Alan McQuillan told the BBC the current attitude to drugs was "creating a cash cow for organised crime, especially in relation to cannabis".
He said police needed to focus on paramilitaries as the source of the drugs problem in Northern Ireland.
The former policeman was taking part in a BBC Talkback discussion about drug dealing in Northern Ireland.
"I think there is real scope for de-criminalising cannabis," he said. "The time has come to consider it."
Mr McQuillan said the focus needed to be on teaching parents and children about the reality of the drugs trade.
"We need to invest in education, to be aware that often the people who are dealing drugs are corrupted young people who are paying for a habit by dealing to other children," he said.
Former Ulster Unionist MLA Adrian Cochrane-Watson told a local newspaper on Wednesday he would "break the legs" of any drug dealers he caught.
He was speaking after a family emergency in which a young relative became unwell after smoking cannabis.
Speaking in the Radio Ulster discussion on Wednesday, Mr Cochrane-Watson said he made no apology for his outspoken remarks.
He said: "When I see drug dealers driving about in their fancy sports cars - money to burn - it does make me angry.
"When I know who these people are, it makes me frustrated.
"If I had got my hands on the guy who dealt these drugs to 13-year-old kids, I'd rather the police would have gotten there before me."

Delivering BBC Radio 4's Thought for the Day, the Prince of Wales said the rise of populist groups "aggressive" to minority faiths had "deeply disturbing echoes of the dark days" of the 1930s.
In the Christmas message, he urged respect for those of different faiths.
He said religious freedom was a "choice between life and death" for some.
It is the third time he has given the address on the Today programme.
The prince said he had recently met a Jesuit priest from Syria who described the plight of Christians he was forced to leave behind in the country.
He said: "He told me of mass kidnappings in parts of Syria and Iraq and how he feared that Christians will be driven en masse out of lands described in the Bible.
"He thought it quite possible there will be no Christians in Iraq within five years.
"Clearly, for such people, religious freedom is a daily, stark choice between life and death."
The prince said the scale of religious persecution around the world was "not widely appreciated" and was not limited to Christians, but included many other minority faiths.
He told listeners he was was born just after the end of World War Two in which his parents' generation had fought against an attempt to "exterminate the Jewish population of Europe."
He went on: "That, nearly seventy years later, we should still be seeing such evil persecution is, to me, beyond all belief.
"We owe it to those who suffered and died so horribly not to repeat the horrors of the past."
Prince Charles urged people to remember the story of the Nativity this Christmas, which was about "the fleeing of the Holy Family to escape violent persecution".
He asked listeners to remember that the Prophet Mohammed migrated from Mecca to Medina because he was "seeking the freedom for himself and his followers to worship".
The Prince said: "Whichever religious path we follow, the destination is the same - to value and respect the other person, accepting their right to live out their peaceful response to the love of God."
A former deputy chief constable has said it may be time to reconsider de-criminalising cannabis.
[NEXT_CONCEPT]
Prince Charles has spoken out about the danger of religious persecution, warning against a repeat of "the horrors of the past".