A few weeks ago I had a coffee with one of the most admired Tory thinkers. A radical libertarian, he spent his time railing against the interventions of Europe and inadequacies of government, arguing how they combined to infringe basic freedoms. Given the stridency of his views and hostility to the state, I asked if he supported the legalisation of drugs. "Oh no," he said. "That's totally different. It's just wrong."

I enjoyed listening to his tortured arguments as he sought to justify why the state he had just been decrying should stop millions of people enjoying themselves. But the question was far from facetious. As the illegality of drugs looks dafter and more disastrous by the day, the Tories should follow the lead of some Republican cousins in the United States and start fighting for reform.

This might sound strange. It was, after all, a Republican president in Richard Nixon who launched the ludicrous war on drugs to shore up his support. Yet there has always been a free-thinking strand of the American right that opposed prohibition on principle, while it was two Democratic presidents, in Bill Clinton and Barack Obama, who admitted using drugs yet hypocritically ramped up spending on enforcement.

Reformers on the right have been boosted by three recent events: the emergence of a conservative campaign for saner penal policies in a nation locking up a quarter of the world's prisoners; the post-election inquest causing smarter Republicans to cast around for new ways to connect with young and minority voters; and landmark referendums in November voting to legalise marijuana in Colorado and Washington.

Liberalisation is moving from the libertarian fringes towards the mainstream. This is unsurprising when a city like Baltimore ends up arresting one in six citizens in a single year alone. Polls are shifting in favour of legalising cannabis, especially among the young, while there is growing acknowledgment of the racist undertones to the war on drugs, with disproportionate numbers of African-Americans jailed.

As the blogger Andrew Sullivan noted, the successful referendum campaigns rebranded reform as a conservative measure. It was not hippies demanding the right to smoke their spliffs, but parents concerned about their children. They demonstrated how drug legalisation, as well as being right and long overdue, is an issue that should appeal to Conservatives here if only they could shake off fear of public opprobrium.

It is offensive to see people criminalised and imprisoned for using stimulants many politicians admit to having used, especially when countless experts and ceaseless inquiries found drugs such as cannabis and ecstasy less harmful than alcohol. It is one more reason for the disconnect between politicians and the people who put them in power. Yet the concept of legalising drugs is caricatured by opponents as pushing the idea of having drugs on sale everywhere – as if they are not already.

Legalisation would replace the freest of markets that currently exists to the benefit of the world's most vicious crooks with a system in which supply is controlled, products regulated and profits taxed. This is safer for children, since parents will have more control than they have at present; it is safer for users, since the drugs can be tested for strength and purity; and it is safer for society, since it cuts off funding for the gangs that scar our cities and the cartels that carve up the world. Ask yourself why we have troops in Mali? One key reason for the country's collapse was corrosion caused by the cocaine trade, which is leaving such a destructive trail across west Africa by inflaming corruption, fuelling violence and funding the war chests of extremist militias. The lack of joined-up thinking in the west is extraordinary.

Current policies are staggeringly wasteful of taxpayers' cash, something that should always concern conservatives. A report last year found more than £65bn spent globally each year on enforcement, yet the booming illicit trade is the same size as the Danish economy, the 32nd biggest in the world. In Britain, annual public expenditure on treatment, policing and criminal justice in relation to drugs is £4.5bn – yet the cost of cocaine on our streets has fallen by half over the past 15 years.

Drug reform should appeal to a Conservative party seeking ways to connect with young and ethnic minority voters, who bear the brunt of street enforcement strategies by police. Instead of resorting to failed core vote strategies aimed at frightened older generations, here is something bold, conservative and modern. It makes sense on economic, political, social and moral grounds. Given the voices starting to come out in favour of legalising drugs, it is scarcely even controversial these days.

It is also popular. For just as in the US, pressure for reform is growing. A new poll out today by the campaign group Transform finds a majority now favour permitting cannabis use, while four in 10 Britons favour total decriminalisation and more than two-thirds favour a comprehensive review of all drug policies. Support cuts across political divisions and embraces readers of all papers.

The war on drugs is stumbling its way to deserved and inevitable defeat after causing terrible collateral damage. Leaders in Latin America are demanding an end to policies that wreaked havoc in their region, while already two European countries – Portugal and the Czech Republic – have decriminalised all drugs and disproved the argument that usage rises when prohibition is lifted. Britain should become the third.

Liberal Democrat leader Nick Clegg has called for a royal commission, while Labour's shadow cabinet recently discussed its stance on drugs. The Tories, whose leader showed unusual courage and realism on this subject before taking office, should seize the opportunity to outflank them by proposing total relaxation of drug laws. What could be more conservative than a policy that is tough on crime, saves money, protects children and aids global security?