Of course it was known long before then, and was famously in Coca Cola and was part of druggists' medical supplies. But it wasn't cocaine the party drug and stuff on which criminal empires and fortunes were built until the 1970s and 1980s - why?
The short answer is decreased legal supply and demand, but it’s more interesting than most market trends.
Cocaine went from being a popular pharmaceutical and additive to being seen as having marginal medicinal benefits supplanted by other anesthetics and vasoconstrictors. It was demonized as a drug used by poor Blacks in manual labor and in recreation, its legal uses were banned by 1922, and US supplies dropped thereafter. Some with money, power, or access who could afford it continued to use it, but illicit demand was not high enough (yet) to motivate smugglers from Cuba or Colombia to send planes to Miami or introduce us to their little friends. Access to cocaine decreased in the teens and twenties, the public’s use of cocaine decreased without the legal supply and, in 1953, California’s drug warriors noted cocaine was not much of a problem that year (1).
What changed by 1970? In part, it was that the past demonization and the racist moral panic of the “Negro cocaine fiend” had been forgotten (2). Cocaine was still being used from 1920-1970, but scarcity fuels perceptions and it gradually became associated with the celebrities and elites who could and did partake. That was primarily because they were among the only users in the public eye. Hollywood celebrity culture gained more attention from the 1920s to the 1960s as the American film industry gained sound and entered its golden age, and there was increasing coverage of celebrity lifestyles, of which cocaine featured in lurid tales of debauchery and even murder as early as the 1920s (3)(4).
In the 1960s, cocaine presented an alternative drug culture of success and power in contrast to the cultures forming around cannabis and psychedelics. Opiates, by contrast, were heavily demonized by this point. In the nineteenth century, elites were depicted lounging with opium pipes (until that pastime was outlawed to protect the populace from the vices of the “heathen Chinee”) (5). Hip elites were now going to be snorting cocaine. Of course, they always had been, and some had not even stopped using opium. What really matters here is public perception and the media.
At this point, black market supply increased to meet demand and you have the cocaine boom of the 1970s-1980s. Cocaine again becomes increasingly associated with poor Black criminals, a moral panic ensues over crack, and the cycle repeats itself.
Regarding the market trend, cocaine prices are hard to trace, but a (suspect) 1973 Cornell Law Review price estimates a range in the equivalent of about $125 a gram to $800 a gram (adjusted to 2022 dollars) (6). The DEA did not even begin to compile statistics on cocaine prices until the 1980s but David F. Musto claims the price of cocaine was “much higher” after WW1, which coincides with the Harrison Act (7). Musto outlines a rise in prices and a decrease demand during and after the early years of cocaine prohibition, whereas the cocaine boom that began around 1970 saw prices thereafter drop with increasing supply. Ultimately, cocaine was expensive and in limited supply until Colombian bootleggers increased US supply, and they did so in the 1970s in part because popular culture, class perceptions, and racist stereotypes about cocaine had shifted in the US.
Gerald T. McLaughlin, Cocaine : The History and Regulation of a Dangerous Drug, 58 Cornell L. Rev. 537 (1973) http://scholarship.law.cornell.edu/clr/vol58/iss3/2
Edward Huntington Williams, MD, “Negro Cocaine Fiends: New Southern Menace,” New York Times, February 8, 1914. https://www.druglibrary.org/schaffer/history/negro_cocaine_fiends.htm
Jill Jonnes. Hep-cats, Narcs, and Pipe Dreams: A History of America’s Romance with Illegal Drugs. Johns Hopkins, 1999.
Ex parte Yung Jon, 28 F. 308 (D.Or. 1886) https://law.resource.org/pub/us/case/reporter/F/0028/0028.f.0308.pdf
McLaughlin.
David F. Musto, “Illicit Price of Cocaine in Two Eras: 1908-14 and 1982-89,” Pharmacy in History, Vol. 33, No. 1 (1991), 3-10. University of Wisconsin Press.