It is more than 40 years since the war on drugs was declared. Ian Blair, former commissioner of the Metropolitan Police, and Richard Branson, entrepreneur and member of the Global Commission on Drugs Policy meet – over a glass of wine – to discuss whether it's time to decriminalise. Emine Saner listens in.

Ian Blair: This is a very nuanced argument. I am in favour of experimentation to see if we can get treatment higher up the agenda of governments in dealing with drugs. Many drug addiction problems could be solved by treatment. But I fear the idea of a fully legalised world around drugs because it is an absolutely untested proposition, and the only evidence we have is small experiments in small countries. The idea that somewhere like the UK or the US goes into an experiment with unforeseeable consequences strikes me as horrific.

Richard Branson: I went into the Drugs Commission with a fairly open mind. We examined the war on drugs over the last 40 years and came to the conclusion it has failed. We then looked at countries that are taking a different approach on the war on drugs. In Portugal they said we're not going to legalise, but we're going to decriminalise all drugs – no one is going to go to prison for possession of drugs. We will move drugs from the home office to the health department. The government will use the money that would otherwise have been spent on putting people in prison to help them – which is about three-quarters cheaper. Portugal has seen a big reduction in heroin use, and in drug-related break-ins, and you can understand logically why.

IB: The Portugal statistics are disputed. It is not yet a proven case. [Overall drug use has increased, and the homicide rate went up – a fact, said a UN Office on Drugs and Crime report, that "might" be due to trafficking activity.]

RB: Proportionally more Americans have used cocaine than Portuguese people have used marijuana. Heroin use among 16- to 18-year-olds fell from 2.5% to 1.8%. New HIV infections fell by 17% between 1999 and 2003. Deaths related to heroin and similar drugs were cut by half. Property thefts dropped dramatically. I could carry on.

IB: That is a relatively isolated country. It is not very big, it is reasonably well off. In the shanty towns of South America, this kind of approach is not going to be available, and so the rules are different – it's about stopping the gangs, and that is where enforcement arises. If we let go into a world of legalised drugs, we have no idea what that is going to do to future generations. I'm happy that really good experimental work is pursued, but don't let that be the decision that opens the gates to decriminalisation across the world, because we're sentencing future generations to something unforeseeable. [In the UK] if it's accompanied by the spending switch that Portugal has achieved around drug treatment, then there may be something in it. Everything we've seen about decriminalisation just frees up the drug barons, because they are in a position to continue a substantial market without law-enforcement.

RB: Unless the government is supplying free methadone and free needles, which pulls the rug out under the suppliers.

IB: There would still remain a significant black market. You are not going to be able to regulate supply in a way that would completely control it, like alcohol is 99% controlled. With something like cannabis, if we had government control of the percentage of THC [the psychoactive ingredient], I can tell you what's going to happen – they will grow the stronger one and sell it cheaper. There needs to be emphasis on treatment, but an understanding that you are not going to reach the desired outcome without a considerable amount of enforcement to go with it, to stop people bringing new drugs on to the market all the time.

RB: There is an argument that marijuana is less harmful than cigarettes and alcohol, and obviously people who take excessive alcohol, cigarettes or skunk – all of them are in danger. Because marijuana is the drug of choice of young people, is it right that it should be treated any differently from alcohol?

IB: It's not about treating it differently, it's recognising that skunk, in particular, has definitely had links to psychiatric illness because of its strength.

Emine Saner: The focus is often on addicts, but the majority of drug users have stable lives, have jobs. Is it right to crimininalise them?

RB: There are 225 million people who take drugs without problems, mostly marijuana. They prefer it to alcohol, and it's possibly less damaging. A very high proportion who take it are not addicts. People should be warned against skunk, but with marijuana, it would be good to see experiments with [legalisation].

ES: What has been your experience of talking to politicians about this?

RB: I think politicians wrongly think this is a vote-loser for them. When you talk to them individually they will say, we've smoked, we don't think people should be sent to prison for this. But when they get into power, as a collective body, they change their mind. We've just done two surveys and overwhelmingly the British public said they felt nobody should be sent to prison for taking drugs, they should be decriminalised.

IB: I was involved in the experiment around the reclassification of cannabis, and I watched politicians go down that route, and they would just be wiped out by the Daily Mail. The politician who goes forward into the election with this is going to be very brave. I've stood in more crack dens than I wished to. At the top end of drug use – the depravation, dehumanisation and real horror – we need to do more than say this is just about treatment. We have to stop people being taken down a route …

RB: OK, education as well …

IB: It's not just education, it's about protection of people from the really bad guys. Enforcement has to be part of that.

RB: These are the drug pushers? So pull the rug from under them. If the government went one step further and legalised, let's say, marijuana, and taxed it, there would be an enormous amount of revenue that could be spent on helping people with bigger problems. It could be used on education, that $350bn [£220bn] a year that goes to the underworld – let's put it to use.

IB: The question of legalising the milder kind of drugs becomes more questionable as you move up to heroin or cocaine.

RB: One of the reasons people move up to heroin or cocaine is that the people who are selling you marijuana are also the people who will sell you cocaine.

IB: In some cases. You're making a specific argument around marijuana and its lower-end strengths, but there is also the fact that a drug being illegal is the reason a lot of people don't take them.

RB: The war on drugs has failed. We would like to see states and countries experimenting with new approaches.

IB: It is absolutely true that the war on drugs has not been won, and it's likely it is not winnable, but it is loseable.

Sir Richard Branson and Lord Blair also took part in an Intelligence2 and Google+ debate this week, "It's time to end the war on drugs", now available on YouTube