This paper presents a cost‐benefit analysis of the returns to the public from reductions in recidivism associated with a graduated sanctioning program for drug felony defendants. Estimates of program costs for operating a court‐based drug testing and sanctioning program are presented with estimates of the value of potential benefits of averted criminal incidents and crime control. The results, based on the evaluation of the Superior Court Drug Intervention Program in Washington, D.C., found that the program saved two dollars in averted crime‐related costs for every dollar spent on the program. This paper presents explicit description of the methods used to derive these results so that they may be applied to the evaluation of other experimental/quasi‐experimental programs.