The report, called Taking Drugs Seriously and produced by the think tank Demos, said that the Misuse of Drugs Act, which focuses on prohibiting drugs and is 40 years old, is no longer fit for purpose.
There are now 600 drugs covered by the act and the numbers are set to increase "drastically", according to the report.
Latest research has found that 40 new substances had emerged by the end of 2010, which was a new record. In the previous year, 24 new synthetic psychoactive substances were identified.
The report says that instead of prohibiting drugs, laws should be brought in with a focus on consumer protection. It goes on to say that a harmful substances act should be brought in over time that also covers alcohol and tobacco.
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