For what it's worth, I was at least able to confirm that Lexington Farm was a real place. I copied this from http://dcpi.ncjrs.org/docs/Coerced%20Treatment%20Article%20-%20Satel.doc:

Narcotics Farms

As early as 1919, when governments began reining in physician prescribing of opiates, the Narcotics Unit of the Treasury Department urged Congress to set up a series of federal narcotics farms where users could be confined and treated (Inciardi, in Leukefeld and Tims, eds., 1988). It was only in 1935, though, in response to the problem of aging addicts, that the U.S. Public Health Service opened a facility in Lexington, Kentucky. Three years later, another federal farm was established in Fort Worth, Texas. These facilities received both criminal violators and addicts who enrolled in treatment voluntarily.

The Lexington facility was a hospital-prison-sanitarium in which medical and moral approaches to treatment converged. It was located, as Jonnes has described it,


on 1,100 acres of rolling bluegrass. . . an Art Deco campus-like affair with barred windows. In its early years, Lexington was literally a working farm operated by patient-inmates with chicken hatcheries, slaughter houses, four large dairy barns, a green house and a utility barn. When not farming, inmates could work in sewing, printing or wood working shops (Jonnes, 1996, p. 111-12).

The facilities did not, however, succeed in providing a wholesome and salutary rural respite. According to Jonnes, the "effect of going to KY [as patient-inmates called the Lexington farm] for most addicts was to expand their network of addict pals." The doctors were dedicated but frustrated, often noting that their patients would likely relapse upon returning to the inner cities from which they came.