against private property.
And gangs are private entities and make money off it and become powerful. Take away their money making machine and you'll take away some of their power.
While it's true that you will theoretically take away some of their power, your original assertion was that the drug trade is a form of capitalism and that to end the war on drugs would harm capitalism. In fact, it will assist in the creation of new ways to put capital to use for starting legal private enterprises.
The producers involved in the drug trade are capitalists in a sense, but the industry itself is not equivalent to a free market in other products. Entry to the industry is not free.
The government attempts to prevent all people from operating in that business and the only people who are "allowed" are largely criminal enterprises that have the power to force their way through the system. The exception being the states and localities that have reformed cannabis laws.
If cigarettes were illegal and R.J. Reynolds and Philip Morris had to engage in turf war on the street to determine their market share, that would not be a free market either. Alternative tobacco companies would be forced out by the state and by the criminal enterprises.
While there are regulatory burdens for tobacco producing companies that would require some means to enter the market, there is free entry, and thus, there are alternative choices for consumers as to which products they choose, and alternatives for producers (i.e. capitalists) where they wish to commit their capital.