The arrest of a 14-year-old Australian boy in Bali on drugs possession charges shows the global war on drugs is not just failing but is harming the wrong people, lawyers say.

Drug abuse must be treated globally as a health issue, not a criminal justice issue, the Australian Lawyers Alliance (ALA) says.

"This situation where a boy holidaying with his family is hauled into the police station and threatened with up to 12 years' prison for allegedly buying $25 worth of cannabis is not just ludicrous, but traumatic and damaging for the young boy involved," ALA president Greg Barns said in a statement today.

"Too many of the wrong people are being jailed as a result of a policy that keeps the drug trade underground, allowing mafia organisations to control it and make huge amounts of money that they reinvest back into organised crime."

Mr Barns said countries such as Portugal and the Czech Republic and several nations in Latin America were starting to look at the decriminalisation of possession and use of small amounts of drugs because prohibition policies were costing thousands of lives and billions of dollars for zero return.