In 2001 Portugal decriminalised all drugs. Last month the Norwegian parliament made clear its intentions to follow this lead. Republican senators across the Atlantic are openly defending the legalisation of marijuana. It’s high time the British government realised that it’s hopelessly out of step with sensible drug policy.

Decriminalisation ends criminal penalties for possessing small amounts of a drug for personal use, but all other aspects of the drug market remain illegal. For Norwegian advocates of harm reduction, this might seem like a big step forward. They are probably right.

Prison isn’t rehab, and a criminal record is a hammer blow to an ex-user’s career prospects. By contrast, decriminalisation makes it easier for problematic users to seek treatment, which leads to decreased use among vulnerable groups. This is what happened in Portugal, as shown by multiple studies – and may explain Portugal’s extremely low rate of overdose deaths. Portugal’s decriminalisation has also reduced the number of HIV-positive people addicted to drugs. This is a huge win for public health.

Decriminalisation was not the only option on the table for Norway, however. As Sveinung Stensland, deputy chairman of the Norwegian parliamentary health committee, put it: “It is important to emphasise that we do not legalise cannabis and other drugs, but we decriminalise.” That’s a shame: Norway would be better off if politicians opted for legalisation.

Decriminalisation is not a panacea: street dealers face no competition from regulated alternatives, and there is a risk that supply to the black market will at best remain unchanged. When the London borough of Lambeth, where I live, experimented with partial decriminalisation (or “de-penalisation”) between 2001 and 2002, a surge in street dealing depressed house prices, most prominently in areas with the highest concentrations of dealing. Lower house prices may sound like good news, but they fell because dealing reduced the local quality of life. The consequences of underground drug markets are well known: more violence, more crime and more dangerous drugs.

Commentators such as Peter Hitchens wrongly believe that these issues are the result of British police not fighting the war on drugs harshly enough – especially for cannabis. It’s true that our prohibition is lenient in comparison with some parts of the US. But I imagine most of the 11,970 people in prison for drug offences in 2016 would have raised their eyebrows at the suggestion that we operate under “de facto decriminalisation”.

There’s appetite to reform the UK’s drug laws, but it has to be done right

Unlike decriminalisation, a legalised, regulated market would drive many street dealers out of existence. This is especially important for underage drug users because, unlike regulated shops and pharmacies, street dealers don’t ask for ID. They also tend to be unreliable sources of information on recommended dosage, and black market drugs are rarely pure. When I go to the pub, I know whether I’m getting beer or vodka; drug buyers on the street can only hope they’re getting what they’re paying for. The UK-based drug testing organisation The Loop has reported finding drugs laced with everything from concrete to crushed-up malaria tablets at music festivals.

Legalisation also opens up the opportunity for significant tax revenue, which could be used to fund treatment and addiction services properly. Recent estimates have suggested that a legal UK cannabis market alone could be worth nearly £7bn a year, raising £1.05bn in tax. And while decriminalisation is a blunt tool for all drugs, legalisation allows the government to tailor regulations to suit the potential harm levels of different substances. We don’t regulate alcohol in the same way as cigarettes, and we shouldn’t treat cannabis and MDMA in the same way as heroin.

Some parts of the world have attempted to compromise between decriminalisation and legalisation, with poor results. When I lived in Washington DC for a year after graduating, it was legal to grow and possess cannabis for personal consumption, but illegal to sell it. Within two weeks of arriving, I was offered a $20 bottle of water with a “free gift” of cannabis, on my morning commute.

There’s appetite to reform the UK’s drug laws, but it has to be done right. The public are ahead of politicians, with recent polling showing that more people support a legal, regulated cannabis market than oppose it. The government’s silence on this crucial issue is deafening. A few British politicians from across the spectrum, such as Paul Flynn, Nick Clegg and Crispin Blunt, agree with the public. I wish more would.

In the wake of Norway’s decision to decriminalise drugs, politicians from all parties should use this opportunity to take a different approach to our drug policy. By opting for legalisation, we can take the market out of the hands of criminals and raise some money for treating vulnerable users while we’re at it.

• Daniel Pryor is head of programmes at the Adam Smith Institute