Making it free keeps people from needing to break everyone's windows to get their next fix. It also allows them to use their money on food/rent/etc so they are less likely to wind up homeless. It also means that they congregate in one area, so it's easier to provide resources if they decide to seek help.
It also prevents, you know, fentanyl from getting into the supply, having people get more addicted to a stronger drug.
There’s also the reality that people who don’t want to go through the shame and trouble of finding a person who could give them a solid hookup and so never try heroin in the first place.
Drugs are partly an issue of convenience. An 18-21 year old who isn’t thinking much about the future and figures “why not” is more likely to try something if it’s free and “safe” due to being distributed by someone reputable than they are to try a grimy baggy that could have anything inside.
When people know they can get a good, pure LSD hookup, they’re more likely to try it. People are more concerned about trying random research chemicals because the effects are unknown—that keeps quite a few people from ever trying LSD or psychedelics as a whole. If people could drop by a volunteer-operated free distribution center, I’m pretty sure we’d have loads more people trying LSD. (Not that I’m saying LSD is deadly like heroin, but the fear of danger is keeping people away from it)
It also prevents, you know, fentanyl from getting into the supply, having people get more addicted to a stronger drug.