Guess I never thought of it like that just assumed it was not passive. Thanks.
Well, it is not passive. By lifting the GND pin from the ground you are affecting the feedback circuit of the regulator. In fact, there are some circuits around which put a pot in the GND pin in order to adjust the voltage.
The only difference between the adjustable version of this regulator and the fixed voltage version is that the fixed version has an internal resistor in the GND pin. The adjustable doesn't have (and it calls the pin ADJUST instead).
Either get a regulator with the enable function or put the transistor in series with the input voltage instead.
Apropos, you have mentioned a laser diode - unless the diode has its own regulation circuit already (i.e. it is an integrated laser module and not a bare diode), this circuit will kill your diode in no time.
Laser diodes are similar to LEDs, they absolutely need constant current supplies and power feedback. The current must not exceed the maximum current even for a microsecond or the diode blows (or, more exactly - it will still dimly glow but won't lase anymore because the optical surfaces got damaged. Your expensive laser is now a crappy LED). Constant voltage supply will not work here because as the diode heats up, the current will change and you may exceed the limits.
Someone at work has managed to blow through several expensive IR laser modules for a touch screen because they were trying to power them from a constant voltage supply. The modules worked for a while - until they suddenly didn't anymore.
You may want to look here, especially if your laser is expensive:
https://www.repairfaq.org/sam/laserdps.htm#dpstoc